heinz watties ltd submission (atp)

Heinz Watti e's ltd. 46 Parnell Road Parnell. Auck land 1052 New Zealand

Private Bag 99920 Newmarket. Auckland 1149 New Zealand

Heinz Wattie's Limited

T +64 9 l08 1000 F +64 9 308 5100 www.heinzwatties.co.nz

Submission to supplementary discussion paper

Introducing a Bounded Public Interest Test and Automatic Termination Period into the New Zealand Anti-Dumping and

Countervailing Duties Regime

26 June 2014

The General Manager Trade and International Environrnent Branch Ministry of Business, Innovation and Ernployrnent PO Box 1473 WELLINGTON

By email: [email protected]

Dear General Manager

Introducing a Bounded Public Interest Test and Automatic Termination Period into the Anti-Dumping and Countervailing Duties Regime: Supplementary Discussion Paper

Heinz Wattie 's Limited ('Wattie's') makes this submission on the Supplementary Discussion Paper on Introducing a Bounded Public Interest Test and Automatic Termination Period into the Anti-Dumping and Countervailing Duties Regime ('the Supplementary Discussion Paper') released by MBIE on 5 June 2015.

The Supplementary Discussion Paper seeks submissions on the possible introduction of an automatic termination period (,ATP'), in conjunction with the bounded public interest test that Cabinet has agreed in principle to introduce. Two possible options (in terms of the design of a potential ATP) are proposed :

• An absolute maximum imposition period (with no ability for industry to apply for the re-imposition of duties) (,Option A'); and

• A maximum imposition period with the ability for industry to apply for the imposition of duties either at any time after the termination of the duties or after a minimum 'stand down ' period has elapsed (,Option B').

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SUMMARY

Heinz Wattie's ltd. 46 Parnell Road Parnell. Auckland 1052 New Zealand

Private Bag 99920 Newmarket, Auckland 1149 New Zealand

T +649 308 5000 F +64 9 308 5100 www.heinzwatties.co.nz

Wattie's does not support the introduction of any ATP, and submits that neither option proposed is viable. The primary arguments against introducing any type of ATP is that it will remove antidumping duties even where it is likely that dumping will resume, causing a recurrence of material injury to the New Zealand industry. For example, the 2015 sunset review of anti-dumping duties on canned peaches from Greece (case study below) concluded that the duties needed to continue to prevent a recurrence of dumping and material injury to the New Zealand industry producing the subject goods. Yet the duties were first imposed 17 years ago, and under an ATP of five years would have expired in 2001. The removal of the duty then, as now, would hurt regional growers in Hawkes Bay most.

Even where industry is able to apply for the re-imposition of duties (under Option B), there will inevitably be a gap between the termination of the duty and the re-imposition of the duty, during which time dumping and material injury to the industry will almost certainly recur. Further, as pointed out in the Supplementary Discussion Paper, Option B would be complex and resource intensive. ' This is because, if the ATP allowed industry to apply for the re-imposition of antidumping duties, after the termination period (or any relevant 'stand-down period') it would require MBIE to conduct an entirely new dumping investigation. The concern is that companies and jobs may be destroyed or shifted to other countries which do not impose an ATP (such as South Africa, Greece, China and Spain), before a decision can be made on a de novo application for the reimposition of a duty.

Secondly, given the Government's approach to regulating only where strictly necessary, there is no mischief requiring the imposition of an ATP. The current anti-dumping legislation already provides significant discretion for the Government to impose new, or terminate existing, anti-dumping duties if there is a concern that a duty is becoming embedded and sheltering domestic industries from lawful competition .

Section 14(7) of the Dumping and Countervailing Duties Act 1988 ('the Act') provides that the Minister may, by notice, terminate (even retrospectively) in whole or in part, the imposition of any anti-dumping duty, and this power has previously been used. The discretion is very broad: as there are no criteria stipulated for the Minister to consider before terminating an anti-dumping duty, the Minister could terminate anti-dumping duties under section 14(7) to address the policy objectives in the Supplementary Discussion Paper, without the need to impose an ATP.

If an anti-dumping duty is not terminated by the Minister, it expires five years after the date on which it was first imposed,' unless the relevant goods are subject to a review of the imposition of an anti-dumping duty under section 14(8) of the Act' commenced by the Chief Executive of MBIE on his own initiative, or on the request of an interested party , but only if positive evidence is submitted justifying the need for a review.

