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[ Last Updated 8 August 2007 ]

Dumping and Countervailing Duties Act1988

Table of Contents
1.	PROCEEDINGS
	1.1	ORIGINAL DETERMINATION
	1.2	REVIEW
	1.3	INTERESTED PARTIES
	1.4	GOODS UNDER REVIEW
	1.5	INVESTIGATION DETAILS
	1.6	EXCHANGE RATES
	1.7	DISCLOSURE OF INFORMATION
	1.8	ACTIONS BY OTHER ADMINISTRATIONS
2.	NEW ZEALAND INDUSTRY
	2.1	LIKE GOODS
	2.2	NEW ZEALAND INDUSTRY
	2.3	IMPORTS OF REFINED SUGAR
	2.4	NEW ZEALAND MARKET
3.	REVIEW OF DUMPING
	3.1	FINDINGS OF PREVIOUS INVESTIGATIONS AND REVIEW
	3.2	CONCLUSIONS RELATING TO DUMPING
4.	REVIEW OF MATERIAL INJURY
	4.1	FINDINGS OF ORIGINAL INVESTIGATIONS AND PREVIOUS REVIEW
	4.2	INJURY FOR THE PURPOSES OF A REVIEW
	4.3	IMPORT VOLUMES
	4.4	PRICE EFFECTS
	4.5	ECONOMIC IMPACT
	4.6	OTHER CAUSES OF INJURY
	4.7	CONCLUSIONS RELATING TO INJURY
5.	CONCLUSIONS
6.	TERMINATION OF ANTI-DUMPING DUTIES
7.	RECOMMENDATIONS

1. PROCEEDINGS

1.1 ORIGINAL DETERMINATION

On 9 November 1988 the Minister of Customs determined in terms of section 186k of the Customs Act 1966 as amended, (hereinafter referred to as the Customs Act) that refined sugar, being refined white sugar and other types of refined sugar (refined from sugar cane or sugar beets) exported from Malaysia, Thailand and the Federal Republic of Germany and imported into New Zealand were goods in respect of which an anti-dumping duty could be imposed in accordance with section 186l of the Customs Act in that the goods were dumped and had caused or were likely to cause material injury to an industry in New Zealand.

The Minister of Customs directed that a dumping duty equal to 100% of the difference between the export price of the goods and their normal value be paid on importations of those goods. A notice was issued by the Minister of Customs dated 9 November 1988 and published in the New Zealand Gazette of 10 November 1988.

The legislation under which the Minister of Customs made his determination was substantially carried forward into the Dumping and Countervailing Duties Act 1988 (hereinafter referred to as the Act).

On 1 December 1988 responsibility for the administration of anti-dumping and countervailing legislation was transferred to the Ministry of Commerce, and the Act came into force.

On 7 June 1989 the Minister of Commerce determined in terms of section 13 of the Act that refined sugar (refined from sugar cane or sugar beets) exported by August Topfer and Co GmbH from the Netherlands, Belgium and Denmark, and by Hottlet Sugar Trading NV from Belgium and imported into New Zealand were goods in respect of which an anti-dumping duty could be imposed in accordance with section 14 of the Act in that the goods were dumped and had caused or were likely to cause material injury to an industry in New Zealand.

The Minister of Commerce directed that anti-dumping duty be collected, charged and paid in accordance with a formula based on the raw sugar price at the time of sale to the importer, which set a duty threshold level. A notice was issued by the Minister of Commerce dated 7 June 1989 and published in the New Zealand Gazette of 15 June 1989.

The Minister of Commerce reassessed this formula on 30 January 1990 in terms of section 14 of the Act. The effect of the reassessment was to update the figures in the formula and to ensure that the anti-dumping duty could not exceed the difference between the export price and the normal value. A notice was issued by the Minister of Commerce dated 30 January 1990 and published in the New Zealand Gazette of 8 February 1990.

On 22 February 1990 the Minister of Customs, in terms of section 186l of the Customs Act reassessed the anti-dumping duty payable in respect of imports from Malaysia, Thailand and Germany. The purpose of this reassessment was to introduce a formula for the charging of anti-dumping duty consistent with that applying to imports from the Netherlands, Belgium and Denmark. A notice was issued by the Minister of Customs dated 22 February 1990 and published in the New Zealand Gazette of 1 March 1990.

On 3 November 1993, following completion of a review investigation, the Minister of Commerce determined that there was a continued need for the imposition of anti-dumping duty on imports of refined sugar from Belgium, Denmark, Germany, Malaysia, the Netherlands and Thailand. The Minister also reassessed the anti-dumping duties payable in respect of those goods.

On 9 October 1998 a request in terms of section 14(8) of the Act, was received from the New Zealand Sugar Company Limited, for the initiation of a review of the continued need for the imposition of anti-dumping duties on refined sugar imported into New Zealand from Belgium, Denmark, Germany, the Netherlands and Thailand.

Anti-dumping Duty Collected

Complete information relating to anti-dumping duty collected on refined sugar since the last review in 1993 is not currently available, however it is known that remedial duty has only been paid on refined sugar originating in Malaysia.

Information received from the New Zealand Customs Service covering the period from 1 January 1998 to the end of February 1999 shows a total anti-dumping duty collection of $______ in that period which related to 9 importations from Malaysia. The total quantity involved in these shipments was ___ tonnes representing ___ percent of total imports. Advice from the importer indicates that the "dumping" of these shipments was due to an exchange rate miscalculation.

1.2 REVIEW

Section 14(8) of the Act states:

The Secretary may, on his or her own initiative, and shall, where requested to do so by an interested party that submits positive evidence justifying the need for a review, initiate a review of the imposition of anti-dumping duty or countervailing duty in relation to goods and shall complete that review within 180 days of its initiation.

Section 14(9) of the Act states

Anti-dumping duty or countervailing duty applying to any goods shall cease to be payable on those goods from the date that is five years after –

(a) The date of the final determination made under section 13 of this Act in relation to those goods; or

(b) The date of notice of any reassessment of duty given under subsection (6) of this section, following a review carried out under subsection (8) of this section –

Whichever is the later, unless, at that date, the goods are subject to review under subsection (8) of this section.

In terms of section 14(9)(b) of the Act anti-dumping duties relating to the subject goods would, in the absence of a review, have ceased to apply as from 3 November 1998.

The provisions of section 14(9) of the Act give specific effect to Article 11 of the Agreement which provides additional guidance as follows:

11.1 An anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury.

11.2 The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately.

11.3 Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date no later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. The duty may remain in force pending the outcome of such a review.

11.4 The provisions of article 6 regarding evidence and procedure shall apply to any review carried out under this article. Any such review shall be carried out expeditiously and shall normally be concluded within 12 months of the date of initiation of the review.

On 23 October 1998, being satisfied that positive evidence justifying the need for a review had been provided, the Secretary of Commerce initiated a review. A notice to this effect was published in the New Zealand Gazette of 29 October 1998. The existing anti-dumping duties have (with the exception of Malaysia) been continued pending the outcome of this review.

Interested parties to the original investigations and the previous review were advised of the initiation of this review in writing and invited to make written submissions to the review team.

The purpose of this Report is to provide a summary of the matters established by the review team as a basis for a determination to be made under section 14(8) of the Act as to whether the expiry of the current anti-dumping duty would be likely to lead to the continuation or recurrence of dumping or injury. It should be noted that this Report provides a summary only of the information, analysis and conclusions relevant to this investigation, and should not be accorded any status beyond that.

Section 10a of the Dumping and Countervailing Duties Act 1988 ("the Act") requires that, within 150 days of the initiation of an investigation, interested parties be given written advice of the essential facts and conclusions that will likely form the basis of any final determination. While this section does not apply in the case of reviews, the Ministry endeavours to the extent possible to follow investigation practice.

In the case of this review, it was not possible to release "written advice of the essential facts and conclusions" within the 150-day timeframe. An interim report, identical in format and content to that which would have been required had section 10a applied, was released to all known interested parties on 26 March 1999. This date was 154 days after initiation of the review. Comments received from Kerry NZ Ltd, New Zealand Sugar Company Ltd, and Cerebos Gregg’s (on behalf of the major New Zealand end-users) were taken into account in the preparation of this Final Report.

