03 July 2015
METALS
NEW Z EALAND
HERA House
17-19 Gladding Place
PO Box 76-134
Manukau city
Ph
Fax
The Manager
Trade and International Environment Branch
Ministry of Business, Innovation and Employment
PO Box 3705, Wellington
+64 9 262 4846
+64 9 262 2856
E-mail
[email protected]
Website www.metals.org.nz
Public Interest Test and Automatic Termination Period Submission
Dear Sir/Madam,
This submission is in response to the Ministry's June 2015 Supplementary Discussion Paper. Metals NZ
appreciates the opportunity to offer its views on the possibility of a Public Interest Test (PI) and an Automatic
Termination Period (ATP) forming part of New Zealand's trade remedies regime.
Background
Metals New Zealand (Metals NZ) is an incorporated society serving the needs of New Zealand's metals related
industry. Launched in 2011, it consists of Organisation Members made up from metals related industry
associations, Ordinary Corporate Members made up from key stakeholder companies and Affiliate Members who
are generally the members of the Organisation Members. Its Executive consists largely of senior personnel
working in New Zealand's major metal-based organisations 1. Metals NZ is independent of any specific company
or organisation interest. It is currently funded through membership contributions.
Summary Comment
Metals NZ does not support the introduction of a PI test in New Zealand's trade remedies regime, nor an ATP. In
Metal NZ's view there are significant problems with both concepts which make them inadvisable.
Bounded Public Interest Test
Metals NZ supports fair trade, consumer welfare, and a stable, predictable regulatory environment. In mid-2014
however, several changes were made to New Zealand's anti-dumping regime that were unexpected, and unusual.
12 months later, it appears those changes have not met the stated objectives.
Metals NZ is very concerned that Cabinet has in principle now agreed to a bounded public interest test. Such
further changes will continue to weaken New Zealand's trade remedies regime. Metals NZ is opposed to the
bounded PI test for the following reasons:
•
Manufacturing investment in New Zealand relies on stable, predictable rules in order to remain confident.
The events in mid-2014 which weakened the New Zealand trade remedies regime have heightened
industry concerns regarding rules uncertainty. The mooted PI test further exacerbates that situation.
•
We do not observe persuasive evidence that a PI test will satisfy an objective to enhance consumer
welfare. In our view that case would need be conclusively shown in order to justify a PI test with all its
complications, uncertainties, costs and additional analysis time.
•
While we note that the Ministry points to the EU and Canada having a PI test, and appears to take
guidance from that precedent, we understand that PI tests are uncommon. We also note that Australia
does not have a PI test. All other things being equal, we consider that the growing uncertainties within
New Zealand's trade remedies regime, which do not exist in Australia and most other places, are a
disincentive to invest in New Zealand manufacturing and employment.
1
See http://www.metals.org.nz/Category?Action=View&Category id=659
2
•
The Ministry pOints to a PI test assisting competition. In Metals NZ's view, this is misdirected. We support
fair trade and proper competition. On one hand however, WTO rules which condemn injurious dumping
(which do not include a PI test) adequately define fair trade, and on the other hand, the Commerce
Commission properly regulate fair competition. It is difficult to see a competition-related problem which
needs fixing. The other rationale offered to do with natural disasters is not persuasive given that, to
Metals NZ's belief, no product/price shortfall has occurred here, and if that did occur other existing natural
disaster-related powers are already in place.
Automatic Termination Period (ATP)
Metals NZ is strongly opposed to an ATP. The proposal includes some very surprising features which, if
implemented, manufacturing could not survive. Set out below is further discussion.
a) If implemented, an ATP requires that a New Zealand manufacturer compete against legitimized dumped
or subsidized goods, from all sources. Manufacturing will not survive that. It is difficult to overstate this
concern.
b) The Ministry clearly desires more imported foreign goods . Provided they are of fit-for-purpose quality and
are properly supported through time, those imported goods may be positive for consumer choice. Further
relaxing New Zealand's trade remedies regime to support those imports via an ATP may, however, have
unintended consequences and thus not be in New Zealand's interests. For example:
i.
Under an ATP, some dumped distressed cargoes may be safely off-loaded in New Zealand and
enter New Zealand commerce solely because the supplier can be immune from anti-dumping
claim. Those goods will not comprise stable and reliable supply, nor, we suggest, are they likely
to be of assured quality.
ii.
Credible and reliable foreign suppliers may be less likely to invest in a New Zealand position
when they know their competition here can be dumped . That will be to New Zealand's detriment.
iii.
Lastly, credible and reliable suppliers from countries which do not subsidise their domestic
industry will be dissuaded from offering their goods to New Zealand, as the economics here can
encompass subsidized pricing. That too, will be to New Zealand's detriment.
c) As far as Metals NZ is aware, no country has an ATP. We presume if a precedent exists, it will have
featured in the Supplementary Discussion Paper. It is difficult to see why New Zealand wishes to
contemplate the uncharted waters of an ATP, and make its trade remedies regime so significantly
different to anywhere else. It is disappointing that this topic has not been analysed. We consider this to be
a material process omission.
d) Metals NZ is very concerned about regulatory uncertainties. Events of June 2104 were a surprise and the
character of the proposed ATP increases our disquiet. We think it is unwise for New Zealand to continue
growing its reputation for making unusual changes to its trade remedies regime, and general trade-related
uncertai nties.
The above comments take us to the matter of competition policy and consumer welfare. Metals NZ supports the
social objectives of housing affordability which are mentioned by the Ministry. We do not however, see an
adequate case made. We also do not see convincing evidence of the consumer welfare objective being met by an
ATP. It seems more likely that the cost in New Zealand of primary goods, is properly fair, and is not a cause of
housing unaffordability.
Conclusion
Metals NZ does not support any further changes to, and weakening of, New Zealand's antidumping regime. It
considers the case offered for a PI test is insufficient. The ATP is very surprising, and economically unsound.
Metals NZ opposes introduction of an A TP.
YOUrSSi~,
~~
~tt-Fuller
CHAIRMAN