Thirdly, duties are about protecting New Zealand industries from unlawful competition, and giving those industries five, eight or ten years to adjust to illegal behaviour is a nonsensical policy. Dumping is illegal under the World Trade Organisation's Anti -Dumping Agreement and Agreement on Subsidies and Countervailing Measures, to which New Zealand is a party, and these agreements are incorporated in the 1988 Act. Also, more time does not change the illegality of dumping.

The reasons in this submission opposing an ATP apply equally to both options proposed by MBIE in the Supplementary Discussion Paper.

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Heinz Wattie's Ltd . 46 Parnell Road Parnell, Auckland 1052 New Zealand


T +64 9 J08 5000 f +64 9 J08 5100 www.heinzwatties.co.nz

Material Injury to New Zealand industry - Greek peach case study

The canned fruit and vegetable industry is an example of where material injury might occur to New Zealand industry if an ATP is introduced. For example, the anti-dumping duty on canned peaches from Greece was recently the subject of an MBIE sunset review under the Act (' the 2015 sunset review'). 1

2 The following information regard ing the proposed reform 's material injury to Wallie's and to growers is provided by Wattie's under an obligation of confidence. If the submissions to the Supplementary Discussion Paper are published online, or are the subject of an official information request, the highlighted parts of Wattie 's submission should be redacted in accordance with section 9(2)(b)(ii) of the Official Information Act 1982, which states that information may be withheld if making it available would be likely to unreasonably prejudice the commercial position of the supplier or subject of the information. This overrides the public interest in making the information available , as Wattie 's would not supply the information if it was made public"

3 The 2015 sunset review concluded that the relevant anti-dumping duties needed to continue to prevent a recurrence of dumping and material injury to the New Zealand industry producing the subject goods. The reviewers agreed with Wattie 's submission that Greek canned peaches were likely to be dumped by a significant margin - 62 per cent of the export price . 3 Further, the reviewers agreed that , if anti-dumping duties were to cease, unsustainable price differences would likely occur (as had happened in the past), resul i

forced down.

Finally, the reviewers concluded that Wattie's was also likely to be undercut by imports from other countries like South Africa , China and Spain if the anti-dumping duties currently imposed on imported peaches from those countries ceased to apply.

4 The information provided by Wallie 's on the recent sunset review of canned peaches from Greece was independently verified by MBIE.4 Accordingly, MBIE's assessment that material harm was likely to occur to the industry should anti-dumping duties cease was supported by positive evidenceS

1 Ministry 01 Business, Innovation and Employment Canned peaches from Greece confidential final report: Dumping and Countervailing Duties Act 19882105 sunset review (June 2015), available < h Up ://www.med.gov!.nzlb u sin esS/trade-t ariffs/pd I-does-I i b ra ry/ current -invest igati on S/i nitiat i onreport-anti-dum ping-can ned-peaches-from-greece>.

2 Offi ciallnlormation Act 1982, s 9(2)(ba)(i). 3 At [41]- [74]. 4 At [34] . 5 At [34] .

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Heinz Wattie's Ltd. 46 Parnell Road Parnell, Auckland 1052 New Zea land


T +649 308 5000 F +64 9 308 5100 www.heinzwatties.CO.nz

5 The anti-dumping duties on canned peaches from Greece were first implemented in March 1998, which was 17' years ago. Under the current provision , the duty was due to expire on 18 November 2014, but it still applies until the completion of MBIE's sunset review6 However, the duty would have expired by now if an ATP was operating instead of the sunset review provision currently in section 14(8) of the Dumping and Countervailing Duties Act 1988 (,the Act') , even if the maximum imposition period was ten years.

6 If the ATP was in the form of Option A proposed by MBIE, the duty would have expired with no ability to impose a new duty in March 2003 (five years); March 2006 (eight years) and March 2008 (ten years). This would have exposed the industry to material injury should dumping have recurred (which MBIE has itself concluded is likely).

7 Alternatively, if the ATP was in the form of Option B proposed by MBIE, the industry would have had to make a costly application for an investigation to be initiated after the ATP (and any subsequent 'stand-down period') had expired , in order to protect the industry from ongoing material harm from dumped imports. An investigation from scratch would be necessary, even if it was readily apparent to MBIE that there was still a risk of material harm, meaning the application would inevitably be granted.

8 Further, Wallie's also notes that anti-dumping duties on canned peaches from Spain , China and South Africa are due to expire (and are therefore currently eligible for a sunset review) in August 2016 , July 2017 and May 2019 respectively. This demonstrates that the material harm to the industry from dumped imports if an A TP is imposed will be felt almost immediately.