Grounds for Review

The review is to establish whether the expiry of the duty would be likely to lead to the recurrence of dumping and injury.

The New Zealand industry in its submissions claims that it is threatened with material injury should the dumped goods be imported into New Zealand without adequate anti-dumping duties. The industry claims that the imports of the dumped goods are certain to significantly increase in volume with the removal of anti-dumping duties and that material injury to the industry is threatened through:

• price suppression and depression
• declining output
• loss of market share
• loss of profits
• loss of sales
• negligible return on investments
• severe constraints on new investment

As a result, the industry claims the effects of the dumped imports will lead to the demise, or a major contraction of, the industry.

Cessation of Anti-dumping Duties in Respect of Malaysia

The submission received from New Zealand Sugar did not include a request for the review of anti-dumping duties on refined sugar from Malaysia.

In terms of section 14(9) of the Act, and as no other interested party had requested a review in respect of refined sugar from Malaysia, the anti-dumping duties applicable to those goods ceased to be payable as from 3 November 1998.

Notice of the cessation of those anti-dumping duties was included in the notice given by the Secretary of Commerce dated 23 October 1998 and published in the New Zealand Gazette of 29 October 1998.

A further notice amending the original notice imposing anti-dumping duties and specifically revoking the anti-dumping duty on refined sugar from Malaysia was given by the Minister of Commerce on 24 November 1998 and published in the New Zealand Gazette of 26 November 1998.

Further comment regarding the trends in imports from Malaysia since the cessation of anti-dumping duties is made later in this Report.

Reassessment of Anti-dumping Duties

If the outcome of this review indicates that anti-dumping duties should continue to be applied, then the amount or rate of duty can be reassessed in accordance with section14(6) of the Act. In relation to the anti-dumping duty imposed by the Minister of Customs pursuant to the provisions of the Customs Act 1966, section 19(4) of the Act provides that the reassessment can be made in accordance with section14 (6) of the Act.

NZSC has provided information regarding alterations it considers are required to update certain components of the existing anti-dumping duty should this be necessary.

1.3 INTERESTED PARTIES

New Zealand Industry

The original applicant was the New Zealand Sugar Company Ltd (hereinafter referred to as NZSC), the sole New Zealand sugar refiner.

The review team received a submission from NZSC and visited its premises in Auckland to obtain additional information and seek clarification of certain matters related to the claims made.

Importers and Exporters

Each of the companies identified from NZCS import information as having supplied or imported the subject goods over the year ending September 1998 was contacted in writing and given the opportunity to make a submission to the review team.

Brief comments were received from some of the importers contacted but no substantive submissions were received. The comments received indicated that the imports of refined sugars which were made during the review period were of either pharmaceutical grade sugars intended for testing and scientific purposes or flavoured sugars made up into sachets for retail sale. In both cases, the per kilo equivalent price was well in excess of the "dumping threshold" for bulk refined sugars.

A brief submission was received from the Commission of the European Community relating to matters of review process and commenting on the relevance of the Community sugar regime to the review.

New Zealand End Users

A preliminary submission was received from Global Sugar Solutions (GSS) representing a group of New Zealand industrial sugar users, namely;

• McDonalds New Zealand Supplier Council
• Griffins Foods Ltd
• Heinz Wattie Australasia
• DB Group Limited
• Tip Top Ice Cream Company Ltd
• Cadbury Confectionery Limited
• Cerebos Greggs Limited
• Lion Nathan/Pepsi
• Coca-Cola Amatil

The preliminary submission made was subject to agreement by the end-users identified above, and to the provision of additional information following confirmation of its confidentiality status. At the time of this report three of the end-users identified above have provided specific agreement to the content of the preliminary submission. The review team has received no further information arising from this preliminary submission.

A separate submission, containing additional information and comment by the "end-users group" was received subsequent to the events noted in 1.3.3.2 above. This information relates specifically to the actions likely to be taken by major end-users should the current anti-dumping duties not be continued. As such, the information is directly relevant to the likely impact on NZSC should this course of action be followed. The submission is summarised in section 4 of this Report.

1.4 GOODS UNDER REVIEW

The goods which are the subject of the application, hereinafter referred to as refined sugar, or "subject goods", are:

Refined sugar, being refined white sugar and other types of refined sugar (refined from sugar cane or from sugar beets)

As from 1 March 1989 the goods under review fall under tariff headings and statistical keys 1701.11.00 (statistical keys 01F to 09A), 1701.12.00 (statistical keys 01L to 09F), 1701.91.00 (statistical keys 01E to 19H) and 1701.99.00 (statistical keys 01A to 49fF) as follows:

The Tariff defines raw sugar as sugar whose content of sucrose by weight, in the dry state, corresponds to a polarimeter reading of less than 99.5°. Some types of refined sugar are definable as raw sugar for the purpose of the Tariff. This fact has had some impact on import and market figures used in this report, further comment and explanation regarding this point is given in section 2.3. Current duty rates are free from all sources.

1.5 INVESTIGATION DETAILS

In this report, unless otherwise stated, years are calendar years and dollar values are NZ$. In tables, column totals may differ from individual figures because of rounding. The term VFD refers to value for duty for Customs purposes.

The period covered by this review is from 1 November 1993 to the present. The period of investigation for establishing dumping is the year from 1 October 1997 to 30 September 1998.

1.6 EXCHANGE RATES

Article 2.4.1 of the Agreement provides as follows:

When the comparison under paragraph 4 [of Article 2] requires a conversion of currencies, such conversion should be made using the rate of exchange on the date of sale8, provided that when a sale of foreign currency on forward markets is directly linked to the export sale involved, the rate of exchange in the forward sale shall be used. Fluctuations in exchange rates shall be ignored and in an investigation the authorities shall allow exporters at least 60days to have adjusted their export prices to reflect sustained movements in exchange rates during the period of investigation.

8 Normally, the date of sale would be the date of contract, purchase order, order confirmation, or invoice, whichever establishes the material terms of sale.

In respect of the exchange rates used in section 3.3 of this Report, the review team has, in the absence of other rates being available referred to an on-line exchange rate service (www.Oanda.com). The review team has used that service’s Historical Currency Table feature to obtain an average Interbank exchange rate over the periods specified in section 3.3.

1.7 DISCLOSURE OF INFORMATION

The Ministry of Commerce makes available all non-confidential information to any interested party through its Public File system.

Article 6.7 of the Agreement provides as follows:

In order to verify information provided or to obtain further details, the authorities may carry out investigations in the territory of other Members as required, provided they obtain the agreement of the firms concerned and notify the representatives of the government of the Member in question, and unless that Member objects to the investigation. The procedures described in AnnexI shall apply to investigations carried out in the territory of other Members. Subject to the requirement to protect confidential information, the authorities shall make the results of any such investigations available, or shall provide disclosure thereof pursuant to paragraph9, to the firms to which they pertain and may make such results available to the applicants.

In the absence of any submissions from suppliers of the subject goods during the period under review, no overseas verification visits have been undertaken.

In response to the Interim Report, NZSC noted that an offer it had made on behalf of E D & F Man for the review team to discuss on a confidential basis "the impact of European sugar in the Singapore market" was not taken up by the review team. Whilst such a discussion, which in practical terms would have necessitated travel to Singapore, may well have been informative in a general sense, its direct relevance to the purpose of this review (as stated in paragraph 1.2.11) provided insufficient justification to undertake such a visit.

Article 6.8 of the Agreement provides as follows:

In cases in which any interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available. The provisions of AnnexII shall be observed in the application of this paragraph.

As noted above, (paragraphs 1.3.2.1 & 2), information was requested, but not received from, inter alia, each of the suppliers of refined sugars to New Zealand during the review period. Due to the paucity of information other than that provided by NZSC, information relating to those exporters is based on the facts available.

1.8 ACTIONS BY OTHER ADMINISTRATIONS

The current review has been completed in terms of the "sunset provisions" of the Agreement and of section 14(9) of the Act. In determining its approach to certain aspects of the review the Ministry has taken some cognisance of the approach taken in and the outcome of reviews of this type completed by other administering authorities. This is possible due to the commonality of the base requirements (i.e. the Agreement) across all WTO signatory nations.

