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• Trade Remedies

• Completed Investigations

• Reassessment Investigations

• Galvanised Wire: Malaysia

Introduction

1. On 10 March 2005, at the request of Pacific Wire (a business unit of Fletcher Building Ltd), the Ministry initiated a reassessment of the rate or amount of anti-dumping duty on galvanised wire originating from Malaysia. The request alleged that the reference prices imposed following the investigation that was completed in April 2004 are now ineffective because of the increases in raw material costs, which have resulted in price increases of the finished product.

2. Under the reference price method of collecting duty, the duty payable is the difference between the import price and a reference price and duty is payable only if the import price is below the reference price. The current reference price duties are in the form of Normal Value (Value for Duty Equivalent) (NV(VFDE)) amounts which represent the undumped value of the goods at the FOB level. Reference prices can also be imposed at less than the margin of dumping based on a Non-Injurious Price (NIP) by means of Non-Injurious Free on Board (NIFOB) amounts. A NIFOB amount represents the FOB price at which imports would not cause injury to the New Zealand industry.

3. The Ministry considered that the request by Pacific Wire contained sufficient evidence to justify the need for a reassessment.

Goods Subject to the Reassessment

4. The goods subject to the request are described as follows:

Galvanised steel wire of high, medium and low tensile strength between (and including) 2 mm and 4.5 mm in diameter.

Dumping

5. The reassessment period is the year ended 28 February 2005. During this period it has been found that galvanised steel cable armouring wire supplied by Southern Wire Industries (Malaysia) Sdn Bhd and galvanised steel wire supplied by SMI Wire Sdn Bhd was dumped. Galvanised steel wire supplied by Southern Wire Industries (Malaysia) Sdn Bhd was found not to be dumped.

6. The existence or otherwise of dumping in a situation where reference prices have been in place for some time is not necessarily indicative of the likely dumping margins in the absence of anti-dumping duty as the export prices are likely to be influenced by the existence of reference prices. A reassessment investigates whether there should be any changes to the rate or amount of anti-dumping duty. Because a reassessment is limited in scope to reassessing the rate or amount of anti-dumping duty it is not the appropriate means to determine whether an anti-dumping duty should continue or be terminated. The need for anti-dumping duties was clearly established in the dumping investigation completed in April 2004 and is not a matter that requires revisiting in a reassessment.

7. It is proposed that reference prices be based on the updated normal values so future imports of galvanised wire from Malaysia will only incur anti-dumping duty if prices are below the appropriate reference price.

Proposed Method of Imposition of Anti-Dumping Duty

8. The Ministry considered whether the duty could be reassessed in the form of a variable element reference price which would include a variable element represented by an index price. A variable component to a reference price would reflect fluctuations in the price of wire rod, the main input into galvanised wire. The Ministry's analysis of this potential method concluded that the price indexes considered do not reflect the actual prices of the Malaysian manufacturers sufficiently closely to be an appropriate surrogate for actual prices. The Ministry has therefore proposed that duties continue to be imposed using non-variable (static) reference prices.

9. The Ministry has given consideration to the desirability of ensuring that the amount of anti-dumping duty is not greater than is necessary to prevent material injury to the New Zealand industry. This requires calculation of a NIP(s), being the price(s) the New Zealand industry could achieve in the absence of dumped imports. The Ministry has considered the New Zealand industry's submissions on establishing a NIP and concluded that the most appropriate method is an import parity approach using the undumped export prices from Malaysia, or where that product was dumped, normal values of that product.

10. The Ministry added an amount to the import parity price that represented a premium for local supply that the New Zealand industry could charge over the price of imported goods. An import parity price containing a price premium could not, in the circumstances of this reassessment, establish a duty at less than the normal value but did allow the Ministry to further consider its selection of the best method of establishing non-injurious prices.

11. The use of the import parity method represents a change in the method used to establish non-injurious prices in the original investigation completed in April 2004 (the Malaysian investigation.) To establish a NIP in the Malaysian investigation the Ministry added to the New Zealand industry's current cost of production, the average profit margin achieved by the New Zealand industry in the latest non-injurious period i.e. a period not affected by the presence of dumped goods (1999).

12. When non-injurious prices are established using undumped export prices or normal values from the country subject to investigation those non-injurious prices will, after being converted into NIFOB amounts, always be equal to or greater than the corresponding NV(VFDE) amount. Because a NIFOB amount can only form the level of duty when it is less than the NV(VFDE) amount the Ministry did not calculate NIFOB amounts.

13. Consequently it is proposed that the duties be reassessed by way of NV(VFDE) reference prices specific to each exporter, and to type and diameter of galvanised wire imported into New Zealand.

14. The current reference prices, imposed after the investigation, were for six different diameters of galvanised wire. The Ministry proposes that applying reference prices that differentiate between high tensile and low tensile galvanised wire and having separate rates for galvanised cable armouring wire provides a more accurate and fairer remedy. It is proposed that for other exporters a residual ad valorem rate will apply. To ensure that any duty does not exceed the reference prices it is proposed that the residual ad valorem rate be capped by NV(VFDE) amounts.

Proposed Levels of Anti-Dumping Duty

15. The following table shows the proposed reference prices:

Changes in Levels of Duty

16. The proposed reference prices are in the main greater than the existing reference prices. However due to the recommended split to recognise differences in prices of high and low tensile galvanised wire and galvanised cable armouring wire, reference prices for three low tensile galvanised wire diameters and one high tensile galvanised wire diameter have decreased from the existing reference prices for that diameter.

Effective Date of Application of New Duties

17. The reassessed duties are due and payable from the day after the Minister determines the new rates or amounts.

Refunds of Anti-Dumping Duty

18. If the reassessment results in lower duties being imposed the Minister may require the New Zealand Customs Service to refund, with effect from the date of initiation of the reassessment, the difference between the duty paid and the lower duty. However, if the reverse situation applies the shortfall is not required to be paid.

Conclusion

19. The Ministry concludes:

• The reference prices for galvanised wire supplied by Southern Wire Industries (Malaysia) Sdn Bhd should be reassessed to reflect updated normal values and to provide specific reference prices for high and low tensile galvanised wire and cable armouring wire.
• A reference price should be imposed on galvanised wire supplied by SMI Wire Sdn Bhd.
• The reference prices imposed against galvanised wire supplied by Aspac Alliance Steel Sdn Bhd should no longer apply.
• A residual ad valorem rate should apply to other exporters, excluding RCI Wire Sdn Bhd which should continue to be exempt from the duty.
• The residualad valorem rate should be capped by the imposition of reference prices.
• The ACSR core wire imported by Olex New Zealand Ltd comes within the description of goods and therefore is subject to anti-dumping duty. The description of goods cannot be amended during a reassessment to exclude this good. This can only be done by way of a review. An interested party may request a review to address this issue but must include with any such request positive evidence justifying the need for a review.