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dumped imports can return to the market, causing a significant depression in prices and material injury to the local industry.

2015 sunset review that it has been Wallie 's notes in its response to the competing successfully with non-d lmrl",rl oods for m

from Australia.?

6 See <http://www.med.govt.nzlbusiness/trade-tariffs/trade-remedieslimported-goods-subject-to-duty>. Although a decision has been made on the review, affected parties may make submissions on proposal until 26 June 2015. Ministry of Business , Innovation and Employment Canned peaches from Greece conflde.ntl report (June 2015) at [257].

8 At [205].

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Heinz Watt ie's Ltd. Private Bag 99920 Newmarket, Auckland 1149 New Zealand

Resulting impact on regional New Zealand

T +64 9 308 5000 F +64 9 308 5100

15 If an ATP is introduced , there are likely to be significant effects on regional New Zealand as a result of the material injury to New Zealand industry operating in those regions. According to the 2013 Census data, many of New Zealand 's regions are declining economically and in terms of population compared to the rest of New Zealand: '

Small communities face demographic 'scissors' - where net migration loss combines with fertility decline and longevity to generate structural ageing and population decline. Twenty out of 67 territorial authorities lost population between 2006 and 2013 (up from 15 between 2001 and 2006).

16 The Hawke's Bay, as New Zealand 's second-largest contributor to the horticulture and fruit-growing industry,' 0 is particularly vulnerable to changes relating to those industries. A 2015 Salvation Anmy study concluded that some North Island regions , including Hawke's Bay, are at risk of economic failure

9 Royal Society of New Zealand Our Futures: Te Pae Tawhiti (2013) at 13. 10 "Regional Gross Domestic Product: Year ended March 2014" (11 March 2015)

Zealand <www.stats.govt.nz>.

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Heinz Wattie's ltd. 46 Parnell Road Private Bag 99920 T +6493085000 Parnell, Auckland 1052 Newmarket, Auckland 1149 F +64 9 308 5100 New Zea land New Zealand www.heinzwatties.co.nz

unless they receive central and local government support and investment." Between 2007 and 2014, Hawke's Bay's median weekly household income declined by 6.4 per cent. Unemployment in the region rose 2.8 per cent to 7.8 per cent in 2014. According to Statistics New Zealand, although Hawke's Bay's regional gross domestic product increased 6.4 per cent in the year ending March 2014, its economy increased only 16.6 per cent between 2009 and 2014, well below the national movement of 22.4 per cent , and this increase was attributed to horticulture and the fruit-growing industry in the region and, to a lesser extent, dairy farming.'2

Grower responses concerning impact on regional New Zealand

17 Canned peaches represent half of the total canned fruit volume in Hastings, and canned peaches and fruit salad together comprise 75 per cent of the total canned fruit volume in Hastings. Wattie's alone employs around 1,000 people in Hawke's Bay. Growers also run labour intensive operations during peak times. The local canning facility and all other downstream industries are also

important to local employers.

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Wattie 's has consulted the following people from

11 Alan Johnson Mixed Fortunes: The Geography of Advantage and Disadvantage in New Zei,'arld .. (Salvation Army Social Policy and Parliamentary Unit, May 2015) at 7 and 11 .

12 "Regional Gross Domestic Product: Year ended March 2014" (11 March 2015) Sta,tistic: Zealand <www.stats.govt.nz>.

13 Except for Mt Erin Pacific, which processes a very small volume of canned boysenberries.

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Heinz Wattie's ltd. 46 Parnell Road Parnell, Auckland 1052 New Zealand


T +64 9 308 5000 F +64 9 308 5100 www.heinzwatties.co.nz

growers industry, who are happy for their comments to be included in Wallie's submission:

• Johnny Byrne - Grower, JVR Orchard

• Rex Graham - Variety rights owner and royalty recipient

• Lesley Wilson - President of the Hawke's Bay Fruitgrowers' Association

• Wayne Walford - CEO, Hawke's Bay Chamber of Commerce

• Andrew Alexander - Grower, Hawke's Bay

• Adrian Mannering - Grower, Hawke's Bay

• Dave Janssen - Grower, Old Virginny Farm Ltd, Hawke's Bay

• Geoff Burton - Grower, Headacre Orchards

Private information

22 If the submissions to the Supplementary Discussion Paper are published online, the contact details of the relevant people in the following section should be redacted to protect their privacy." Any specific figures relating to Wallie 's or growers' commercial information which are highlighted in yellow should also be redacted in accordance with section 9(2)(b)(ii) of the Official Information Act 1982, which states that information may be withheld if making it available would be likely to unreasonably prejudice the commercial position of the supplier or subject of the information . This overrides the public interest in making the information available, as the submitters would not have supplied the following information if the relevant commercial information was made public."