In particular, the Ministry has referred to a "Continuation Inquiry" completed by the Australian Customs Service (ACS) in January 1999 in relation to A4 Copy Paper from Brazil, Germany and South Africa (Australian Customs Service, 1999).

2. NEW ZEALAND INDUSTRY

Section 3a provides the definition of "industry":

3a. Meaning of "industry"—For the purposes of this Act, the term ‘industry’, in relation to any goods, means—

(a) The New Zealand producers of like goods; or

(b) Such NewZealand producers of like goods whose collective output constitutes a major proportion of the New Zealand production of like goods

"Like goods" is defined in section 3 of the Act:

"Like goods", in relation to any goods, means—

(a) Other goods that are like those goods in all respects; or

(b) In the absence of goods referred to in paragraph (a) of this definition, goods which have characteristics closely resembling those goods:

2.1 LIKE GOODS

In order to establish the existence and extent of the NewZealand industry for the purposes of an investigation into injury, and having identified the subject goods, it is necessary to determine whether there are NewZealand producers of goods which are like those goods in all respects, and if not, whether there are NewZealand producers of other goods which have characteristics closely resembling the subject goods.

The subject goods have been identified in section 1.4 of this Report as:

Refined sugar, being refined white sugar and other types of refined sugar (refined from sugar cane or from sugar beets)

The original investigations determined that NZSC was manufacturing like goods to those being imported from the countries cited in each case.

The question of like goods was examined in some detail during the original investigation involving Belgium, Denmark, and the Netherlands and in a subsequent request for the re-initiation of the investigation into sugar from Papua New Guinea, in which the question of "refined sugar" was addressed.

In the previous (1993) review investigation the question of like goods was again addressed in relation to claims made that imports of "Commercial Brown" sugar (both high and low Pol) should be excluded from the review.

In each case referred to above, the Ministry was satisfied that the characteristics of the range of refined sugars produced by NZSC closely resembled those of the imported sugars and were therefore like goods.

In the present review, no substantive queries have been raised by any interested party or by the Ministry, which may have required that this matter be revisited.

On the basis of the information available, the Ministry considers that the refined sugars produced by NZSC, are like goods to the subject goods.

2.2 NEW ZEALAND INDUSTRY

The New Zealand industry consists of only one manufacturer, NZSC, which refines raw sugar to produce various refined sugars.

During the period since the last review, NZSC has imported minor quantities of refined sugar, specifically cube sugar (which is not produced in New Zealand) from Hong Kong and the USA and some soft brown sugar from Australia. None of these countries of origin are included in the existing determination.

2.3 IMPORTS OF REFINED SUGAR

The import volumes in table 2.1 below have with the exception of "Other Imports" been compiled from Statistics New Zealand INFOS data.

Following release of the Interim Report, the review team revisited the base data on which it had established the import volumes used in that report. In particular the question of the coverage of the tariff items noted in section 1.4 above and the figures recorded by INFOS for imports from Australia in the 1995 to 1998 calendar years were re-examined.

The present anti-dumping duties and this review relate specifically to refined sugars. As noted in paragraph 1.4.3 above, for import tariff purposes certain types of refined sugars fall within the classification relating to raw sugar. Inclusion of INFOS figures relating to those classifications in the import figures, particularly for Australian imports within the "Other Imports" category, caused a degree of distortion in terms of overall quantities.

The 1996 INFOS figures in respect of Australia were queried by NZSC in its application. NZSC stated that it felt the INFOS data overstated Australian imports, and provided alternative figures for the 1996, 1997 calendar years and for the first six months of 1998, drawn from its own import records and those of MacKay Refined Sugars (NZ) Ltd.

Prior to release of the Interim Report, the review team compared the INFOS data with that obtained from the NZCS. Whilst some variation was found, it was minimal and was not considered significant by the review team.

Subsequent to the release of the Interim Report, further enquiries have been made with Statistics New Zealand with the result that, although the figures used are accurate according to the available base data, they are outside of the expected and commercially reasonable trend. This matter was further queried by NZSC in its response to the Interim Report.

In respect of imports under the raw sugar tariff items, the review team is unable to isolate those imports that might correctly fall within the ambit of the existing anti-dumping duty. Such imports are however small in comparison to those relating to goods outside of the current determination. The figures used in Table 2.1 have been adjusted to exclude all imports recorded by INFOS within the "raw sugar classifications".

Similarly, being satisfied that the 1996-1998 INFOS figures for Australia did not accurately reflect imports of the subject goods the review team has used the figures provided by NZSC, being the best alternate information available, in establishing the "Other Imports" category of the following table.

The table shows that over the most recently completed calendar year, imports of refined sugars from each of the countries currently subject to anti-dumping duties were negligible, and collective imports from those countries were also negligible. This conclusion is unchanged from that arising from the figures used in the Interim Report. As noted above in paragraph 1.3.2.2, imports of refined sugar were of pharmaceutical grade or packaged in sachets, rather than bulk refined sugars.

Applicability of Section 11(1) to a Review

In its application NZSC submits that it does not consider the provisions of section 11(1) of the Act [and by extension the provisions of Article 5.8] relating to negligibility apply in the case of a review, as imports have been the subject of anti-dumping measures which has had the effect of limiting import volumes. The Ministry shares this view; therefore this review focuses in part on the likelihood of significant imports of refined sugar from the subject countries.

2.4 NEW ZEALAND MARKET

The market for refined sugars in New Zealand currently stands at around 180,000 to 190,000 tonnes a year, of which about 90% is for white sugar products (granulated, castor, etc.), with the balance being for brown sugars, treacles and the like. Approximately three-quarters of demand – or some 140,000 tonnes – is from industrial buyers, who use sugar as an input to production. The major users are companies in the food processing and beverage industries. The balance is made up of retail sales of around 45,000 tonnes to consumers, mainly through the major supermarket chains.

NZSC distributes refined sugars to the industrial market directly, generally on a free into store basis, throughout New Zealand using a network of cartage contractors. The retail market is serviced in a similar way through a range of wholesalers and retailers.

Considerable change has occurred in the New Zealand refined sugar market over the period covered by this review. Also, the cessation of anti-dumping duty in respect of refined sugars imported from Malaysia, which would otherwise have fallen within its ambit, tends to differentiate the current review from that completed in 1993. Some further comment is made on these matters elsewhere in this report.

In light of the lack of information available to it from sources other than NZSC and bearing in mind the commercial context of all the submissions received, the review team has identified and in part referred to, a recently published economic review of Sugar Refining (Pickford, 1998) which specifically addressed various factors of international and Australasian market development, structure, participant conduct and performance.

NZSC has expressed some concern at the apparent weight placed on the economic review noted above and has cited a number of areas in which it feels the analysis by Pickford is flawed. Whilst the review team does not consider that undue weight has been placed on the Pickford document, the matters raised by NZSC have been taken into account in preparing the current report.

Market Size.

The total New Zealand market for refined sugar is made up of sales by NZSC of its own production plus imports of the goods under review and all other imports. This is shown in table 2.2. The figures used are from the same sources and subject to the same considerations and adjustments as those in Table 2.1 above.

3. REVIEW OF DUMPING

Section 3(1) of the Act states:

"Dumping", in relation to goods, means the situation where the export price of goods imported into NewZealand or intended to be imported into NewZealand is less than the normal value of the goods as determined in accordance with the provisions of this Act, and ‘dumped’ has a corresponding meaning:"

3.1 FINDINGS OF PREVIOUS INVESTIGATIONS AND REVIEW

The original investigations found that dumping of refined sugar was occurring. Dumping margins established were found to range between US$124 per tonne and US$652 per tonne or 46% to 262%, calculated as a percentage of export price.

The 1993 review concluded that refined sugar imported from Thailand continued to be dumped and that conditions were such that refined sugar imported from the cited European countries would be dumped. The margins calculated, which were based largely on generic information, ranged between US$75 per tonne (15% expressed as a percentage of export price) for Thailand and US$587 to US$598 per tonne (68% – 69% expressed as a percentage of export price) from European sources.

The Ministry's sunset reviews are intended to determine whether the removal of the existing anti-dumping duties after the five year period would be likely to lead to the continuation or recurrence of dumping and of injury. Reviews are intended to establish whether there is a continued need for the imposition of anti-dumping duties. Questions to be asked are whether the goods under review continue to be dumped, the extent of that dumping and, where imports of the goods subject to anti-dumping duty have ceased, the likelihood of imports being made at dumped prices and thereby causing injury if anti-dumping duty is removed. The likelihood of imports is considered in section 4.

