Paul Goldsmith: Protection vs cost finely balanced

In 2012 the Productivity Commission released the finding of its enquiry into housing affordability. As part of this enquiry the Commission looked into the affordability of materials available in New Zealand.

In response to the Productivity Commission's recommendations, the Government started a work programme, which included the Ministry of Business Innovation and Employment's (MBIE) Construction Sector Market Study.

That study found residential construction materials are much more expensive in New Zealand than in Australia, and explored options on how to improve their affordability.

A public interest test for the trade remedies regime and an automatic termination period was first mooted for New Zealand by officials as part of this study. The issues are relevant beyond the construction sector.

A public interest test will allow us to consider not just the manufacturer of a good and give consideration to whether consumers are benefiting from lower prices, more choice, availability and quality, and whether this benefit outweighs the net effect to the New Zealand industry.

Public feedback to MBIE's study was varied. Most submitters opposed having both a public interest test and an automatic termination period, so the Government went forward with only the public interest test.

This test aims to strike a balance between encouraging competition while assuring domestic industries they will still be protected from unfairly priced imports.

With this in mind, the steel industry in New Zealand cannot be thought of as just the producer alone. It is prudent, in a market as small and geographically isolated as New Zealand's, to think about the industry in terms of steel consumers as well: builders working in construction and the many small businesses operating across a variety of industries.

Other countries have grappled with this challenge and several have opted for public interest tests. Officials modelled the public interest test off Canada and the EU's trade remedies regimes.

The test will also contain a presumption in favour of imposing duties: The imposition of anti-dumping or anti-subsidy duties will be considered to be in the public interest unless the cost of imposing a duty to downstream industries and consumers outweighs the benefits to the domestic industry.

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What the Trade (Anti-dumping and Countervailing Duties) Amendment Bill does not do is change the application process for domestic industries to seek remedies:

• Industries that feel that they have been injured by dumped or subsidised goods can apply to MBIE for an investigation.

• That application should include evidence that there is dumping or subsidisation causing injury to the industry.

• If MBIE is convinced that an investigation is warranted, it will initiate and publicly notify.

• All applications are considered confidential unless MBIE initiates an investigation.

The public interest test is an additional step after the investigation that the regulator will have to complete.

Will this make it less likely that duties are imposed? In some circumstances, possibly, but only if it is in the wider public interest.

The Government has a role in serving the interests of all New Zealanders. I want to ensure a balance whereby our producers are protected from dumping but I also want to ensure we have a competitive market where consumers are getting the best value for money.

It is a delicate balance and one that the public interest test seeks to solve.