Johnny Byrne - Grower

23 Johnny Byrne owns and manages a peach orchard, JVR Orchard , in Hawke's

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Bay. He has been I Wattie 's with peaches for around 14 years. Mr Byrne sells around of his peach crop to Wattie's, and supplies Wattie's with around of peaches a year. He employs up to 12 people at various times throughout the year to help with the harvest and thinning.

find another place to sell the peaches, as the local produce market was very competitive and difficult to access. The nature of the local market was part of the reason Mr Byrne started supplying to Wattie 's in the first place.

25 If MBIE requires any further information from Mr Byrne, he is happy to be contacted on or by email :

14 Official Information Act 1982, s9(2)(a).

15 Official Information Act 1982, s9(2)(ba)(i).

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Rex Graham - Variety rights owner and royalty reCipient

T +649 308 5000 F +64 9 308 5100 www.heinzwatties.CO.nz

26 Rex Graham has been involved in the horticultural industry for over 40 years and has vast experience in management, variety development, large scale orchard set ups (particularly for corporate organisations) and governance. Mr Graham is a director of the New Zealand Fruit Tree Company. He worked as part of Wattie 's procurement business for 15 years, trialling different fruit varieties in the Hawke's Bay.

Mr Graham is concerned that, if anti-dumping duties were lifted , this would have a huge impact on fruit growers in the Hawke's Bay. Mr Graham stressed that real people would be seriously affected by the removal of the duties. Growers overseas, particularly in Europe, are able to produce large volumes of fruit at such a subsidised cost that New Zealand industry cannot compete.

According to Mr Graham, removing anti-dumping duties would result in a loss of jobs in a region that could not afford to lose more jobs.

If MBIE requires any further information from Mr Graham, he is happy to be contacted on _ or by email:

Lesley Wilson - President of the Hawke's Bay Fruitgrowers' Association

27 Lesley Wilson is the President of the Hawke's Bay Fruitgrowers' Association. The Association resents the pip fruit, stone fruit and kiwifruit industries of Hawke's Bay. Ms Wilson has been a member on the Association Executive committee since 2006 , and was elected President of the Association in 2014. Ms Wilson and her husband have been fruit growing in Puketapu , Hawke's Bay for over 27 years.

28 According to Ms Wilson , the growing industry is open to competition but is strongly opposed to dumping. She estimated that, if anti-dumping duties were lifted, process-fruit growing businesses would be forced to close down in as little as a year. Profit margins are small at present and have been for at least a decade.

29 There is a high cost structure in the growing industry due to various compliance costs in the New Zealand regulatory framework, including under the Health and Safety Act 2001 , the National Policy Statement for Freshwater Management, GlobalGAP or NZGAP, and a number of employment law statutes. Ms Wilson expressed concern that, in contrast, there may be few regulatory compliance costs overseas, which meant that New Zealand industry simply could not operate legally and at the same time compete with dumped imports.

30 Ms Wilson also pointed out that the lack of requirement for country of origin labelling means that it is difficult for New Zealanders to support local-grown products over overseas imports. Because New Zealand has no country of origin labelling,'6 which is unheard of in most of the other markets in

16 See Food Standards Authority Overview and Application of Food Labelling and Requirements (November 2011) at 18. See also food/food·labellinglcountry-of origin/>.

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Heinz Watt ie's Ltd. 46 Parne ll Road Parnell, Auckland 1052 New Zealand


T +64 9 308 5000 F +64 9 l08 5100 www.heinzwatties.co.nz

which New Zealand trades, this significantly increases the vulnerability of the New Zealand market to product dumpingH Country of origin labelling is not legally required in New Zealand , so the country of origin can be withheld from New Zealand consumers to the advantage of mass-imported produce. This will become a much greater issue if anti-dumping duties are removed and more dumped products are imported into New Zealand. New Zealand growers are not against competition from overseas, but they do not want unfair competition from dumped products. Growers simply want a level playing field.

31 If MBIE requires any further information from Ms Wilson, she is happy to be contacted on _ or by email:

Wayne Walford - CEO, Hawke 's Bay Chamber of Commerce

32 Wayne Walford is CEO of the Hawke's Bay Chamber of Commerce.

33 Mr Walford considered that,

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this would be hugely detrimental to Hawke's Bay and Hastings.