3.2 CONCLUSIONS RELATING TO DUMPING

The conclusion reached in section 4 of this report is that there is no clearly foreseen and imminent likelihood of imports of the subject goods from the subject countries of origin. The review team has not therefore calculated export prices or normal values for the goods.

4. REVIEW OF MATERIAL INJURY

4.1 FINDINGS OF ORIGINAL INVESTIGATIONS AND PREVIOUS REVIEW

The original investigations concluded that material injury to the New Zealand industry had been caused by reason of the dumped imports resulting in price depression and prevention of price increases and decline in market share, downturn in utilisation of production capacity, decline in employment, negative effect on cash flow and lost profits. It was further concluded that the threat of additional injury in these areas had been proven.

The 1993 review concluded that there was a continued threat of material injury in each of the major areas of volume of imports, price effects and consequential economic impact should anti-dumping duties be removed. This finding was however tempered by the recognition that such injury would only arise in the context of certain world market conditions. It should be noted that these findings were made prior to New Zealand’s adoption of the "sunset provisions" arising from the Uruguay Round.

The review team called for submissions on the question of injury from interested parties and examined these, together with the findings on injury in the original investigations and the previous review.

The Ministry’s review is intended to determine whether the removal of the existing anti-dumping duties would be likely to bring about the continuation or recurrence of material injury to the New Zealand industry due to dumped imports of the subject goods.

As noted earlier in this report, no dumped imports of refined sugar from any of the subject countries, are known to have occurred during the period under review, nor in several cases the period subject to the 1993 review. The focus of the present review is therefore on the likelihood of dumped imports of the subject goods and on the recurrence of material injury arising from such imports.

4.2 INJURY FOR THE PURPOSES OF A REVIEW

Section 8 of the Act 1966 deals with injury to industry and states:

(1) In determining for the purposes of this Act whether or not any material injury to an industry has been or is being caused or is threatened or whether or not the establishment of an industry has been or is being materially retarded by means of the dumping of subsidisation of goods imported or intended to be imported into New Zealand from another country, the Secretary shall examine--

(a) The volume of imports of the dumped or subsidised goods; and

(b) The effect of the dumped or subsidised goods on prices in New Zealand for like goods; and

(c) The consequent impact of the dumped or subsidised goods on the relevant New Zealand industry.

(2) Without limiting the generality of subsection (1) of this section, and without limiting the matters that the Secretary may consider, the Secretary shall have regard to the following matters:

(a) The extent to which there has been or is likely to be a significant increase in the volume of imports of dumped or subsidised goods either in absolute terms or in relation to production or consumption in New Zealand:

(b) The extent to which the prices of the dumped or subsidised goods represent significant price undercutting in relation to prices in New Zealand (at the relevant level of trade) for like goods of New Zealand producers:

(c) The extent to which the effect of the dumped or subsidised goods is or is likely significantly to depress prices for like goods of New Zealand producers or significantly to prevent price increases for those goods that otherwise would have been likely to have occurred:

(d) The economic impact of the dumped or subsidised goods on the industry, including—

(i) Actual and potential decline in output, sales, market share, profits, productivity, return on investments, and utilisation of production capacity; and

(ii) Factors affecting domestic prices; and

(iii) The magnitude of the margin of dumping; and

(iv) Actual and potential effects on cash flow, inventories, employment, wages, growth, ability to raise capital, and investments

The Ministry interprets these provisions to mean that injury is to be considered in the context of the impact on the industry arising from the volume of the dumped goods and their effect on prices. This is consistent with Article 3 of the Agreement.

Section 13 of the Act provides:

... the Minister shall make a final determination as to whether or not, in relation to the importation or intended importation of goods into New Zealand,—

(a) The goods are being dumped or subsidised; and

(b) By reason thereof material injury to an industry has been or is being caused or is threatened or the establishment of an industry has been or is being materially retarded.

This means that any material injury found must be caused by reason of the dumping of goods.

Section 11(1) of the Act provides for the termination of an investigation where the Minister is satisfied in respect of some or all of the goods under investigation, that there is insufficient evidence that material injury to a New Zealand industry has been or is being caused or is threatened by means of the dumping of the goods.

Threat of Injury

In considering injury in the context of a review, account must be taken of the fact that the intention of the imposition of anti-dumping duties is to remove the injury resulting from the dumping of goods. Thus, the investigation of injury looks at the situation that could be expected to apply in the absence of the application of anti-dumping duties. This necessarily results in considering the threat of injury. Article 3.7 of the Agreement states in part:

A determination of threat of injury shall be based on facts and not merely on allegation, conjecture or remote possibility. The change in circumstances which would create a situation in which the dumping would cause injury must be clearly foreseen and imminent10

10 One example, though not an exclusive one, is that there is convincing reason to believe that there will be, in the near future, substantially increased importation of the product at dumped prices.

The present review is for the most part being undertaken due to the application of section 14(9) of the Act and the effect of the additional clarification provided by Article 11.3 of the Agreement. It is therefore differentiated from the previous review in so far as Article 11.3 infers a necessity to clearly demonstrate that, "… the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury" [emphasis added]. Some guidance regarding the interpretation of the phrase "would be likely" has been provided by the New Zealand Court of Appeal which interpreted the phrase to mean "a real and substantial risk…, a risk that might well eventuate" (Commissioner of Police Vs Ombudsman [1988] 1 NZLR 385). The Ministry considers that this adds a further dimension to the situation envisaged by Article 3.7.

In addition to the factors set out in paragraph 4.2.1 above, and in the context of Articles 3.7 and 11.3 of the Agreement, the review team also noted the additional guidelines accepted by the GATT Anti-Dumping Committee, as laid out in Article 3.7, viz.:

In making a determination regarding the existence of a threat of material injury, the authorities should consider, interalia, such factors as:

(i) a significant rate of increase of dumped imports into the domestic market indicating the likelihood of substantially increased importation;

(ii) sufficient freely disposable, or an imminent, substantial increase in, capacity of the exporter indicating the likelihood of substantially increased dumped exports to the importing Member's market, taking into account the availability of other export markets to absorb any additional exports;

(iii) whether imports are entering at prices that will have a significant depressing or suppressing effect on domestic prices, and would likely increase demand for further imports; and

(iv) inventories of the product being investigated.

No one of these factors by itself can necessarily give decisive guidance but the totality of the factors considered must lead to the conclusion that further dumped exports are imminent and that, unless protective action is taken, material injury would occur.

Where information was available on these matters they are discussed under the appropriate headings in the report.

In its response to the Interim Report, NZSC commented on the above paragraph, stating;

"This is a very important paragraph. Parts (ii), (iii), and (iv) are already proven and accepted in the case of European origins – there is a big surplus and large inventories (or continuing production), available at dumped prices."

This is only partially correct. In paragraph 4.3.7.4 of the Interim Report, the Ministry has accepted that refined sugars are available for export from all of the subject countries of origin. By inference the Ministry has accepted that those sources do have inventories of the product being investigated (Article 3.7 (iv) above) and that exporters within those countries of origin had sufficient freely disposable capacity (in part, Article 3.7 (ii) above). The Ministry does not accept that the availability of product and the existence of disposable capacity in and of themselves indicate a likelihood of substantially increased dumped exports to New Zealand.

The Interim Report also concluded at paragraph 3.5.7 "if imports were made, it is likely they would be at dumped prices". This does not constitute an acceptance that Article 3.7 (iii) above has been satisfied. In fact, the basis of the interim conclusions reached is that there have not been any significant imports of refined sugar from the subject countries of origin for a considerable period of time. Article 3.7 (iii) above clearly refers to the likelihood of increased demand arising from existing imports and as such cannot be applied in the present review.

