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NOTE: This document is an extract from a review report/discussion document released in February 1998. The tables below were last updated 31 December 2000.

Contents

• History
• Countervailing Duty Actions
• Countervailing Duty Practice in New Zealand
  • Definitions
  • Subsidies
  • Actions

History

New Zealand's countervailing duty law has generally followed the same track as anti-dumping law, and the Dumping and Countervailing Duties Act 1988 and its predecessors applied to subsidised goods. There are some differences, for example, countervailing duty action can still be taken on trans-Tasman trade. It is also noteworthy that New Zealand joined the GATT Subsidies Code several years before joining the Anti-Dumping Code, reflecting its concerns over subsidisation per se rather than with the response of countervailing duties.

In 1994, the Dumping and Countervailing Duties Act was further amended to take into account the WTO Agreement on Subsidies and Countervailing Measures (the SCM Agreement).

Countervailing Duty Actions

New Zealand has conducted few countervailing duty investigations, as shown by the table below. This reflects international experience, since apart from the United States few other countries have any significant number of countervailing duties in force. During the period 1982-2000 six actions have been taken, two of which involved acceptance of undertakings.

Countervailing Duty Investigations by New Zealand 1982-2000: Number of Investigations

The goods involved in investigations have been limited to transport equipment and foodstuffs. In two cases involving tugs and catamarans, the action related to the purchase of a piece of capital equipment.

The table below shows that Australia and EU countries have been the main targets of investigations.

Countervailing Duty Investigations by New Zealand, 1982-1998

As at 31 December 2000, countervailing duties applied to canned spaghetti from Italy and canned peaches from the EU.

Countervailing Duty Practice in New Zealand

The provisions of the Dumping and Countervailing Duties Act relating to processes and injury apply equally to dumping and subsidy investigations, with some additional notification and consultation requirements in subsidy cases, as required by Article 13 of the WTO SCM Agreement.

Definitions

The 1994 amendments to the Act introduced a number of new or revised definitions relating to subsidies. These included definitions of "foreign government", which includes sub-national authorities as well as bodies exercising authority for an association of foreign countries; and "specific subsidy", which reflects the definition found in Article 2 of the SCM Agreement.

Subsidies

The determination of whether there is a subsidy and the amount of the subsidy is made on the basis of the SCM Agreement and section 7 of the Act. Information is required on the existence, amount and nature of the subsidy. This information permits the Ministry to identify the subsidy programme concerned, to determine if there is a financial contribution by a government, and to gauge the extent to which it provides a benefit to the exported product.

In investigating subsidies, information is sought from the government concerned as well as from exporters.

Actions

Countervailing duties may not exceed the amount of subsidy on the goods, and as in the case of dumping a lesser duty rule applies, the Minister is required to have regard to the desirability of ensuring that the amount of countervailing duty is not greater than is necessary to remedy the material injury.

In applying a countervailing duty, the Minister must ensure that the products concerned are not subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidisation (Article VI:4 of GATT 1994). The New Zealand Court of Appeal has interpreted this to mean that no anti-dumping duty can be applied to deal with a situation of export subsidisation, which means that the price differentiation impact of an export subsidy must not be attributed to dumping when considering injury in a dumping case, and vice versa.

The SCM Agreement sets out the conditions under which certain subsidies are non-actionable. In addition to non-specific subsidies, certain subsidies relating to regional development, research and development and adaptation to environmental regulations, are non-actionable when the conditions laid down in the SCM Agreement are met. The Act does not reiterate these conditions, but section 14(3) provides that no countervailing duty may be imposed if to do so would be inconsistent with New Zealand's obligations as a party to the WTO Agreement. This provision would also apply in cases where certain agricultural subsidies are non-actionable under the WTO Agreement on Agriculture.

Provisions for termination are similar to those for anti-dumping, but with the addition of the requirement in section 11(1)(c) that there should be termination where the imposition of a countervailing duty would be inconsistent with New Zealand's obligations as a party to the WTO Agreement, and the requirements of section 11(2)(c) relating to negligible imports. This covers the situation where termination is required under the Agreement if the amount of subsidy is less than one percent of the value of the goods, or less than two percent for goods from developing countries, or less than three percent for goods from least-developed countries.