The New Zealand Government has announced that it will shortly amend the Dumping and Countervailing Duties Act 1988 (Act) to introduce a bounded public interest test (BPIT) but not an automatic termination period (ATP).
Goods are ‘dumped’ when an overseas manufacturer exports them to New Zealand for less than the price it sells them for in its home market. Dumping can be competitive but it can also cause significant damage to domestic manufacturers. In order to ‘level the playing field’, the Act provides that duties can be imposed on the dumped goods.1
Following the Christchurch earthquake, the Government became concerned about the cost of building materials and suspended several existing anti-dumping duties. It also became concerned that the Act was protecting domestic manufacturers to the detriment of consumers.
Following a lengthy consultation process, the Government decided in principle in June 2015 to address that concern by introducing a BPIT into the Act.2 Further consultation was conducted regarding whether to prevent duties becoming ‘embedded’ by introducing an ATP so that they would automatically lapse after e.g. five years. However, the Government has now announced that no ATP will be introduced.3
The detail of the new test will only be known when an amendment bill is introduced to Parliament, but at this stage it appears likely that the BPIT:
will weigh the harm that would be done by the duty to downstream industries and consumers against the benefit accruing to domestic manufacturers (rather than carry out a full cost-benefit assessment);
will be applied whenever imposing or reviewing a duty;
will be subject to a discretion not to impose or defer a duty in the wake of a natural disaster (like an earthquake);
will come into effect before 2017 (so will be applied when the suspension of current duties on building materials ends).
The changes have the potential to reduce the protection which the Act offers to New Zealand manufacturers, so it will be important for interested parties to engage fully in the Parliamentary process. If you would like to discuss the possible implications of these changes for your business, please contact us.
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.