NZSC continues;

"Only item (i) is at issue. Import _____________________________ _____________________________; the history of 1988 showed that sugar trade flows from Europe to New Zealand increased rapidly and significantly. The "null hypothesis" should be that the same will occur rather than it will not; we see no evidence produced by the Ministry or others that it will not occur"

The review team has some difficulty relating the circumstances that existed in 1988 in the New Zealand sugar market to those existing today and notes that the test to be applied is a positive one, i.e. whether material injury caused by dumping is likely to recur in the absence of anti-dumping duties, the continuation of an anti-dumping remedy cannot be recommended on the basis that the Ministry is not satisfied that these events will not occur (i.e. a negative test).

NZSC also notes that the Ministry has not analysed the position or likely response of EU and Thai export traders in reaching its interim conclusions. As noted elsewhere in this Report no responses were received from the exporters and or traders contacted.

Further comment regarding the likelihood of imports in the absence of the existing anti-dumping duties is made below.

In section 3.5 of the Interim Report the Ministry outlined its approach in respect of those countries of origin from which import levels over at least the period under review have been insignificant to a point well below that of negligibility in terms of Article 5.8 of the Agreement and section 11(1) of the Act. In doing so, the Ministry referred to the conclusions reached by the ACS in a recently completed Continuation Inquiry where similar circumstances existed. (Australian Customs Service, 1999)

In that case the ACS noted;

"The absence of VCP [the specific Brazilian exporter which had brought about the existing anti-dumping duty] from the … market for virtually three years has made it difficult for Customs to identify an imminent and foreseeable threat of dumping from this supplier"

and concluded;

"Accordingly, on the basis of the available evidence, Customs is not satisfied that the expiration of the anti-dumping measures against VCP [and therefore Brazil] would lead to a recurrence of exports of A4 copy paper at dumped prices."

The ACS further notes, in reaching this conclusion that, "while it is always possible for an exporter to sell at dumped prices at some time in the future, the issue to be addressed by Customs is whether that dumping circumstance would probably arise in the imminent and foreseeable future."

The Ministry is of the opinion that the circumstances in the present review are even more clear-cut in respect of the absence of imports, let alone dumped imports of the subject goods into the New Zealand market. The Ministry does not dispute the possibility that dumped imports may at some time in the future enter the New Zealand market but must be constrained by the requirements of Article 3.7 of the Agreement which requires that such imports must be clearly foreseen and imminent.

4.3 IMPORT VOLUMES

Section 8(2)(a) of the Act provides that the Secretary shall have regard to the extent to which there has been or is likely to be a significant increase in the volume of imports of dumped or subsidised goods either in absolute terms or in relation to production or consumption in New Zealand.

In determining whether or not any material injury to an industry is threatened by means of the dumping of goods imported or intended to be imported into New Zealand, the Minister is required to examine, inter alia, the volume of dumped imports and to have regard, inter alia, to the extent to which there has been or is likely to be a significant increase in the volume of dumped imports, either in absolute terms or in relation to production or consumption in New Zealand. In the context of this review, dumped goods (from the countries cited) are not present in the market therefore the investigation must consider the likelihood of such imports causing injury if they recommenced.

Imports of refined sugar over the review period are shown in the table below. Once again, the figures recorded in Table 4.1 below differ from those shown in the equivalent table of the Interim Report. The amendments made are as outlined in respect of Table 2.1 in section 2.3 above.

Table 4.1: Imports of Goods Under Review
(Calendar Years, Tonnes)
	1993	1994	1995	1996	1997	1998
Imports from
- Belgium	-	-	-	-	-	-
- Denmark	-	-	-	-	-	-
- Germany	0	0	0	0	0	0
- Netherlands	1	3	8	1	0	0
- Thailand	1,180	750	2	4	5	0
GUR	1,181	754	10	4	5	1
- Other Sources	22,439	36,979	31,933	67,199	48,679	13,332
Domestic Production		Increase	Decreasing			Increase
Total NZ Market		Increase	Decrease	Increase	Decrease	Increase
GUR as % of:
- NZ Production		Decrease	Decrease	Decrease	Increase	Decrease
- Total Market		Decrease	Decrease	Decrease	Increase	Decrease

The above analysis shows that during the review period there have not been significant imports from any of the countries under review. The analysis also shows that those imports that have occurred have been decreasing in both relative and absolute terms. These conclusions are unaffected in relation to those in the Interim Report by the alterations made to the figures used.

When considering the threat of material injury in respect of imports the review has been hampered by a lack of information from importers and suppliers. The review team also noted, and has discussed with NZSC, its position that because of the circumstances applying to the refined sugar industry in the European Union, threat of injury from imports originating in Belgium, Denmark, Germany and the Netherlands should be examined predominantly on the basis of the threat posed by the EU as a whole. On this latter point, a note of caution was contained in the brief comments provided by the European Commission.

Approach in Respect of the European Union

In its application for the review and continuation of anti-dumping duties NZSC stated that "Because these countries are all members of the European Union and the European Commission sets sugar production volumes and prices it is appropriate to consider them as one market and one exporter". Much of the information adduced by NZSC relates to the quantities of sugar available for export from the EU generally.

During a visit to its premises by the review team NZSC provided further information on this aspect, noting that market intelligence indicated that refined sugar was a "portable commodity" within the EU and that sugar produced in one Member State could easily be transported to and exported from any other member state. NZSC cited as an example of the flexibility available to EU exporters the manner in which supply of refined sugar to New Zealand was "switched" to other EU Member States following the application of anti-dumping duties to exports originating in Germany in 1988.

The Ministry notes that it is the country of origin or production that determines anti-dumping liability not the country of export and that the terms of Agreement require that anti-dumping duty be applied on a country by country basis.

NZSC has commented in its response to the Interim Report;

"We can understand the Ministry choosing to deal with European countries on a separate basis, for the purposes of calculating individual dumping duties. In practice though, the market operates as a separate entity under the provisions of the Common Agriculture Policy and all export restitution’s are managed as if it were one entity.

Reality and practice become somewhat at odds with the WTO rules which require dumping to be found against individual countries."

In respect of the threat of injury which might be posed by dumped imports of subject goods the review team recalls its interim conclusion at paragraph 3.5.7 above that if imports were made, it is likely that they would be at dumped prices. The Ministry must now consider available evidence in relation to whether such dumped imports are imminent.

Overall, the Ministry does not consider that an examination of the likelihood of injury arising through dumping by individual member states of the EU in the absence of anti-dumping duties on the basis outlined by NZSC is appropriate and has considered this aspect country by country.

Likelihood of Imports

NZSC has submitted that the primary reason for the lack of imports from the subject European origins over the review period is the existence of the anti-dumping duty and has cited the availability for export of considerable quantities of refined sugars both within the subject countries and on the basis noted in paragraph 4.3.4 above, within the EU generally. Similar general claims of product availability in Thailand have also been made.

The review team notes that in the context of a threat of material injury, it is the potential injury arising from dumped imports, not merely the threat of imports themselves, which must be established.

The claims made by NZSC in regard to the threat of material injury rely heavily on the premise that in the absence of anti-dumping duties imports of refined sugars from the subject origins will occur. Evidence provided to support this premise primarily relates to the availability of product for export from each of the subject countries of origin and to recent levels of imports from Malaysia. In both these cases the circumstances of the imports differ significantly from those applying, at least in the short to medium term, to the countries of origin subject to the current review.

In response to the Interim Report, NZSC referred the Ministry to various other factors, raised in its review application which they felt supported the premise that in the absence of anti-dumping duties injurious imports from the cited countries would recur. Certain of these additional factors had been noted and taken into account by the review team in the Interim Report although they may not have been specifically reported on. Factors raised by NZSC are:

• The provisions of CER in respect of Australian exports;
• Whether recent importations of refined sugars from Malaysia may have been at dumped prices;
• Freight rates from Europe and Malaysia as compared to those available trans-Tasman;
• The commissioning of new refineries in countries other than those cited and the resulting redistribution of world sugar supplies;
• Responses by EU exporters to market changes in Indonesia and Singapore.

NZSC has also reiterated its comments regarding the offer to visit E D & F Man’s Singapore facility. This was previously discussed in paragraph 1.7.4 above. Where appropriate, the above factors have been commented on in the following paragraphs.

As noted earlier in this report the information provided by the applicant and otherwise available from both public sources and previous investigations has led the Ministry to accept the availability of refined sugars for export to New Zealand from the subject countries of origin.

