New Zealand Legislation: Bills
Bills are proposed Acts
This Bill implements a new safeguards regime for New Zealand.
Safeguards are emergency measures applied at the border, usually in the form of a duty, which may be taken to provide temporary protection to a domestic industry from injury caused by a surge in imported goods resulting from unforeseen developments. Safeguards are provided for under the General Agreement on Tariffs and Trade (GATT) and the World Trade Organisation (WTO) Agreement on Safeguards and are intended to facilitate adjustment by a domestic industry to increased imports.
This Bill repeals the Temporary Safeguard Authorities Act 1987, which embodies New Zealand’s current safeguards regime, and replaces it with a new regime designed to ensure that it is consistent with WTO rules and to promote efficient, transparent, and objective investigative and decision-making processes.
The Bill includes matters that must be considered when determining whether the application of a safeguard measure is in the public interest. This inclusion is aimed at promoting certainty and transparency. The Bill provides that safeguard investigations be undertaken by the Ministry of Economic Development rather than by independent Temporary Safeguard Authorities, to allow the expertise of the Ministry to be fully utilised in the undertaking of investigations and align the conduct of safeguard investigations with those for other trade remedy investigations into dumped or subsidised imports. The Bill extends the time frame for completing such investigations to ensure a WTO-compliant investigation can be undertaken.
Where a safeguard measure is warranted, the Bill provides for the responsible Minister to impose a final and provisional safeguard duty or to recommend that other measures be taken. To comply with WTO rules, the Bill also authorises the Minister of Commerce to extend, liberalise, and terminate a safeguard duty following a review.
Clause 1 is the Title clause.
Clause 2 provides for the commencement of the Bill. It comes into force on the day after it receives the Royal assent.
Clause 3 states the Bill's purpose. This is to enable New Zealand to apply safeguard measures at its border in accordance with the agreement establishing the World Trade Organization adopted at Marrakesh on 15 April 1994.
Clause 4 provides for the definition of terms used in the Bill. Key terms are: directly competitive goods, domestic industry, increased imports, like goods, serious injury, and threat of serious injury.
Clause 5 provides that the Bill will bind the Crown.
Clause 6 sets out how decisions under the Bill must be notified. This involves giving notice in the Gazette that the decision has been made and where a copy of the decision is or will be available for inspection. As well as notifying a decision in the Gazette, a copy of the decision must be available for inspection at the head office of the Ministry of Economic Development (or any other Ministry for the time being responsible for the administration of the Bill) and on the Internet.
The Government considers that the separate notification procedures required in the Bill, including for the decisions that are legislative in nature, are more appropriate in the circumstances than publication in the Statutory Regulations series.
Clause 7 is concerned with how a safeguard investigation is initiated. An investigation may be initiated at the Minister's discretion or after an application. The Minister may initiate an investigation by the chief executive into increased imports if the Minister is satisfied that there are reasonable grounds for an investigation into whether increased imports are causing serious injury (defined as a significant overall impairment in the position of a domestic industry) or a threat of serious injury (defined as a serious injury that is clearly imminent).
Clause 8 is concerned with applications for a safeguard investigation. These may be made by any person, and must include the requisite information.
Clause 9 relates to the chief executive's obligation to seek submissions relating to a safeguard investigation from interested persons (subclause (1)). The clause is also concerned with the chief executive's ability, at any time during a safeguard investigation, to require an application or submission or any other information relating to the safeguard investigation to be supported by a statutory declaration. Finally, the clause entitles the chief executive to disregard any information relating to a safeguard investigation that he or she considers to be unreliable.
Clause 10 sets out the right of all interested persons to access all information relevant to a safeguard investigation, except for confidential information or other information that the chief executive considers should be withheld under the Official Information Act 1982. The clause then provides that the chief executive may request a summary of such information and, if not satisfied with such a summary, or if the request is ignored, the chief executive may disregard the information.
Clause 11 sets out how long a safeguard investigation must be. The deadline for the chief executive is 85 days after the date on which the Minister initiated the investigation if the applicant seeks provisional safeguard duty or if that is imposed. For all other safeguard investigations, the deadline is 75 working days after the investigation is initiated.
Clause 12 sets out the matters the chief executive must investigate. Essentially, these are whether or not there is a serious injury or a threat of serious injury caused by the increased imports, and whether the increased imports were due to unforeseen developments. The other considerations concern the nature of any safeguard measure and the public interest.
Clause 13 describes the circumstances in which the Minister may impose a provisional safeguard duty.