Mr Walford emphasised that the region could not afford to lose any more jobs, particularly in the manufacturing industry. For example, the closure of the freezing works had significant upstream and downstream effects on the region. Similarly, the upstream and downstream effects of the proposed reform will be significant - not only will growers, fruit processors, suppliers and distributors be affected , but the whole Hawke's Bay economy, which is heavily reliant on horticulture.

35 If MBIE requires any further information from Mr Walford , he is happy to be contacted on 06 876 5938 or by email: [email protected].

Andrew Alexander - Grower

36 Andrew Alexander runs his own peach growing business in Hawke's Bay. Mr Alexander supplies to Wattie's, and has been doing so for the past 15 years. In that time, his land area has grown from two hectares to 15 hectares.

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rl ' .' _ ~. f>; ,,- • -• .. '1-!

Although Mr Alexander says that he could grow other crops apart from peaches, it would take six or seven years to adjust to such a change, during which time he would have no source of income.

38 Finally, Mr Alexander says that he will have to layoff the people he employs at various times throughout the year to help with pruning , storage and harvest the proposed reform is adopted . Through winter pruning , up to four people

17 Interviews with Leigh Catley, Communications Manager at Horticulture New Zealand, Wilson, President of the Hawke's Bay Fruitgrowers' Association (25 June 201 5) .

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Heinz Wattie's Ltd. 46 Parnell Road Parnell, Auckland 1052 New Zealand


T +64 9 l08 5000 F +64 9 l08 5100 www.heinzwatties.co.nz

employed; through early summer for fruit thinning, up to ten people are employed, and during harvest up to 30 people are employed.

39 If MBIE requires any further information from Mr Alexander, he is happy to be contacted on _ or by email :

Adrian Mannering - Grower

40 Adrian Mannering and his wife , Rose Mannering , have been growing peaches, apples and other pip fruit for many years. They currently supply around . _ of golden queen peaches to Wattie 's, and have supplied Wattie 's since 1992. They also have an irrigation company, which provides services to other orchards, including peach growers, in the area.

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Peaches were an integral part of his orchard business, and comprised around of the orchard's planted area.

For one, his apple produce will also be affected , as there are environmental benefits to growing apple trees on land where peach trees have previously been planted . Further, Mr Mannering says that his ability

irric]"tion services to neighbouring peach growers will be undermined Finally, Mr Mannering says that the orchard will struggle

to sustain the levels of staff it currently employs at various times throughout the year (around 30 staff) if the orchard has to stop growing peaches.

43 If MBIE requires any further information from Mr Mannering, he is happy to be contacted on or by email:

Dave Janssen - Grower

44 Dave Janssen is a grower in the Hawke's Bay. Mr Janssen is the manager and owner of the Old Virginny Farm Ltd orchard in Hastings. He has been growing fruit in the Hawke's Bay for 30 years, and has been supplying peaches to Wattie's for about 15 years.

45 According to Mr Janssen, the impact of removing anti-dumping duties on canned peaches will be huge, both on his own business, and on the wider Hawke's Bay Mr Janssen's contract with Wattie's makes up approximately of his overall business, which also includes growing apples and pears. Mr Janssen doubts that he would be able to to keep the five people he currently employs on his orchard as a result of higher costs to local growers in the absence of a local canning plant.

46 As to the impact on the wider community, Mr Janssen says it is market will become saturated by dumped products, driving costs up

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T +64 9 308 5000 F +64 9 308 5100 www.heinzwattie5.CO.nz

down. According to Mr Janssen, this will make it impossible for local producers to eompete,

leading to the loss of numerous jobs, and some owners going out of business, He says that, while there might be an option for growers to change crops, that is a very expensive option and it is likely that some growers will not be able to afford such a change.

47 Mr Janssen is also concerned about food safety risks associated with dumped products imported from countries without adequate food safety regulations. For example, Mr Janssen says that organophosphates are not used in New Zealand, but may well be used on dumped fruit that is imported into New Zealand in the absence of anti-dumping duties.

48 If MBIE requires any further information from Mr Janssen, he is happy to be contacted on or by email:

Geoff Burton - Grower

49 Geoff Burton is the owner and manager of Headacre Orchards in Hawke's Bay, which grows peaches and apples. He has been in the growing industry for 21 years.

