New Zealand has 3 types of trade remedy action to deal with dumped or subsidised imported goods that could injure New Zealand manufacturers.
The 3 types of trade remedies
- Anti-dumping duties are used to counter dumping of products causing material injury to the domestic industry.
- Countervailing duties are used to counter the subsidisation of imported products causing material injury to the domestic industry.
- Temporary safeguard measures are used to counter a sudden increase in imports causing serious injury to the domestic industry.
Dumping and subsidisation are not illegal, but where it injures New Zealand producers, duties can be imposed to remedy the situation. These duties can only be imposed after a formal investigation.
Trade remedy legislation
Trade remedies are set out in the Trade (Anti-dumping and Countervailing Duties) Act 1988 and the Trade (Safeguard Measures) Act 2014.
These acts reflect the provisions of:
- the World Trade Organization Anti-Dumping Agreement
- the Subsidies and Countervailing Measures Agreement
- the Safeguards Agreement.
The law ensures that import competition is fair to New Zealand manufacturers.
Goods are dumped if the export price when imported into New Zealand is less than its normal value in the country of export. An export price is the price an importer in New Zealand pays for the goods. The normal value is the price the goods sell for in the country of export.
A fair comparison of export price and normal value requires them to be compared at the same level of trade and for sales made at as nearly as possible at the same time. Comparisons are normally made ex-factory in the country of export.
Adjustments can be made for:
- differences in terms and conditions of sale
- levels of trade
- physical characteristics
- any other differences that affect price comparability.
In determining a normal value for goods, if they are not sold domestically in the country of export, you can instead use the normal values of other producers, constructed values, or sales made to a third country.
Subsidisation involves specific foreign government assistance, directly or indirectly, for imported goods.
A subsidy can be:
- an export subsidy to boost exports of the country of manufacture
- a domestic subsidy to help the industry of the country of manufacture, whether or not the goods are subsequently exported.
If subsidised goods are imported and sold in New Zealand, we can investigate and apply trade remedies to make sure market competition is fair to New Zealand manufacturers.
An investigation must establish how the imported goods benefit from government help. This means we need to identify the subsidy programme concerned, and its nature and operation, including product coverage and the assistance provided.
Countervailing duties can be imposed to offset injury to the New Zealand industry. Under World Trade Organization rules, some subsidies cannot be countervailed.
Temporary safeguard measures can be imposed if, because of extraordinary or unforeseen developments, they are required to remedy serious injury caused or threatened by a sudden surge in imported goods.
Safeguard measures are only applied for the length of time required to prevent or remedy serious injury and to facilitate adjustment by the New Zealand industry. If a safeguard measure applies for more than 1 year it is to be progressively liberalised during its lifetime.
Final safeguard measures can be imposed for a period up to 4 years, extendable to 8 years under special circumstances, and depending on the outcome of a separate review investigation.
How temporary safeguard measures are applied
Temporary safeguard measures can be:
- a safeguard duty that is applied at the New Zealand border
- a duty or variation of any rate of duty by Order in Council under the Tariff Act 1988, or
- a restriction on importing goods by Order in Council under the Customs and Excise Act 1988 or the Imports and Exports (Restrictions) Act 1988.
The Trade (Safeguard Measures) Act 2014 provides for our Chief Executive to carry out enquiries into imported goods and make recommendations to the Minister of Commerce and Consumer Affairs for urgent temporary safeguard measures. These measures would allow an industry time to adjust to increased competition from imports.
The Act also provides for the Minister of Commerce and Consumer Affairs to impose a provisional and final safeguard duty and recommend other forms of safeguard action be taken by Order in Council.
The New Zealand industry must be able to show that unforeseen sudden increases in the volume of imports of a good is causing serious injury or threatens to cause serious injury to it. Evidence of actual or potential serious injury must be provided to support the request for temporary safeguard action.