On 21 June 2012 the Australian Government asked the Productivity Commission to investigate whether safeguard action needed to be implemented to protect Australia’s processed fruit and processed tomatoes industry.
SPC Ardmona sparked the investigation after it reported that a significant increase in imported products has swamped supermarket shelves and created an uneven playing field resulting in the termination of contracts with 60 growers in the Goulburn Valley region.
The Productivity Commission has been tasked with reporting on:
- whether conditions are such that safeguard measures would be justified under the World Trade Organisation Agreement
- if so, what measures would be necessary to prevent or remedy serious injury and to facilitate adjustment
- whether, having regard to the Government’s requirements for assessing the impact of regulation which affects business, those measures should be implemented.
Safeguard measures include temporary, ‘emergency action’ (using tariffs, tariff-quotas or quotas) implemented in situations where a surge of imports causes or threatens to cause serious injury to a domestic industry (Commonwealth of Australia Special Gazette No. section 297, 1998).
Under World Trade Organisation (WTO) rules, a government can only take safeguard action (whether final or provisional) if its ‘competent authority’ finds that action is justified. Although the government can choose not to act, if it does take action it cannot impose measures greater than those considered appropriate by the authority (in this case, the Productivity Commission).
On 26 September 2013 the Productivity Commission released two accelerated reports 'Safeguards Inquiry into the Import of Processed Food Products' and 'Safeguards Inquiry into the Import of Processed Tomato Products' which concluded that the strict criteria stipulated by the WTO have not been met and provisional safeguard measures are unwarranted.
In it’s submissions to the Productivity Commission the Australian Manufacturing Workers Union stated:
“Australia wants to be the “food bowl of Asia” but this can only happen if the government is prepared to support local food companies in the face of unforeseen competitive pressures. Without government intervention to support our local industry, we are not going to be able to feed ourselves, never mind Asia. Cheap imports are threatening to eradicate our local processed tomato and fruit industry. The WTO’s emergency safeguards are a simple, common sense measure to eliminate the immediate pressure on the industry while the situation is reviewed. The time for action is long overdue.”
The Productivity Commission’s investigations are ongoing. A final report into whether WTO safeguards are required to protect Australian’s canned fruit and tomatoes industry is expected to be finalised by 20 December 2013. We will provide an update once the final report has been released.
Author: Grace Evans
Ron Eames, Partner
T: +61 7 3135 0629
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