50 Mr Burton is concerned that the orchard will be significantly affected if antidumping duties on peaches cease. Around _ of Headacre Orchards' produce is sold to Watties.

51 this would result in at least 15 redundancies during the thinning and harvesting seasons, and would likely cause the orchard to struggle financially. Even if some business could be recouped by increasing the orchard 's apple crop, Mr Burton says that this will take years to develop

52 If MBIE requires any further information from Mr Burton , he is happy to be contacted on or by email :

No problem requiring the introduction of an ATP

53 Given the Government's approach to regulating only where strictly necessary, there is no mischief requiring the imposition of an ATP, as the current antidumping regime already provides significant discretion for the Government to impose new, or terminate existing, anti-dumping duties.

54 As stated in the Supplementary Discussion Paper, the policy objectives of the proposed changes to the anti-dumping and countervailing duties regime , as they relate to the imposition of an ATP, are:

• To contribute to the government's objective of improving affordability and assisting with the Canterbury rebuild ;

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Heinz Watt ie's ltd. 46 Parnell Road Parnell, Auckland 1052 New Zealand

Private Bag 99920 Newmarket, Auckland 1149 New Zea land


• To continue to provide a level of protection for domestic industry when faced with dumped or subsidised imports causing material injury but, at the same time, to prevent duties being embedded thereby providing protection to industry against import competition for prolonged periods of time; and

• To minimise complexity and administrative costs, and promote certainty of outcomes.

55 However, the policy justification behind the imposition of an A TP as articulated in the Supplementary Discussion Paper is flawed for the following reasons:

• It would be unusual and counter-productive to adopt a blanket ATP to address concerns relating to one particular industry, without an assessment against the facts of other affected industries to assess the likelihood of material injury to the domestic market in those other industries;

• Anti-dumping duties are imposed to stop illegal trade practices, and requiring domestic industry to adjust to illegal trade practices over five, eight or ten years is simply inapt; and

• The concerns articulated in the Supplementary Discussion Paper can be dealt with using mechanisms already provided for in the existing legislation .

Existing legislative framework

56 The current anti-dumping and countervailing duties regime provides that antidumping duties can be imposed by the Minister of Commerce and Consumer Affairs ("the Minister'), where, following an application from New Zealand producers of like goods, an investigation is conducted by the Chief Executive of MBIE into whether the relevant goods are being dumped, and whether as a result , material injury to an industry has been or is being caused , or is threatened , or the establishment of an industry has been or is being materially retarded.

57 Section 14(7) of the Act provides that the Minister may, by notice , terminate (even retrospectively) in whole or in part, the imposition of any anti-dumping duty. If an anti-dumping duty is not terminated by the Minister, it expires five years after the date on which they were first imposed,'s unless the relevant goods are subject to a review of the imposition of an anti-dumping duty under section 14(8) of the ACt. "

58 Section 14(8) provides that such a review may be commenced by the Chief Executive of MBIE on his own initiative, or on the request of an interested party that submits positive evidence justifying the need for a review.

18 Except in the case of goods of Singaporean origin , in which case the life-span of an duty is three years, unless a review is carried out under section 14(8).

19 Dumping and Countervailing Duties Act 1988, s 14(9).

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Sunset reviews

Heinz Wattie's Ltd. 46 Parnell Road Parnell, Auckland 1052 New Zealand



59 Section 14(8) of the Act does not expressly set out any criteria to be considered by MBIE when it is conducting a review. Therefore, MBIE looks to the provisions of Article 11.3 of the World Trade Organisation Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (,the Anti-Dumping Agreement') , which requires that a duty be terminated five years after it was imposed or last reviewed , unless an investigating authority determines in a review that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury20

60 As MBIE has noted, the phrase "would be likely to" means "a real and substantial risk ... , a risk that might well eventuate", and that "likely" can be equated with "probable", in terms of the recurrence of both dumping and injury2' Therefore , the test applied under the current sunset provision is not a soft touch , and there is already a high threshold to meet before an antidumping duty will be continued.

61 A study conducted from 2000 to 2011 in relation to 22 World Trade Organisation ('WTO') members found that the number of anti-dumping measures in force in New Zealand for more than five years had steadily increased'» In fact, there was a tendency to extend anti-dumping measures beyond the five-year period across the majority of member states surveyed. Given the high threshold required by the sunset review process for an antidumping duty to be continued, this trend indicates that there is a need for an ability for anti-dumping duties to be continued for more than five years where there is evidence of a likelihood of dumping and material injury to an industry recurring.

