By Joshua Riddiford
The government's plans to introduce a consumer welfare test to anti-dumping laws will put local firms at a disadvantage to their foreign counterparts, according to Business New Zealand.
Commerce and Consumer Affairs Minister Paul Goldsmith has announced plans to write a test into legislation to weigh up the impact dumped goods have on a manufacturer against the wider effects on industries and consumers, before duties are imposed.
Business NZ executive director of manufacturing Catherine Beard says New Zealand companies operate in one of the least protected economies in the world, and it's unfair that they should have to compete with foreign companies operating on a different playing field.
"In some cases, companies can do it because of domestic support from their governments," Ms Beard said.
Dumping is the practice of manufacturers exporting products to another country at a price which is lower than the price at which they are sold in their domestic market.
A duty or financial penalty is imposed on those dumped products considered to harm New Zealand manufacturers or a local industry.
Ms Beard said by letting foreign companies dump cheap products on the local market as a loss-leader, New Zealand firms could be squeezed out.
"Is that good for the New Zealand business ecosystem?" she said.
Eric Crampton, head of research at think-tank the New Zealand Initiative, said anti-dumping legislation typically reduced market competition, and if the welfare test benefited consumers that was probably for the greater good.
"In general, anti-dumping legislation is fraught because it can be used in an anti-competitive fashion," he said.