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Trade dumping bill could hurt NZ industries

The Commerce Select Committee is currently hearing submissions on the Trade (Anti-dumping and Countervailing Duties) Amendment Bill.

This bill worries me. I flagged some major concerns during its first reading.

I am now reading submissions from NZ Steel, Horticulture NZ, Business NZ, the Employers and Manufacturers Association, the Food and Grocery Council, and many others – nearly all also expressing alarm or concern at this bill.

What’s the concern?

“Dumping” is where a product floods into a market at below cost price, undermining local producers. An example is ultra-cheap imported tinned peaches undercutting our local fruit growers.

Basically, the Bill makes it easier for dumped and subsidised products to be imported into New Zealand, under the guise of an additional ‘public interest’ test.

This extra test is simply not needed. New Zealand already has one of the most liberal markets in the world. Australia recently considered a similar “public interest test” and decided against it. New Zealand should reject it too.

Currently, anti-dumping and countervailing duties are one of the very few protections New Zealand industries have from being undermined by dumped or subsided goods imported into New Zealand.

It’s important to note that this isn’t about other countries who can legitimately provide a product cheaper than we can in New Zealand. It can only be applied to imported products that can be shown to be subsidised or sold below cost price. Dumping is a highly anti-competitive practice, recognised as such by the World Trade Organisation.

We know from international experience that the practice of dumping very low-priced goods onto local markets can have highly damaging long-term consequences for local economies. People might save a few dollars at the supermarket, but local industries can be forced to cut jobs or close completely, which has significant flow-on effects to our communities and wider economy.

Once we have lost manufacturing expertise in a particular area it is often very difficult to re-establish that at a later date when the particular product that had been dumped is no longer available at rock-bottom prices. The same is true for industries that require significant capital investment upfront.

What dumping means for NZ industries

To take one example, the peach industry in Hawke’s Bay currently contributes $15 million to the region’s economy and employs thousands of people. At the moment, because there is a duty on most imported peaches, they cannot be dumped here, so there is a more level playing field.

But if those peaches were allowed, in the consumer interest of enabling consumers to have extremely cheap peaches (as was argued by Foodstuffs NZ in their verbal submission to the committee last week), then that could destroy the peach-growing industry in Hawke’s Bay.

Hawke’s Bay growers could end up pulling out their trees if we see mass imports of canned peaches from Greece and Spain at ultra-low prices. If dirt cheap imports then dry up, it would take significant time and investment to re-establish local orchards.

It is not just the peach industry that is at risk. NZ Steel was very blunt in its submission to the committee last week, asking pointedly: “do you want a steel industry in New Zealand?” They were very clear that the Bill increases New Zealand’s exposure and vulnerability to dumped steel.  Other industries made similar points.

Why on earth would we put all of that at risk for short-term consumer interest?

This isn’t about being pro or anti-trade. It’s about making sure there’s a more level playing field. It’s not right to expect our local industries to compete against imported products that are only cheap because they are subsidised by their governments or that are being sold here below cost.

I am proud that the Green Party was the only party to vote against the Bill in the first reading. I hope that other parties will take on board the points made by submitters and reconsider their vote at the second reading.