In considering the likelihood that injurious imports would in fact be made in the absence of the existing anti-dumping duties the Ministry examined the various routes by which imports might occur and assessed the available evidence on the basis outlined in paragraph 4.2.7 above.

Direct Imports by the Industrial Sector

As indicated previously, the industrial demand in the food and beverage sector for refined sugars in New Zealand accounts for an average of 75 percent of NZSC’s annual sales. Information provided to the review team covering the period 1993 to 1998 inclusive shows that this figure fluctuated only slightly during that time (range __ to __ percent). Within the industrial sector, a large proportion is accounted for by a small number of large companies, such as Coca-Cola/Amatil, Dominion Breweries, Lion Nathan/Pepsi, Cadbury Schweppes and Nestlé. For the most part, sales to these customers are made pursuant to long term contracts to enable both refiner and end-user to maintain continuity of supply and process respectively. As noted by NZSC in its comments on the Interim Report, shorter-term contracts and spot purchases regularly supplement these long-term contracts, noting that "… _______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_________________________________." Negotiations are therefore potentially occurring at any time.

Internationally, pricing of refined sugar in industrial contracts is typically expressed as the raw sugar price plus a margin to cover refining costs and profit. Because the price is normally fixed, the refining margin is put at risk by fluctuations in raw sugar over the life of the contract (the raw white differential). According to Commerce Commission documents (New Zealand Commerce Commission, 1997) and as indicated by NZSC itself, refined sugar is sold to industrial users in one of two ways: either for a fixed price for a set quantity and time period; or on a differential basis (as outlined above) where the raw sugar price may vary over time. The Commerce Commission information indicates a preference amongst New Zealand users for the first method.

During a visit to NZSC by the review team, the question of the expiry date/s of the principal supply contracts between NZSC and the major industrial users was raised and discussed. NZSC stated that these were timed for renewal in the period ______________ through to __________. It was also noted that in order to ensure continuity of supply, negotiations for the first of the contract renewals would probably begin up to two months prior to the end of the existing contracts in ______________, i.e. some ______________ the latest completion date for this review.

Subsequent to the release of the Interim Report, NZSC has advised the Ministry that ;

"… _______________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
__________________________________________________________________
________________________________."

NZSC also notes that "… __________________________________________
_________________________________________________."

Pickford (1998) cites a number of both attributed and anecdotal comments made in various forums regarding the difficulties faced by industrial users in moving from the established supplier, NZSC. Information made available to the New Zealand Commerce Commission by the same companies, in the context of its investigation also tends to indicate that economic factors and market forces prevent to a large extent the "migration" of industrial customers to untried off-shore suppliers. NZSC’s concerns regarding the use of Pickford’s commentary have already been noted.

Noting the willingness of major New Zealand end-users to assist the review process and the provisions of Article 6.12 of the Agreement, the review team sought information regarding the action likely to be taken by, in particular, industrial sugar users, should the current anti-dumping duties be discontinued.

Section 1.3.3 above refers to submissions made to the review team by a group comprising, inter alia, most of the major companies listed in 4.3.7.5 above. It was from this group, that the review team was able to obtain specific comment regarding "the major NZSC customer likely action should anti-dumping duty be revoked."

In summary, the submissions made indicate that for mainly economic reasons the likely action by major NZSC customers will be to _____________ ___________________. A clear statement is made that ________________ _________________________________. Reasons cited by end-users ___ _______________________________________, include:

• __________________________________________;
• __________________________________________________;
• __________________________________________________;
• __________________________________________________;
• __________________________________________________;
• __________________________________________________;

Subsequent to the Interim Report a further brief submission was received from the end-user group in which comment was made regarding the _______ ______________________________. The submission also commented on the perceived limited availability of the subject goods in container lots from Thailand.

Conclusion Regarding Direct Imports by the Industrial Sector

On this basis therefore, __________________________________________ ____________________________________________________, seek to import dumped refined sugars from the countries under review.

NZSC has opined that customer comment should be seen as ____________ __________________________________. The review team has, as noted in paragraph 2.4.4 kept in mind the "commercial context" of all the submissions made. Likewise, reference to information provided and comments made in the Commerce Commission inquiry, has been made in the knowledge of their context. Such information and comment does however serve to indicate a high degree of consistency of approach by New Zealand end-users and an indication of participant behaviour.

Third Party Imports for Industrial Use

Industrial sugar is a standardised commodity. Dry sugars are delivered in bulk road tankers (24 tonnes), rail containers (11 tonnes), one tonne bags, or in pallet loads of 35 kg bags. Liquid sugars (granular sugar dissolved in water) are delivered in bulk road tankers, or like syrups in 870 litre drums. Service and product quality are important, with users depending on reliability of delivery, technical support and maintenance of quality, the last being of particular importance in the food and beverage sector.

The New Zealand market is at present served by two major suppliers, NZSC and Kerry (NZ) Ltd (Kerry), and has unencumbered access (other than any commercial arrangements, which may be contained in the joint venture agreement between NZSC and Sugar Australia), to direct supplies from Australia.

In a brief submission made in response to the Interim Report, Kerry queried certain of the comments contained in the following sub-section, stating that they were not correct. The specific items to which this comment refers were not identified, therefore no further action could be taken or comment made.

Kerry (NZ) Ltd

Kerry entered the New Zealand market shortly after deregulation in 1986 and over the period 1991-1994 became a major importer of white sugars into New Zealand. Kerry’s imports were in various bulk (35kg, 1 tonne & FCL) packs and were sourced from refineries in Singapore and Malaysia, the latter of which became subject to anti-dumping duties in 1988. Sugar imported by Kerry was either delivered direct to industrial customers in bulk or repacked for retail customers. Kerry is majority owned by a Hong-Kong based international property and commodities enterprise, the Kuok Group.

In 1994, Kerry entered into an agreement to purchase sugar from Mackay Refined Sugars (Mackay) in Australia and concentrated on supplying the retail market leaving Mackay to supply industrial users (see below). As part of the outcome of the New Zealand Commerce Commission investigation, NZSC "inherited" the residual portion of the agreement and supplied refined sugar to Kerry for part of the 1998 year after which the arrangement was terminated.

Available information indicates that imports by Kerry are at present largely sourced from Malaysia, which since November 1998, has been outside of the scope of the existing anti-dumping determination. In the current calendar year to date, Kerry has also sourced quantities of refined sugar from Singapore. Due to its links with the Kuok Group of companies, which also includes interests in a number of sugar refineries located primarily in Malaysia, and the cessation of anti-dumping duties from that source, it is considered unlikely that Kerry would in the foreseeable future import the subject goods from any of the countries subject to anti-dumping duties.

In response to the Interim Report, Kerry has stated, "Kerry would import sugar from the cheapest origin i.e. from the EEC or Thailand or any other origin because if we did not then Kerry would very soon loose (sic) its market share due to price." In a second and subsequent submission, Kerry stated, "KNZ will import from the cheapest origin, i.e. sometimes Malaysia, sometimes Europe or Thailand. KNZ expects to import sugar from Europe and Thailand, as there will be times when these origins will be cheaper than Malaysia."

The Ministry considers that whilst these comments may reflect the reality of Kerry’s commercial links within the Kuok Group, they do not materially alter the comments made in 4.3.6.23 above. In the absence of specific orders etc these comments merely indicate a possibility of imports at some time in the future. As such they do not meet the Article 3.7 test of being clearly foreseen and imminent.

A second factor, which tends to provide Kerry with a competitive advantage over any new importer, is that part of the outcome of the New Zealand Commerce Commission investigation was that Kerry was given access to NZSC’s Christchurch sugar liquefaction plant and was sold de-bagging and bulk truck loading facilities and an associated weighbridge in Auckland. The aim of these arrangements, according to Commerce Commission documents, was to allow greater imports of refined sugars, increase the choice available to major users of liquid sugar, and to give Kerry ownership of equipment it could use for handling imported sugar. The practical effect is that Kerry is in a position to supply a full range of product types to its customers.

Finally, having been consistently in the market in excess of ten years, Kerry has an established New Zealand presence, reputation and customer base, which would further tend to improve its position over any new entrant and add to factors deterring entry of other competitors to the New Zealand market.

