Parliament split on Chinese steel dumping

Bowen House, the Beehive and Parliament Building, Wellington. Photo / Mark Mitchell

Parliament's commerce select committee was split on a bill which seeks to introduce an additional test before anti-dumping penalties can be imposed, with opposition MPs opposed, in the run-up to a formal investigation into Chinese steel dumping.

The Trade (Anti-dumping and countervailing duties) Amendment Bill, first announced in August 2015, suggests introducing a bounded public interest test - one which would consider the cost of duties only on downstream industries and consumers - as part of an investigation into dumping. The test would include public interest elements such as competition and consumer benefits, and would add 90 days to the existing investigation timeline.

Dumping is when manufacturers export products at a lower price than they sell to their domestic market, while countervailing is when foreign governments provide a subsidy on exports. Currently, a duty is imposed on those dumped products considered to harm New Zealand manufacturers or a local industry, but the costs of imposing duties are not considered.

The committee was tied on voting on the bill and couldn't agree on whether to recommend it be passed, it said its December 9 report back to parliament. National Party members of the committee supported the bill, which they said would be fairer than the current regime as it would allow the commerce minister to consider the wider effects of a duty, and would increase competition and enhance consumer welfare.

The opposition members of the committee opposed the bill, saying it weakened important protections for New Zealand businesses which suffer from unfair international competition, particularly small businesses.

The Labour, Greens and NZ First MPs said they weren't convinced the test was adequately accurate, rigorous and consistent, and submitters had been "overwhelmingly opposed" to the bill, saying it would tilt the playing field in favour of dumped or subsidised imports rather than supporting local industry.

The bill was drafted in direct response to concern about the cost of building materials in New Zealand, the opposition MPs said. In 2014, the government announced the removal of tariffs and duties on building materials covered under existing legislation with the intention of improving housing affordability, an issue that continues to plague policymakers.

On December 22, the Ministry of Business, Innovation and Employment announced an investigation into claims Chinese galvanised steel coil imports, used in construction, have been dumped on the local market, causing "material injury" to New Zealand industry.

The government department said it considers there's enough evidence that Chinese imports are undercutting New Zealand Steel, a subsidiary of ASX-listed BlueScope, leading to lower prices for the company which meant it wasn't able to recover increasing costs, putting a squeeze on profit and investment.

In a submission on the trade legislation, NZ Steel said it opposed the bill as being "an unnecessary and radical shift in New Zealand's trade policy" with "no principled reason why New Zealand producers should be expected to compete with goods illegally dumped here below their cost of production offshore".

Chinese steel imports have been a bone of contention around the world, with the world's most populous nation facing down Europe and US claims of dumping. When New Zealand was dragged into the matter in June, there were claims that Kiwi companies could face a backlash if the government pursued an anti-dumping probe.

MBIE's investigation must be completed within 180 days, excluding the holiday period, after which a recommendation will be made to the commerce minister, with recently appointed Commerce Minister Jacqui Dean making a final decision on whether to impose duties or not by July 9.