The Ministry of Business, Innovation and Employment says there are no grounds to impose provisional measures to protect steel products makers while it investigates claims subsidised Chinese rivals are damaging the local industry.
In August, MBIE launched an investigation into steel reinforcing bar and coil (rebar) from China after Pacific Steel NZ claimed government-subsidised rebar imports from China are causing material injury to Pacific Steel through price undercutting, price depression and price suppression.
Pacific Steel is the sole producer of rebar in New Zealand and is a wholly owned subsidiary of New Zealand Steel Holdings whose parent company is ASX-listed BlueScope Steel.
Chinese steel imports have been a bone of contention around the world as US and European producers claimed their own industries were being undercut by the dumping of subsidised steel in their markets.
When filing its complaint, Pacific Steel requested provisional measures be imposed on the imports during the remaining period of the investigation.
For that to happen, MBIE needs "reasonable cause to believe" goods are subsidised and local industry is suffering material injury and needs protection during the probe. It also needs to wait 60 days before forming a view.
MBIE said its provisional conclusion is that the weighted average level of subsidisation that can reasonably be identified is 0.11 per cent, which is below the de minimis levels provided for in the Dumping and Countervailing Duties Act 1988 and the Subsidies Agreement.
"In the light of the provisional conclusion that the level of subsidy is de minimis there is no basis for addressing the question of whether it is necessary to impose provisional measures to prevent subsidisation causing material injury during the remaining period of the investigation, it said.
However, while there are not sufficient grounds for the imposition of provisional measures, there are also no grounds for terminating the investigation, it said.
The act obligates the minister to terminate an investigation if there is insufficient evidence of subsidisation to justify proceeding with the investigation or there is insufficient evidence that material injury to a New Zealand industry is being caused or threatened.
The Subsidies Agreement also requires that an investigation be terminated promptly as soon as the authorities concerned are satisfied that there is not sufficient evidence of either subsidisation or injury to justify proceeding with the case. The provisional conclusion is based on information available up to October 14.
"Subsequent information obtained by MBIE or made available to it, including information provided in supplementary questionnaires, or submissions by interested parties, could provide a basis to modify this provisional conclusion during the remaining period of investigation," it said.
MBIE must now prepare and circulate to interested parties a report on the essential facts and conclusions that will likely form the basis for the final determination by February 1, 2018. A final decision is due March 3. After its investigation, MBIE will make a recommendation to Minister of Commerce and Consumer Affairs Kris Faafoi, who then makes a final determination on the investigation, including whether to impose duties.
Separately, New Zealand Steel has asked the High Court for a judicial review of the decision by the former Minister of Commerce and Consumer Affairs not to impose countervailing duties on imports of galvanised steel coil from China in a prior investigation.
That decision was made in July this year, following an investigation by the Ministry of Business, Innovation and Employment which found that Chinese subsidies on galvanised steel coil imports were too small to have injured the domestic industry.