NZSC has indicated that it does not consider that the factors outlined in 4.3.6.27 would act to deter "_______________________________________________
______________________________________________________________
__________________________________________". Noticeably, Kerry has not commented in this respect.

Comment has already been made regarding the applicability of 1988 circumstances and market patterns to the current review.

Import Patterns from Malaysia since November 1998

Over the period under review Malaysia has shared the position of most significant external supplier to the New Zealand market with Australia. When Australian levels were high Malaysian levels were low, and vice versa. During the 1995 to 1997 trans-Tasman "price war" (discussed below) Malaysian imports decreased to minimal levels but have since recovered. It has already been noted that since the cessation of anti-dumping duties on refined sugar from Malaysia the volume of imports from that source has increased markedly. NZSC has alleged that this pattern would also be followed in respect of imports from the cited European sources and from Thailand should anti-dumping duty not be present.

In the absence of more specific information from Kerry itself, paragraphs 4.3.6.25 and 4.3.6.26 above outline the review team’s understanding of the advantages enjoyed by Kerry in the current New Zealand market. It cannot be denied that the cessation of anti-dumping duties in respect of Malaysia would have had a beneficial effect on Kerry’s ability to supply its customers from that source, however it is considered that this is only one factor impacting on the increased volume of imports.

The review team has taken account of the increased volumes from Malaysia and has considered whether this might provide a reliable indicator of the likelihood of increased volumes from the sources subject to this review. It is considered that at least in the short to medium term the circumstances leading to the increase in Malaysian sourced sugar (inter alia those outlined above) do not apply, except in the case of Kerry itself, to imports from any of the sources subject to this review. Kerry’s own comments and the review team’s position are given above.

Australia

Historically, and for both economic and geographical reasons, a major external supplier (together with Malaysia, as noted in paragraph 4.3.6.30 above) of refined sugars into the New Zealand market has been Australia. Since the last review in 1993, this source has accounted for up to 97 percent of imports and __ percent of the total market. These figures reflect the height of the "price-war" that occurred in 1995 – 1997. Averages across the total period under review were 52 and __ percent respectively.

The percentages indicated in paragraph 4.3.6.33 above differ somewhat from those recorded in the Interim Report. This is due to the recalculations occasioned by the statistical alterations outlined in section 2.3.

A sugar refining overcapacity has existed for some time in Australasia and the commissioning in June 1994 of a new refinery operated by Mackay Refined Sugars (MRS) in a joint venture with ED & F Man added substantially to this.

In 1993 a proposal for an Australasian industry wide rationalisation, which retained the NZSC refinery and avoided a pending fight for market share in New Zealand was turned down by the Australian Trade Practices Commission as being anti-competitive. The New Zealand Commerce Commission had however accepted the proposal.

A trans-Tasman "price war" ensued during which each of the refiners in New Zealand and Australia sought to maximise their individual sales. Both parties paid particular attention to the major industrial customers. The intensity of the "competition" and of the environment created was demonstrated by allegations made to the Commerce Commission and to the High Court by MRS that NZSC was engaging in anti-competitive behaviour in this sector. These allegations were investigated and effectively dismissed. Mackay’s first shipments arrived in New Zealand in late 1994 by which time prices in the industrial sector had fallen to levels which placed them amongst the lowest in the world.

The price war continued throughout 1995 and 1996, during which time both NZSC and Mackay sustained heavy losses, leading eventually to Mackay’s withdrawal from the New Zealand market.

In July 1997, approval was given by the Australian Competition and Consumer Commission, which had succeeded the Trade Practices Commission, for a 50:50 joint venture between MRS and CSR in which their existing refining operations, distribution and marketing would be pooled. In part the agreement recognised that the New Zealand market could only support one refinery, and it would need to retain significant market share, MRS was therefore to acquire 50 percent of NZSC’s business, withdraw from the New Zealand market and terminate its arrangement with Kerry.

The New Zealand market has, since the establishment of the joint venture regained some measure of equilibrium with prices returning to more realistic and economically viable levels.

Aside from the joint venture partners, two other refiners, Bundaberg Sugar in Queensland and Manildra Harwood Sugars in New South Wales are active in Australia and, as reported by the New Zealand Commerce Commission, would be capable of supplying into the New Zealand market.

The comparative ease with which refined sugar could be placed into the New Zealand market from Australia was clearly demonstrated during the "price war". As noted by NZSC in its response to the Interim Report, Australia does enjoy "immunity" from anti-dumping action under the terms of CER, giving Australian refiners a degree of competitive advantage over suppliers located elsewhere. A similar advantage is provided by the relative availability of containers and return freight from New Zealand, compared to Thai and European origins. This latter aspect was commented on by the end-users themselves.

The review team also notes that refined sugar sourced from Australia would be produced from cane as opposed to beet thereby avoiding the concerns raised by some of the industrial end-users regarding residual odours.

Balanced against these factors and as was also noted by NZSC, trans-Tasman freight rates are traditionally higher than those which may be available from European and Thai ports and are therefore seen as a disincentive to imports in the quantities likely to be sought by New Zealand end-users.

On balance, the review team considers there is a greater likelihood of imports occurring from Australia than from the countries under review.

Other Origins

In both its initial request for initiation of this review and in subsequent submissions following the release of the Interim Report, NZSC has discussed the commissioning of a number of new refineries in what it considers the same geographical region as New Zealand. This aspect was also addressed and reported on by the Commerce Commission in its investigation. Refineries have been built and commissioned or are about to be commissioned in: (Commissioning year in brackets)

• Jeddah, nominal capacity 500,000 tonnes per annum, (1997);
• Dubai, nominal capacity 700,000 tonnes per annum, (1995);
• Indonesia, (Sulawesi), nominal capacity 360,000 tonnes per annum, (1998);
• Indonesia (Serang, East Java), nominal capacity 150,000 tonnes per annum, (1999).

Any one of these refineries (other than that in East Java, Indonesia) has the capacity to supply the entire New Zealand market at least twice over.

NZSC has stated that the effect of the commissioning of refineries in Jeddah and Dubai in particular have had the effect of displacing EU sourced refined sugar from "traditional" markets in Saudi Arabia and the Middle East. As a consequence of this displacement, NZSC argues that the refined sugar previously sold into those markets is finding its way increasingly into the Far Eastern region, which includes New Zealand.

Figures showing increasing EU exports to various "Far Eastern" destinations have been provided in support of NZSC’s claims regarding the "speed with which EU sugar traders can respond to changes in market circumstances". NZSC infers that the removal of anti-dumping duties in New Zealand would constitute a "change in market circumstances" such that EU traders would respond.

The review team notes that the commentary and majority of the figures provided by NZSC relate once again to total EU exports rather than those Member States under review. In several cases, these gross figures show considerable increases in exports apparently in the face of increased domestic/regional refining capacity. Figures provided, which relate specifically to exports from the countries under review, in most cases show an overall decrease in export tonnages to all sources and a pattern of increased exports to many Middle Eastern destinations. This tends to detract from NZSC’s claims.

Although no claim has been made by any of the parties to the review, it seems reasonable to the review team that the increased refining capacity now available in our own geographical region as compared to the period covered by the previous review provides a greater degree of choice should New Zealand users wish to import refined sugars.

Conclusion Regarding Third Party Imports for Industrial Use

From the information and evidence available to the review team, it appears highly unlikely that in the foreseeable future the industrial sector of the New Zealand sugar market will be supplied, through any known third party, with refined sugars from any of the source countries subject to the current review.

Retail Sector

Around 25 percent of New Zealand demand is through the retail sector, serviced in the main by the major supermarket groups. The same group of suppliers discussed above serves this sector and most of the same barriers to new entrants that exist in the industrial sector are present in the retail sector.

The Ministry has undertaken a number of investigations (New Zealand Ministry of Commerce, various reports) into goods falling within the consumer range and is aware of the dynamics of this market as well as the competitive pressures present in that sector. Taking these factors together with those common to the industrial sector, the review team is satisfied that the likelihood of imports directly into the retail sector from the subject countries of origin, although arguably greater than in the industrial sector, is low. Comments reported by the Commerce Commission to have been made during its investigation support this view.

NZSC has indicated its disagreement with the conclusions reached by the review team in respect of the retail sector, stating;

"__________________________________________________________________
___________________________________________________________________
___________________________________________________________________
_____________________________________________."