Alternative measures available under existing framework to address policy objectives

62 As noted above, the Minister has the ability under section 14(7) of the Act to terminate, in whole or in part, the imposition of any anti-dumping duty. Such termination can be prospective or retrospective.

63 Many of the instances where the Minister has issued a notice terminating the imposition of an anti-dumping duty have followed a sunset review by MBIE which have concluded the duties should cease. However, there are examples of cases where the Minister has terminated an anti-dumping duty without a sunset review having been conducted first , including the following:

20 Ministry of Business, Innovation and Employment Canned peaches from Greece - Confidential final report (June 2015) at [19) and [20).

21 Ministry of Business, Innovation and Employment Canned peaches from Greece - Confidential report (June 2015) at 4.

22 Abjit Das and Meghana Sharafudeen "Sunset Reviews: Important Provisions Made (2014) 5(1) Jindal Global Law Review 79 at 96.

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Heinz Wattie's Ltd . 46 Parnell Road Parnell. Auckland 1052 New Zealand


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• December 2006 - Termination of anti-dumping duty on oil filters from China, Indonesia , Korea and Thailand - The duty was terminated because of the cessation of production of like goods in New Zealand ;23

• August 2006 - Termination of anti-dumping duties on oral liquid paracetamol from the Republic of Ireland - Previous duties applying to this product were terminated at the same time as new duties (applying to differing amounts) were imposed;24 and

• February 2000 - Termination of anti-dumping duty in respect of sweetened condensed milk from Thailand - This duty was terminated due to the cessation of production of like goods in New Zealand25

64 The Minister's discretion under section 14(7) is very broad, and there are no criteria stipulated for the Minister to consider before terminating an antidumping duty. Therefore, the Minister could terminate certain anti-dumping duties under section 14(7) to address the policy objectives articulated in the Supplementary Discussion Paper, without the need to impose an A TP which would have a larger than necessary impact on other industries.

65 For example , the Minister could exercise his discretion under section 14(7) to terminate anti-dumping duties currently imposed on construction materials, in order to improve housing afford ability and to assist with the Canterbury rebuild. Similarly, if there were concerns regarding a particular anti-dumping duty becoming embedded , the Minister could consider terminating that duty under section 14(7), rather than taking a broad brush approach across all industries.

Bounded Public Interest Test Reform already adopted

66 The new bounded public interest test agreed to by Cabinet already remedies the mischiefs that the introduction of an A TP is intended to address.

67 Under the public interest test, anti-dumping duties will not be imposed where the harm of imposing duties to upstream and downstream industries (for example , growers) and consumers materially outweighs the benefit of imposing the duty to domestic producers. As noted in the Supplementary Discussion Paper, the public interest test will be conducted following a finding in a review of an existing duty that dumping and material injury are likely to continue or recur should the duty be removed.26 This will prevent anti-dumping duties from becoming embedded and, as noted by MBIE, will increase competition 27 It will

23 "Termination of anti-dumping duty on oil filters from China, Indonesia, Korea and Thailand" (21 December 2006) 174 New Zealand Gazette 5086. Avai lable at: <https:/Igazette.govt.nzlnotice/id/2006-g08844>.

24 "Imposition of Anti-Dumping Duties: Oral Liquid Paracetamol From the Republ ic of Ireland" (3 December 2006) 91 New Zealand Gazette 91 . Avai lable at: <httPs:/Igazette . govt.nzlnotice/id/200~

g05130>. 25 "Termination of anti-dumping duty in respect of sweetened condensed milk from Thailand" (1

February 2000) 11 New Zealand Gazette 268. Available at: .sb!1!P§J!s.~ill§'llf"!L!Jl!.i.lQ)j'&!.~ g0906>.

26 At 9.

27 At 10.

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Heinz Watt ie's ltd. 46 Parnell Road Parnell. Auckland 1052 New Zealand


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also ensure the impact on downstream and upstream industries is taken into account. 2

•

68 Further, as noted by MBIE in the Supplementary Discussion Paper, the adoption of an A TP in addition to the public interest test could result in the antidumping regime changing to a system which provides domestic producers with only a limited time to adjust to dumped import competition , providing emergency but only temporary protection to domestic producers.29 The only certainty the A TP provides is that exporters and importers involved in the illegal trade of dumped goods will know with certainty when they can resume dumping.

69 The new bounded public interest test , which is itself a significant reform, should be given time to 'bed in ', and its impact assessed, before determining whether any further reforms are needed. This is especially important given the potentially devastating effects of adopting an ATP on regional industries in particular.

