Safeguards Law and Practice in New Zealand
[ Last Updated 31 January 2006 ]
NOTE: This document is an extract from a review report/discussion document released in February 1998. The tables below were last updated on 31 December 2000.
Contents
History
Prior to the passage of the Temporary Safeguard Authorities Act in 1987, safeguard action was taken under the Industries Development Commission Act 1961, and more specifically, by the Emergency Protection Authority (EPA), established under that Act.
If a domestic industry considered that it was suffering damage from an increase in imports it could put a case for the restriction or other restraint on imports to the EPA. If the EPA decided that emergency action was appropriate, there was an automatic reference to the Industries Development Commission (IDC), which would then make recommendations on appropriate longer term industry assistance measures.
In light of the completion of industry-specific development plans, the removal of import licensing and the reduction of normal tariff levels, which largely removed the role of the IDC, it was not considered necessary to maintain it. The Temporary Safeguard Authorities established under the Temporary Safeguard Authorities Act were intended in many respects to operate in much the same way as the EPA, but with additional definitions of industry, like goods, and injury, which were closely aligned with the GATT Anti-Dumping Code. In addition, if the Minister decided to take action as a result of TSA recommendations, this decision would be final and would not be referred to the IDC after 12 months.
Following the negotiation of an Agreement on Safeguards (SG Agreement) in the Uruguay Round, it became necessary to amend the Temporary Safeguard Authorities Act to reflect the obligations of the new Agreement. In particular, it was necessary to reflect the SG Agreement requirements for "serious injury" and to permit safeguard action on behalf of industries producing "like or directly competitive goods". Also, the Act was amended to ensure that the SG Agreement requirements regarding the duration and conditions of any safeguard action were met.
It should be noted that, unlike anti-dumping and countervailing duties which are imposed on individual exporters or countries, safeguard action can normally be taken only on an MFN basis, and deals with the consequences of increased imports, not their cause.
Safeguard Actions
Since the passage of the Temporary Safeguard Authorities Act in 1987, only four applications for such action have been referred to a TSA. Two other applications, one for safeguard action under SPARTECA, were declined or withdrawn. The inquiries undertaken by a TSA have included footwear, in 1989, when the TSA recommended a range of actions but the Minister's decision was that the issues should be dealt with in the context of the general review of industry assistance for the footwear industry; men's and boys' underpants, in 1992, when the Authority's recommendation for a temporary duty was accepted; and used tyres, in 1993 and abrasive discs in 1995, when the Authority's recommendations that no action be taken were also accepted.
Safeguard Practice in New Zealand
The Temporary Safeguard Authorities Act 1987 (TSA Act) provides for the appointment of Temporary Safeguard Authorities to inquire into references made to an Authority by the Minister of Commerce.
The Minister may request an Authority to undertake an inquiry in relation to the importation of goods when it appears to the Minister that the importation of goods has caused or may cause serious injury to an industry. An Authority is required to report on whether the industry has suffered or is likely to suffer serious injury as a result of the importation of the goods, and if so, whether urgent action is necessary to protect the industry and the nature of the protection considered appropriate. The request to the Authority, and any statement of Government policy transmitted to the Authority, are required to be published in the New Zealand Gazette.
The TSA Act defines serious injury as "… significant overall impairment to the economic viability of a domestic industry". An industry is defined in terms of New Zealand producers of like or directly competitive goods, with "directly competitive goods" being "… goods that, as a matter of fact and commercial common sense, are substitutable for imported goods".
In carrying out its inquiry, an Authority is required to call for submissions from interested parties. Provisions regarding the confidentiality of information are similar to those in the Dumping and Countervailing Duties Act. An Authority has 30 working days in which to report to the Minister.
In determining whether an industry is being injured, an Authority is required to evaluate the rate and amount of increase in imports in terms of both volume and value, in absolute and relative terms; the economic impact of the increased importation including actual or potential declines in output, sales, market share, profits, productivity, employment and utilisation of production capacity; factors other than imports which may be injuring the industry; and the nature and extent of imports by New Zealand producers.
An Authority may report to the Minister that urgent action is required only if it is satisfied that the imports are causing or threatening serious injury; that serious injury is not attributable to other causes; and that it is not practicable for the industry to reduce the injury by other adjustment measures.
An Authority may recommend safeguard measures if such measures are compatible with New Zealand's obligations as a party to the WTO Agreement, including the imposition or variation of any duty, the restriction of imports, or any other action considered appropriate. The reference to WTO obligations is intended to cover the SG Agreement's provisions relating to the duration and conditions for safeguard action, including general application, degressivity and limitations on repeat action.
Following receipt of a recommendation from an Authority, it is up to the Minister of Commerce to determine what action, if any, shall be taken, i.e. an Authority's recommendations are not binding. Where the Minister does decide to take action, then it is implemented through the appropriate instrument, which in the case of a change in the rate or amount of a duty, will be through an Order in Council under section 9 of the Tariff Act 1988. Thus, a safeguard measure is currently not a temporary supplementary measure, unlike anti-dumping or countervailing duties, but is a change in the substantive level of protection. This would appear to be inconsistent with the view that a safeguard measure is a temporary and emergency action.
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