Clause 14 provides for the length of time a provisional safeguard duty is due and payable on the demand of the New Zealand Customs Service (the Customs) on imported goods.
Clause 15 provides that the Minister may terminate or reduce a provisional safeguard duty at the Minister's discretion.
Clause 16 describes the effect of the imposition of a safeguard measure on provisional safeguard duty already paid. If the relevant duty imposed as a safeguard measure is less than the provisional safeguard duty already paid, the Minister can require a remit of the amount of the difference. If no relevant duty is imposed as a safeguard measure, then, again, the Minister may require a remit.
Clause 17 sets out the 4 different types of safeguard measure, which are any of the following imposed on or in relation to imported goods:
a safeguard duty:
a duty, or a variation of any rate of duty, or an exemption of any duty under the Tariff Act 1988:
a restriction on importing the goods under the Customs and Excise Act 1996 or the Imports and Exports (Restrictions) Act 1988:
any other action the Minister considers appropriate.
Clause 18 describes the circumstances in which safeguard measures can be imposed.
Clause 19 provides for the length of time a safeguard duty is due and payable on the demand of the Customs on imported goods. It also sets out the length of time a safeguard measure imposed under clause 18(2)(c) is in effect.
Clause 20 is concerned with how a review of a safeguard measure is initiated. A review may be initiated at the Minister's discretion or after an application. The clause provides that earlier clauses apply (with any necessary modifications) to a review as if the review were an investigation initiated under clause 7.
Clause 21 describes the circumstances in which safeguard measures can be reviewed.
Clause 22 describes the circumstances in which extended safeguard measures can be imposed.
Clause 23 provides for the length of time an extended safeguard duty is due and payable on the demand of the Customs on imported goods. It also sets out the length of time an extended safeguard measure imposed under new section 22(2)(c) is in effect.
Clause 24 provides that all duty imposed under this Bill must be paid to, and collected by, the Customs.
Clause 25 provides for the way in which a safeguard measure may be terminated or reduced.
Clause 26 provides that, except as necessary for the purposes of clause 27, Temporary Safeguard Authorities established under the Temporary Safeguard Authorities Act 1987 are abolished. No member of a Temporary Safeguard Authority is entitled to compensation for loss of office.
Clause 27 provides that, in relation to an inquiry by a Temporary Safeguard Authority under the Temporary Safeguard Authorities Act 1987 that the Minister requested before this Bill is passed into law, the following apply:
the inquiry must be completed under that Act as if this Bill had not been passed; and
the Temporary Safeguard Authority has all the powers it would have had if this Bill had not been passed; and
the Minister may take any action in response to the Temporary Safeguard Authority's report as if this Bill had not been passed.
Clauses 28 to 31 provide for consequential amendments and the repeal of the Temporary Safeguard Authorities Act 1987.
Safeguards are emergency measures applied at the border, usually in the form of a duty, which may be taken to provide temporary protection to a domestic industry being injured by a surge in imported goods.
Safeguards are provided for under the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO) Agreement on Safeguards, collectively referred to in this statement as WTO rules. Safeguard measures are intended to facilitate adjustment by a domestic industry to increased import competition.
The Temporary Safeguard Authorities Act 1987 (TSA Act) provides for the investigation required under WTO rules to be carried out by independent Temporary Safeguard Authorities into whether a safeguard measure should be applied. A review of the TSA Act was prompted by decisions of the WTO Dispute Settlement Body (the DSB) relating to safeguards. This jurisprudence indicates that it is likely to be very difficult to complete a WTO compliant investigation within the current 30-working-day time frame.
While the review was initially prompted by DSB decisions, the review has also provided the opportunity to make changes to the current regime to improve the investigative and decision-making process and clarify some definitional inconsistencies between the TSA Act and the Agreement on Safeguards.
The TSA Act currently provides for independent Temporary Safeguard Authorities to undertake investigations despite the expertise for undertaking investigations of this type and the knowledge of WTO safeguard jurisprudence being held within the Ministry. The necessity to extend the investigation time frame is also likely to reduce the availability of suitably qualified persons to act as temporary safeguard authorities, making recruitment more difficult. The TSA Act also lacks a mechanism for applying a safeguard measure. In order to apply a measure, recourse to other legislative instruments is necessary. Safeguard measures in the form of duties or quantitative restrictions must be implemented under other instruments by Order in Council, a potentially lengthy process which can reduce the potential effectiveness of the measure.
