5. Questions for Discussion
Trade remedies are specific actions intended to deal with specific problems raised by imports. In particular, the present trade remedies approach is compared with that of competition policy, where the objective is economic efficiency and maximisation of economic welfare.
The Government's overall economic strategy aims to maximise national welfare. Carrying this through into trade remedy policy (as in competition policy), would require some modifications to the way the policy operates.
The Government has agreed that the interests of parties other than producers of like goods, including consumers and other producers, should also be considered in the decision as to whether the Government should provide trade remedies (but not necessarily where dumping or subsidisation arises from government action in the exporting country).
Further changes could include:
- Taking anti-dumping or countervailing duty action only against anti-competitive (predatory) dumping, identified in a similar way to the process employed under competition policy, or where price discrimination results from government actions in the exporting country;
- Providing for safeguard action (adjustment assistance) where firms encounter problems coping with supply shocks of international origin, on the basis of criteria consistent with those used to administer assistance to firms encountering adjustment problems due to domestic causes.
- Recognising that since there is a substantial overlap between the three arms of trade remedies legislation, both in terms of their effects on the economy and in the nature of the investigation process for dealing with them, the three forms of remedy can be dealt with within a common framework and administrative structure.
Below is an outline of the stages of a process which could be used for all trade remedy investigations. It incorporates aspects of the current regimes, and makes additions arising out of the analysis in previous chapters. It is intended to aid consistency of treatment and avoid duplication of resources.
There are four basic components to the investigation process in response to claims of dumping, subsidies, or unexpected surges of cheap imports. These are:
- Identification and investigation of the grounds for action (are imports dumped, subsidised, or increasing suddenly), in accordance with the international rules governing such investigations, and the extent to which foreign government actions contribute to the grounds for action;
- Consideration as to whether the imports are causing relevant injury, ("material" injury in the case of dumped or subsidised goods, and "serious" injury in the case of sudden increases);
- Consideration of the effects on the process of competition (which implicitly includes the effects on consumers);
- Consideration of the appropriateness of a remedy (including a recognition of the interests of consumers and tax-payers), and the nature and application of any remedy recommended.
Instances of "market isolation" dumping where dumping occurs from behind protective trade barriers, and "mercantilist" dumping where governments affect exports with direct or indirect subsidies or other interventions, would be deemed not to be in the public interest. In such cases application of the latter two components of the framework would be unnecessary, and the usual process for the imposition of anti-dumping or countervailing duties would be followed.
Related and additional issues which need to be addressed in the context of any revised approach to trade remedies, include:
- Issues arising from the administration of trade remedies, and
- The interpretation and implementation of the legislation applied by the Trade Remedies Group of the Ministry of Commerce.
These conclusions, and the preceding discussion in this Paper, are intended to provide a basis for developing a framework for the future operation of trade remedy policy, including a basis for New Zealand’s active participation in the development of international rules in this area.
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