Bilateral Transitional Safeguards
The transitional safeguard mechanism provides a safety net for local producers. If the reduction or elimination of a tariff under the CEP results in increased imports originating from Thailand 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.
The Tariff (New Zealand-Thailand Closer Economic Partnership) Act 2005 [link to New Zealand Legislation website] came into force on 1 July 2005. Part 2 of the Act contains provisions under the Tariff Act 1988 so that bilateral transitional safeguard measures can be applied if tariff reduction or removal under the CEP Agreement is causing or threatening to cause serious injury to New Zealand industries.
A New Zealand industry, which considers that it is suffering or being threatened with serious injury by increased imports from Thailand 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 tariffs. It would need to include details of the impact of the increased imports on the industry as reflected in factors such as production, productivity, sales, utilisation of capacity, inventories, market share, exports, wages, employment, domestic prices, profits and investment. 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 Thailand 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.
Bilateral safeguards are transitional in nature. They must terminate within two years following the elimination of the tariff on the product concerned, and no new safeguard measure may be applied to that product after that date.
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 CEP.
Bilateral transitional safeguard provisions provide an additional safety net for any New Zealand industries that might be seriously affected by tariff reductions under the CEP. 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 CEP.
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