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Steel Imports Under Close Scrutiny

21 June 2002

Government Ministers, steel industry and union leaders have jointly expressed their strong resolve to prevent New Zealand’s steel industry from being harmed by surges in steel imports.

The joint resolution reflects concerns that steel will be diverted to New Zealand shores following action by a number of countries to raise protection in their own markets following the introduction of high safeguard tariffs by the United States. The protective actions of these countries have displaced steel exports from traditional markets.

Representatives of the New Zealand steel industry approached Commerce Minister Paul Swain and Acting Minister of Customs Jim Anderton recently. The group, comprising New Zealand Steel President Cyril Benjamin, Pacific Steel General Manager Alan Pearson, and EPMU National Secretary Andrew Little, has resolved that government and industry work closely together to take strong and swift action against any increase in steel imports that threatens serious injury to the New Zealand steel industry.

World Trade Organisation (WTO) rules allow countries to take measures against certain injurious imports, and the establishment of a government/industry monitoring group should ensure that New Zealand is in a better position to react quickly to any threat to the New Zealand steel industry.

The Ministers have directed the Ministry of Economic Development and the New Zealand Customs Service to implement a system for monitoring imports. Volumes and values of steel imports will be under close scrutiny so that increased imports that could seriously injure the industry may be detected early.

The monitoring system involves close co-operation with the steel industry so that appropriate safeguard or anti-dumping action can be taken wherever it is justified. Any action taken would be consistent with WTO rules. Ministers said they were confident that New Zealand’s trade remedy regime could respond rapidly to surges in cheap steel imports looking for a home.

“Senior executives of New Zealand Steel and Pacific Steel stress that New Zealand’s industry is unsubsidised, internationally competitive and has relatively little tariff protection. They see little justice in the industry having to compete in both its domestic and export markets with producers who have received extra protection to counter the problems raised by the US action,” Paul Swain said.

“The union concern is that increased imports could lead to job losses, not only within the steel industry, but also in industries and communities supported by the industry. They quite reasonably question why New Zealand jobs should be at risk from action taken in other countries to counter the US tariffs,” he said.

Acting Customs Minister Jim Anderton said, “Ministry of Economic Development and Customs officials expect to be able to implement a system for monitoring steel imports within the next few weeks. The system will allow any import surges to be identified quickly and, where appropriate, targeted for swift trade remedy action.”

In the meantime, at the WTO in Geneva, New Zealand, along with a number of other affected countries, is continuing to pursue its concerns over the WTO-consistency of the US steel safeguard action. New Zealand has held dispute settlement consultations with the US in Geneva at which it outlined its full range of concerns.

Background on Monitoring of Steel Imports

Why does New Zealand need to monitor steel imports?

Effective from 20 March 2002, the United States imposed additional tariffs of up to 30 percent on steel imports. The United States claimed that the tariffs were needed to safeguard its domestic steel industry from serious injury.

Many other countries responded by taking safeguard and protective actions against steel imports to protect their own industries. The EC, China and Canada initiated safeguard investigations and some other countries, such as Malaysia and Indonesia, increased their tariffs on steel.

The protective actions of these countries have displaced steel exports from traditional markets and trade may now be diverted to markets, such as New Zealand, where levels of protection are relatively low. In world terms, the New Zealand industry is very small in scale, making it particularly vulnerable to a surge in imports.

The New Zealand Customs Service can access import data as soon as imported steel enters New Zealand, whereas provisional import statistics are provided by Statistics New Zealand on a monthly basis about four weeks after the end of the month.

Representatives of the New Zealand steel-producing industry asked the Minister of Commerce and the Acting Minister of Customs to implement an import monitoring system that would act as an early warning system and allow it to respond rapidly by way of safeguard action.

Who will carry out the import monitoring?

The Ministry of Economic Development and the New Zealand Customs Service are already co-operating to implement a system for monitoring imports. New Zealand steel producers will be closely involved in the design and implementation of the monitoring system.

What assistance does the New Zealand industry receive currently?

There are two producers of steel in New Zealand, New Zealand Steel Ltd and Pacific Steel, who between them employ about 1,600 people.

New Zealand’s industry is unsubsidised and has relatively little tariff protection. Tariffs on steel imports range from free of duty to 6.5 percent.

What action can be taken against increased steel imports?

World Trade Organisation (WTO) rules allow countries to take three different types of trade remedy action against certain injurious imports. These are anti-dumping actions, countervailing actions and temporary safeguard actions. For each type of action, a New Zealand industry must apply for, and provide evidence in support of, an investigation or inquiry.

Safeguard Action

Where it appears to the Minister of Commerce that the importation of goods has caused or may cause serious injury to a New Zealand industry, the Minister may request a Temporary Safeguard Authority to undertake an inquiry. A Temporary Safeguard Authority is an independent body, with certain powers of a Commission of Inquiry.

The Authority must report back to the Minister within 30 working days on whether the industry has suffered or is likely to suffer serious injury, whether urgent action is necessary to protect the industry and the nature of the protection considered necessary. The Authority can recommend a range of remedies that include the imposition of a duty, variation of a duty or quantitative restrictions. Safeguard action would apply to imports from all countries, except exports originating in Australia.

Anti-dumping or Countervailing Duties

Anti-dumping or countervailing duties may be imposed on imports of dumped or subsidised goods that cause or threaten to cause material injury to a domestic industry.

Goods are dumped if the price at which they are exported to New Zealand is less than their normal value in the country of export.

Dumping and subsidy investigations must be completed within 180 days of the date of initiation of an investigation. Within that time the Minister of Commerce must make a final determination on whether or not the goods are being dumped or subsidised and are causing or threatening to cause material injury to the industry.

Provisional anti-dumping or countervailing duties may be applied as early as 60 days after initiation of an investigation, and in certain situations duties may be applied retrospectively to the date of initiation of an investigation.

Who administers New Zealand’s trade remedies regime?

New Zealand’s trade remedy regime is administered by the Trade Remedies Group of the Ministry of Economic Development. The Ministry administers the Temporary Safeguard Authorities Act 1987 and the Dumping and Countervailing Duties Act 1988. The New Zealand Customs Service enforces, at the border, any measures imposed under these statutes.

While a Temporary Safeguard Authority would carry out any safeguard inquiry, dumping and subsidy investigations are carried out by the Trade Remedies Group. All investigations and inquiries that are carried out comply with the WTO Agreements.

Are any other countries monitoring steel imports?

Following a Steel Summit meeting in Canberra in March, Australia set up a Ministerial Task Force (including Ministers, industry CEOs and unions), to consult on the response to the US safeguard action and the impact of that action. The Task Force established a Steel Import Monitoring Committee to monitor steel imports in preparation for a rapid response to any disruption to the Australian market.

What is New Zealand doing about the increased protection being given by some countries to their steel industries?

The United States’ safeguard action against steel imports has resulted in all New Zealand steel exports to the United States being subject to an additional 30 percent tariff from 20 March 2002, decreasing to 24 percent in year two and 18 percent in year three.

At the WTO in Geneva, New Zealand, along with a number of other affected countries, is continuing to pursue its concerns over the WTO-consistency of the US steel safeguard action. New Zealand has held dispute settlement consultations with the US in Geneva at which it outlined its full range of concerns.

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