Although NZSC has offered no evidence to support its comment, the review team has re-examined the files relevant to its previous investigations into products in the retail/consumer sectors and in particular the submissions made in those cases by the larger New Zealand retailers regarding the price sensitivity of this sector, the growth in "house-brands" and the degree of competition present. This re-examination has not caused the review team to alter its interim conclusions in this area.

Conclusion Regarding the Likelihood of Imports

Based on the information available to the review team and summarised above, it is considered that there is no clearly foreseen and imminent likelihood of imports of refined sugars being made from the countries of origin subject to this review.

4.4 PRICE EFFECTS

As noted in paragraph 4.2.2 above, the Ministry considers that it must be clearly shown that material injury or threat thereof is due to the volume of imports of dumped goods, their effect on prices and consequent economic impact.

Having concluded that the likelihood of dumped imports from the countries under review is neither clearly foreseen nor imminent, it follows that the review team does not consider that any threat of injurious price effects can arise from such imports.

4.5 ECONOMIC IMPACT

Section 8(2)(d) of the Act provides that the Secretary shall have regard to the economic impact of the dumped or subsidised goods on the industry, including—

(i) Actual and potential decline in output, sales, market share, profits, productivity, return on investments, and utilisation of production capacity; and

(ii) Factors affecting domestic prices; and

(iii) The magnitude of the margin of dumping; and

(iv) Actual and potential effects on cash flow, inventories, employment, wages, growth, ability to raise capital, and investments.

In the absence of the likelihood of either adverse volume effects or resultant price effects the review team considers that no threat of material injury based on the economic impact factors can be attributed to dumped imports of the type under review.

4.6 OTHER CAUSES OF INJURY

Sections 8(2)(e) and (f) of the Act provide that the Secretary shall have regard to factors other than the dumped goods which have injured, or are injuring, the industry, including—

(i) The volume and prices of goods that are not sold at dumped prices; and

(ii) Contraction in demand or changes in the patterns of consumption; and

(iii) Restrictive trade practices of, and competition between, overseas and New Zealand producers; and

(iv) Developments in technology; and

(v) Export performance and productivity of the New Zealand producers; and

the nature and extent of importations of dumped or subsidised goods by NewZealand producers of like goods, including the value, quantity, frequency and purpose of any such importations.

Having concluded that a threat of material injury is neither clearly foreseen nor imminent it is not necessary to address the issues raised by sections 8(2) (e) and (f)

4.7 CONCLUSIONS RELATING TO INJURY

Based on the information provided by the applicant, by other interested parties, and otherwise available to the review team, it is concluded that the threat of material injury to the New Zealand industry producing refined sugar arising from imports of dumped refined sugars from Belgium, Denmark, Germany, the Netherlands and Thailand in the absence of anti-dumping duties is neither clearly foreseen nor imminent.

Therefore, the review team concludes that the removal of the existing anti-dumping duties is not likely to cause or bring about a recurrence of material injury.

5. CONCLUSIONS

On the basis of the information available, it is concluded that:

(a) The likelihood of injurious imports in the absence of anti-dumping duties is neither clearly foreseen nor imminent, and no threat of material injury to an industry has been found; and

(b) expiry of the current anti-dumping duty would be unlikely to lead to the recurrence of dumping or injury.

6. TERMINATION OF ANTI-DUMPING DUTIES

The provision of the Act relating to the termination of anti-dumping duties is section 14(7), which is set out below:

(7) The Minister may, by notice, terminate, in whole or in part, the imposition of any anti-dumping or countervailing duty imposed under this section, with effect from the date specified in the notice, which date may be prior to the date of the notice

Basis for Termination

The review team has concluded that the expiry of the current anti-dumping duty would be unlikely to lead to the recurrence of dumping or injury.

Article 11.1 of the Agreement states that:

An anti-dumping duty shall remain in force only as long and to the extent necessary to counteract dumping which is causing injury.

While section 14(9) of the Act states:

Anti-dumping duty or countervailing duty applying to any goods shall cease to be payable on those goods from the date that is five years after –

(a) The date of the final determination made under section 13 of this Act in relation to those goods; or

(b) The date of notice of any reassessment of duty given under subsection (6) of this section, following a review carried out under subsection (8) of this section –

Whichever is the later, unless, at that date, the goods are subject to review under subsection (8) of this section.

In the absence of the current review, anti-dumping duties on refined sugar from Belgium, Denmark, Germany, the Netherlands and Thailand would have ceased to apply as from 3 November 1998.

Impact of Termination of Anti-dumping Duties

During the period 1 January 1998 to 28 February 1999 no anti-dumping duty was collected on refined sugar from any of the countries of origin subject to this review. It is understood that this has been the case since the completion of the last review in 1993.

As noted in paragraph 4.3.3 above, there have been no significant imports of refined sugar from the subject countries of origin over the review period. In respect of several of the countries concerned, no significant imports have occurred over the majority of the time during which anti-dumping duties have been in place.

The review team has examined the likelihood of injurious imports of refined sugar from Belgium, Denmark, Germany, the Netherlands and Thailand and has concluded that there is no clearly foreseen and imminent threat of such imports occurring.

Should dumped imports of refined sugar from the subject countries of origin, or from the wider European Union recur following the removal of anti-dumping duties, the provisions of section 17 of the Act would allow for consideration of the retrospective imposition of anti-dumping duties in the event that a new investigation were initiated following receipt of a properly documented application by the New Zealand industry.

Such duties may be applied in the circumstances specified in the Act, to imports made up to 60 days prior to the imposition of provisional duties. The provisions of section 17 were applied, and retrospective duties imposed in the case of the original (1989) investigation into the dumping of refined sugar from Belgium, Denmark and the Netherlands.

7. RECOMMENDATIONS

It is recommended:

1. That the Secretary complete the review by agreeing that:

• The expiry of the current anti-dumping duty on refined sugar from Belgium, Denmark, Germany, the Netherlands and Thailand would be unlikely to lead to the recurrence of dumping or injury.

2. That the Secretary recommend that the Minister for Enterprise and Commerce:

• Terminate anti-dumping duties imposed with respect of refined sugar from Belgium, Denmark, Germany, the Netherlands and Thailand with effect from 3 November 1998; and
  
• Sign the attached Gazette Notice giving notice of the termination of anti-dumping duties to interested parties in accordance with sections 9 and 14(7) of the Act.

Bibliography

Australian Customs Service, Trade Measures Report No. 3: Continuation Inquiry: A4 Copy Paper Exported From Brazil, Germany and South Africa, 15 January 1999

New Zealand Commerce Commission: Proposed Business Acquisition: Mackay Refined Sugars Pty. Ltd./New Zealand Sugar Company Ltd, Investigation Report, 1997a

New Zealand Commerce Commission: Proposed Business Acquisition: Mackay Refined Sugars Pty. Ltd./New Zealand Sugar Company Ltd, Report to Commission Members on Investigation, 1997b

New Zealand Ministry of Commerce: Final Report on Subsidy Investigation, Sweetened Condensed Milk From Thailand, 1994

New Zealand Ministry of Commerce: Final Report on Dumping Investigation, Sweetened Condensed Milk From Thailand, 1994

New Zealand Ministry of Commerce: Final Report on Subsidy Investigation, Baked Beans in Tomato Sauce from Italy, 1996

New Zealand Ministry of Commerce: Final Report on Subsidy Investigation, Spaghetti in Tomato Sauce from Italy, 1996

New Zealand Ministry of Commerce: Final Report on Dumping Investigation, Canned Peaches from South Africa, 1996

New Zealand Ministry of Commerce: Final Report on Subsidy Investigation, Canned Peaches from South Africa, 1997

New Zealand Ministry of Commerce: Final Report on Dumping Investigation, Canned Apricots from South Africa, 1997

New Zealand Ministry of Commerce: Final Report on Subsidy Investigation, Canned Apricots from South Africa, 1997

New Zealand Ministry of Commerce: Final Report on Subsidy Investigation, Canned Peaches from the European Union, 1998

Pickford, Michael: "Sugar Refining" in The Structure and Dynamics of New Zealand Industries, 149-82, Edited by Michael Pickford and Alan Bollard, Palmerston North, The Dunmore Press, 1998

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