While only 4 investigations have been carried out under the TSA Act since 1987, with 1 resulting in a safeguard being applied, the ongoing potential for volatility in international markets and New Zealand's current tariff liberalisation agenda heighten the likelihood of a New Zealand industry seeking a safeguard investigation. This potentially exposes New Zealand to greater risk of WTO dispute settlement, highlighting the need to improve the efficiency and clarity of safeguards legislation.
The key objectives of the review of the TSA Act are to ensure that New Zealand's safeguards regime—
is consistent with WTO rules; and
provides for an efficient, transparent, and objective investigative and decision-making process.
No non-regulatory measures exist that would be capable of achieving the specified objectives. The source of the current problems is the inconsistency between the current legislation, and WTO rules and legislative best practice.
Consultation with stakeholders and further analysis by officials has revealed a number of necessary amendments to the TSA Act. Significant recommendations are that—
the current requirement, that the public interest be considered before a safeguard measure is applied, be retained and that guidelines for determining whether application of a safeguard measure is in the public interest be introduced into revised legislation as well as requiring the investigating authority to consider and make recommendations on the guidelines:
safeguard investigations be undertaken by the Ministry of Economic Development rather than by independent Temporary Safeguard Authorities:
the Minister of Commerce be authorised to apply final and provisional safeguard duties, and grant refunds where appropriate:
the time frame for a safeguard investigation be increased from the current 30 working days to 75 working days with an automatic extension to 85 working days if provisional measures are requested. The length of the Christmas/New Year period excluded from the investigation time frame should also be extended.
A number of other minor or technical amendments are also proposed. These include—
making the Ministry of Economic Development the point of lodgement for applications seeking safeguard investigations, and specifying in general terms what applications must contain in terms of sufficient evidence:
incorporating or clarifying various definitions and provisions from the WTO Agreement on Safeguards, relating to definitions of serious injury, threat of serious injury, domestic industry, and provision for extension, review, and liberalisation of safeguard measures:
repealing provisions relating to—
the investigating authority’s powers of inquiry; and
the provision of a statement of government policy to the investigating authority.
The key benefit of the preferred option to Government is a significant reduction in the risk of a successful WTO dispute settlement or judicial review, should an investigation be concluded and a safeguard measure applied. Like judicial review, a WTO dispute is a costly and resource intensive process, requiring consultation between disputing parties and providing for a complainant to request establishment of a panel to adjudicate on the matter where no agreement is reached. Requiring the Ministry of Economic Development to undertake investigations rather than independent Temporary Safeguard Authorities will also reduce costs, with most investigation costs being met out of existing Ministry budgets and resources.
There are not expected to be any significant additional costs to business (principally domestic industry, competing importers, and their respective customers) arising out of the proposals made here. Costs to business largely involve preparing for, and participating in, a safeguard investigation. Although an extension is proposed to the investigation time frame, because the key evidentiary components of the investigation remain essentially unchanged, no significant increase in the cost to participate is expected.
Business will benefit from improved clarity in legislation, transparency of process, and the creation of a single government point of contact for all trade remedy inquiries.
New Zealand as a whole benefits significantly from the reduction of trade barriers. As a limited exception to freer trade, an effective safeguard regime has the potential to promote support for future trade liberalisation among import-competing domestic manufacturers.
An effective safeguard regime, as part of a coherent trade remedies regime, could also have positive effects on investment by providing a means to protect domestic industry from international supply shocks. The temporary, targeted, and adjustment orientation of safeguards means they are not contrary, but complementary, to trade policies such as tariff reduction.
Consultation was undertaken, through the release of a discussion paper, with a range of New Zealand business groups and firms. These included significant users of trade remedies, business organisations, importers, the current Temporary Safeguard Authorities appointed under the TSA Act, consultants in the trade remedies field, and the New Zealand Council of Trade Unions.
There was general support from stakeholders for the proposed amendments to the TSA Act with 2 exceptions, as set out below.
The proposed guidelines for considering whether a safeguard measure is in the public interest were not canvassed in the discussion paper. Although this proposal was not canvassed, guidelines are favoured because they promote certainty and transparency of process without altering the status quo in terms of core considerations of the decision-maker and investigating body. Stakeholders will also have the opportunity to make submissions on appropriate guidelines during the select committee stage.
Some submitters supported an amended investigation time frame shorter than that proposed. Officials consider that the proposed time frames are the minimum times required to complete a WTO compliant investigation, one of the central policy objectives of the review.
The following government departments were consulted during the preparation of the discussion paper and this paper: the Ministry of Foreign Affairs and Trade, the New Zealand Customs Service, and the Treasury, and these departments agree with the recommendations in this paper. The Department of the Prime Minister and Cabinet was also notified.
