Trade Remedies under the New Zealand - China Free Trade Agreement
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Summary
Under the New Zealand – China Free Trade Agreement [link to MFAT website] (FTA), which came into effect on 1 October 2008, both parties will retain their existing WTO rights and obligations on anti-dumping and countervailing duties procedures and the use of global safeguard measures (although there is discretion to exclude partner country trade from any global safeguard action). Chapter 6 of the FTA covers trade remedies.
Bilateral transitional safeguards will also be available during the tariff phase out period. These will allow either country to address situations of serious injury to domestic industries caused by increased imports due to tariff reduction or elimination under the FTA.
Anti-Dumping and Countervailing Action
New Zealand has retained, without compromise, the ability to take WTO-consistent trade remedy actions against unfairly traded imports which are dumped or subsidised and injure New Zealand producers. The FTA includes a requirement that when either party accepts a properly documented application for a dumping investigation it must notify the other party as soon as possible (WTO rules require only that this notification be made prior to a dumping investigation being initiated).
Anti-dumping and countervailing (anti-subsidy) investigations and duties must continue to comply with WTO rules under the Anti-Dumping Agreement [link to PDF document held on WTO website] and the Agreement on Subsidies and Countervailing Measures [link to PDF document held on WTO website].
Global Safeguards
Global safeguards remedy serious injury caused or threatened to New Zealand industries by sudden and unforeseen increases in imports. Global safeguard investigations and measures must continue to be consistent with the WTO Safeguards Agreement [link to PDF document on WTO website] and may be taken by New Zealand against imports from all countries, except Australia [link to Australian Department of Foreign Affairs and Trade website] and Singapore [link to MFAT website]. The FTA provides that a global safeguard measure may exclude imports originating from China "if such imports are non-injurious".
Bilateral Transitional Safeguards
The transitional safeguard mechanism provides a safety net for local producers. If the reduction or elimination of a tariff under the FTA results in increased imports originating from China of such an extent as to cause or threaten serious injury to a New Zealand industry, the tariff may be reinstated temporarily to a previous level. The temporary reinstatement of a tariff would allow an industry time to adjust to the new competitive situation.
An amendment to the Tariff Act 1988 will come into force on 1 October 2008 so that bilateral transitional safeguard measures can be applied if tariff reduction or removal under the FTA is causing or threatening to cause serious injury to a New Zealand industry that produces a like or directly competitive product to that being imported.
A New Zealand industry which considers that it is suffering or being threatened with serious injury by increased imports from China may apply to the Trade Rules, Remedies and Tariffs Group of the Ministry of Economic Development with evidence justifying the need for a safeguard investigation. An application would need to include information on the increase in imports and how this was linked to the reduction in tariff under the FTA. It would also need to include details of the impact of the increased imports on the industry as reflected in factors such as market share, sales, production, productivity, capacity utilisation, profits and losses and employment. The Ministry is responsible for carrying out any transitional safeguard investigation and reports to the Minister of Commerce.
The Minister of Commerce may apply a transitional safeguard measure against imports from China if this is warranted following an investigation. A transitional safeguard measure would involve reverting to higher tariffs for an initial period of up to two years, extendable to three years, and would allow time for an industry to adjust.ilateral safeguards are transitional in nature and must terminate at the end of the “transition period". The "transition period" is the 3 year period beginning on 1 October 2008, except in the case of a product where the liberalisation period lasts 5 or more years, in which case it is the period in which the tariff reaches zero plus 2 years. No new safeguard measure may be applied to a product after the end of the “transition period”.
Bilateral transitional safeguards are different from WTO safeguards, because they are targeted at the serious injury which has been caused or threatened by an increase in imports arising from tariff elimination or reduction under the FTA.
Bilateral transitional safeguard provisions provide an additional safety net for any New Zealand industries that might be seriously affected by tariff reductions under the FTA. These provisions are reciprocal. New Zealand ensured in the negotiations that reasonable disciplines are placed on both countries' use of bilateral safeguard provisions in order not to undermine the overall benefits of the FTA.
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