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Barry Coates speaks about the Trade (Anti-dumping and Countervailing Duties) Amendment Bill - Committee Stage

​Tēnā koe, Mr Chair. Thank you for calling me on this bill, the Trade (Anti-dumping and Countervailing Duties) Amendment Bill. We would like to talk to the general provisions in Part 1 of the bill. The purpose of the Act is to enable New Zealand to apply anti-dumping and countervailing duties. Actually, the purpose of this amendment is why the Government should not apply anti-dumping. We are deeply concerned over this bill and have expressed that concern in the committee process. We are joint authors with Labour and New Zealand First in a minority opinion on this bill, which is reflected in the committee's report.

We have some very fundamental questions about the purpose of this bill. Firstly, it is not quite clear what problem it is we are trying to solve here. If the problem is responding to the Christchurch earthquake, which appears to be the dominant rhetoric around the need for this bill, then certainly there are provisions already in existing legislation for emergency response for exactly that situation. We are not sure why these amendments are required more broadly to give the Government powers to deny New Zealand companies their rights of redress when foreign producers predate their markets.

The second issue we have is "Who wants this bill?". We have heard, as Dr Clark said, from a number of submitters including Business New Zealand, including the association of manufacturers exporters, including most of the business associations, which were—how shall I put it—puzzled as to why the Government would be putting this bill forward. We have, as Dr Clark said, seen that this bill would introduce a complexity with regard to our trans-Tasman trade. Australia has twice looked at this kind of test to introduce for anti-dumping and has twice, after far more comprehensive analysis that we had available to us as a committee, rejected it. This lack of coherence with Australia on the issue of anti-dumping will create problems for our manufacturers and exporters, and, what is more, will create some incentives for foreign companies to come and predate our markets, undercut local businesses, and, once they have driven them out of business, according to a national interest test of lower prices for consumers, then of course they are free to raise their prices again and use up that consumer surplus in order to generate monopoly profits in the New Zealand market.

We think that, instead of a bill that would even the level playing field, what we have is a bill that further tilts the playing field in support of foreign companies, and that actually foreign companies are being given advantages through this bill, and these are foreign companies that often already have advantages—for example, through not being forced to pay tax. If you are a multinational that can benefit from transfer pricing or if you are a company that sells goods online for under $400, then you do not have to pay GST—a disadvantage to New Zealand companies—of 15 percent. So we are adding insult to injury through the inability now of manufacturers to be able to understand whether or not they have protection from anti-dumping laws, and it is this aspect of uncertainty for a manufacturer that is one of the harshest aspects of this bill.

The companies that are facing unfair competition have an opportunity, first, to put in their application to the bill, and, as we see in the legislation, in 180 days they will get a preliminary opinion. But even if they won the case as to why they are being predated by anti-dumping rules, then there is a test applied and that test applied means that they may not get redress even though they are clearly able to show that they are being predated. That is bad for their business, and therefore that is introducing an element of uncertainty into New Zealand business that I think is disadvantageous for what is left of our manufacturers.

This bill is particularly harsh on small and medium sized enterprises (SMEs), and as we go through the clauses in this bill we see the difficulties that SMEs have in being able to negotiate procedures and timetables that are burdensome and disadvantageous to them. Not only is there a 180 day-period, which for a small company is often a long enough period for them to be driven out of business, but then, with the introduction of this test, there is a further 90-day period to understand whether or not they will receive any redress. That compounds the problem for them. They are obliged to provide more information and,, as small businesses, they are put at a great deal of disadvantage compared with their often far better funded overseas competitors. Again, this bill is tilting the playing field towards our foreign competitors and against the interests of New Zealand companies. Surely, we want New Zealand companies to do well. That is why it is very hard to understand the rationale for this bill and the purposes of this bill.

The further problem here is a problem with the criteria in the test itself—and we will come with specific recommendations and specific comments on the criteria that are to be applied under the national interest test—but in the committee we had officials who were quite open with us to say that it was extremely difficult to provide an objective and conclusive assessment of this national interest in ways that could be sure that the national interest outweighed the long-term damage that companies would face by being driven out of business by predatory pricing from their overseas competitors. There are deep failings in the proposed methodology, which is likely to result in the application of a standardised methodology. We heard of a methodology that would be applied by Treasury to estimate a consumer surplus that might apply in this case, and that methodology was tilted in favour entirely of the cheap importers that are dumping goods and ruining the prospects for New Zealand manufacturing companies.

The factors in these tests are vague and subject to ministerial discretion, and that, for us, is a crucial point. Throughout this bill there is extensive discretion given to the Minister, which politicises this process in a way that is deeply worrying for the future of independent and objective decision-making on important issues like anti-dumping. The Minister, throughout this process of a national interest test, is given discretion at every stage of the process. We think that discretion is not sufficiently fettered by controls and objective criteria that will reign in the accountability of a Minister, and, once again, we will come with specific proposals during this debate to introduce some greater accountability for Ministers into this process.

Finally, I would say that we are concerned that this bill shows a neglect of the respect for, and understanding of, the difficulties faced by small business and producers in New Zealand. We have seen over the years manufacturers driven out time and time and time again by predatory foreign competition, and this bill will not only not stop that happening; this bill is a mechanism to facilitate it happening. It takes what was an anti-dumping bill and says: "Maybe it's an anti-dumping bill, but, actually, it might be a bill that would allow predatory pricing by foreign competitors." It completely changes the nature of the anti-dumping legislation in this country. We cannot, as the Green Party, support it. Thank you.