Inconsistent with international approaches

70 The introduction of an A TP is inconsistent with the approaches taken in other countries that use anti-dumping measures. For example, the Doha Round negotiating proposals on the WTO agreements in 2011 indicated that the majority of countries favoured New Zealand 's existing approach to the sunset review clause , or a bounded public interest Test reform only. In particular, no country supported an A TP without any opportunity for review and a further extension of anti-dumping duties, 3D as has been proposed as Option A by MBIE.

71 The three main approaches in the Doha Round of trade negotiations in relation to sunset review clauses are as follows:"

• Litlle to no change - This approach is supported by countries such as the United States and Egypt.

• The List Approach - Countries that support this approach , such as Canada and Japan, are concerned about sunset review clauses and wish to introduce detailed amendments to the sunset review provisions which would require administering authorities to take a list of factors and conditions into account to assess the likelihood of material injury to domestic producers.

• Automatic sunset approach - Even those countries supporting an automatic sunset approach of five years (primarily advocated for by Friends of Anti-Dumping Negotiations countries, such as China , Korea and Thailand) supported anti-dumping measures being reinstituted after a

28 This is also the position in Australia. See s 269T(4) of the Customs Act 1901 (AU).

29 At 11.

3D Abjit Das and Meghana Sharafudeen "Sunset Reviews: Important Provisions Made Irrellev'ID ?~=IiIIil-" (2014) 5(1) Jindal Global Law Review 79 at 100- 101 .

31 Abjit Das and Meghana Sharafudeen "Sunset Reviews: Important Provisions Made (2014) 5(1) Jindal Global Law Review 79 at 100-101.

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Heinz Watt ie's ltd. 46 Parnell Road Parnell, Auckland 1052 New Zealand


T +64 9 308 5000 F +64 9 308 5100 www. he i nzwattie~ .co . nz

further initiation and investigation procedure, as outlined in the WTO agreements (as in Option B proposed by MBIE).

Australia 's approach

72 As noted in the Supplementary Discussion Paper, an Australian Productivity Commission final report on a 2009 inquiry into Australia's anti-dumping and countervailing system recommended that the Australian government adopt a maximum eight-year duration for anti-dumping and countervailing duties, but that such duties should be able to be re-imposed , once terminated, if new evidence of injurious dumping/subsidisation emerged .'> Thus the proposal was in line with option two in MBIE's Supplementary Discussion Paper.

73 The Supplementary Discussion Paper also notes that the Australian Government rejected the Productivity Commission 's recommendation in , but does not state the reasons for that rejection , which were as follows:33

• All Australia's major trading partners did not impose an A TP for antidumping measures;

• Permitting the continuation of anti-dumping measures was consistent with the WTO's Anti-Dumping Agreement and Agreement on Subsidies and Countervailing Measures. Under these agreements, measures may only remain in force as long, and to the extent necessary, to counteract injurious dumping or subsidisation . Measures should not cease where injurious dumping or subsidisation is occurring, or likely to recur, if measures are removed; and

• Limiting continuation would introduce an arbitrary limit on the duration of measures. If industry was required to bring a new application , even if dumping or subsidisation was still occurring, then Australian manufacturers would be vulnerable to material injury caused by dumping or subsidisation for a period of up to two years before measures could be imposed again .

74 In New Zealand , MBIE was lukewarm about the idea of an ATP in its November 2013 Construction Market Options Paper for similar reasons.34 In that paper MBIE noted the concerns around duties becoming embedded , but emphasised that there was nothing about the underlying purpose of antidumping duties to indicate that they should be removed after a certain number of years if the dumping and harm continues; anti-dumping duties "seek to

32 At 8.

33 Australian Governm ent Streamlining Australia 's anti-dumping system (June 201 1) at 27 . online <http://pk.awu.net.au/sites/pk.awu.net.au/files/streamlini i i

34 See Ministry of Business, Innovation and Employment Residentia l Construction Sector (6 November 2013) at 48-49. See I u sl cons u I tab 0 n sIres i d enti ai-co n struct ion-sector -0 ptl on s. pdf> .

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Heinz Wattie's Ltd . 46 Parnell Road Parne ll, Auckland 1052 New Zealand



remedy the injury caused by dumped imports and this continues to hold true irrespective of how long a given duty has been in place".35

Yours sincerely Heinz Wattie 's Limited

MJ Pretty Managing Director

35 At 49.

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heinz watties ltd submission (atp)

Documents