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Wednesday, 7 December 1983
Page: 3391


Mr JOHN BROWN (Minister for Sport, Recreation and Tourism, Minister for Administrative Services and Minister Assisting the Minister for Industry and Commerce)(4.15) —I move:

That the Bill be now read a second time.

This Bill and the Customs Tariff (Anti-Dumping) Miscellaneous Amendments Bill 1983 which I propose to introduce in a few moments form a package of legislative changes arising from a review of Australia's anti-dumping and countervailing legislation. The Government's election platform included a commitment to strengthen anti-dumping procedures to ensure that goods are not landed in Australia at unrealistically low prices. A wide ranging review of the legislation was announced on 10 April 1983. A Green Paper was subsequently published and an opportunity was afforded State governments, industry and commerce organisations, trade unions and all other interested parties to submit their views on ways in which the anti-dumping and countervailing legislation and procedures might be improved. Some 150 submissions were received, canvassing a very wide range of views and various proposals for change.

Dumping occurs when the products of one contry are exported to another country at less than their normal value. Normal value is defined as the price of like goods sold in the ordinary course of trade for consumption in the country of export. Dumping is condemned internationally as unfair trading if it causes, or threatens, material injury to the industry producing like goods in the importing country and a dumping duty, equal to the difference between the export price and the normal value, may be levied on dumped imports.

Where any subsidy, bounty, reduction or remission of freight or other financial assistance applies to the production, export or carriage of goods exported to Australia and those goods cause or threaten material injury to an Australian industry, countervailing duties, equal to the amount of subsidy or other assistance received, may be levied.

Australia's international rights and obligations in respect of anti-dumping and countervailing action are governed by its membership of the General Agreement on Tariffs and Trade and the relevant GATT agreements negotiated in 1979 during the Tokyo round of multilateral trade negotiations. These agreements are known as the GATT Anti-Dumping Code and the GATT Code on Subsidies and Countervailing Duties.

The provisions of the GATT and the codes are designed to ensure a balance of rights and obligations between exporting and importing interests by attempting to ensure that the use of dumping and subsidy practices do not adversely affect or prejudice the interests of any signatory and that offsetting measures, whilst providing relief to local industry suffering injury, do not unjustifiably impede international trade.

The Customs Tariff (Anti-Dumping) Act 1975 was enacted in that year to give effect to Australia's decision to become a signatory to the GATT Anti-Dumping Code. The Act was revised in 1981 to enable Australia to become a signatory to the revised GATT Anti-Dumping Code and the GATT Code on Subsidies and Countervailing Duties arising from the Tokyo round of multilateral trade negotiations.

Before I explain the specific changes in this Bill I will take a few minutes to outline some changes to administrative procedures for processing dumping or subsidisation complaints which emanate from the review. The Government considers it is fundamental to effective anti-dumping and countervailing action to ensure that complaints are dealt with expeditiously and that all parties to a complaint have an opportunity to provide information relevant to the issues in the complaint within a reasonable time frame.

It is proposed, therefore, to require the Department of Industry and Commerce, in other than exceptional cases, to arrive at a preliminary finding on whether there is a case of injurious dumping or subsidisation within 45 days of accepting a complaint. The suppliers of the imported goods and the importers as well as the complainants will be given an opportunity to provide information relevant to the complaint within a specified period, usually 30 days, during this initial examination. Questionnaires will be provided to all interested parties to simplify the process. If a preliminary case of injurious dumping or subsidisation is determined, the Department will also be required, in other than exceptional circumstances, to complete its investigation of the complaint within a further 120 days. This is the normal period of validity of provisional security action. Consultations required under the GATT code on subsidies and countervailing duties and Australia's bilateral trade agreements would occur during these periods.

The time limits I have just mentioned apply to normal complaints but must remain flexible to deal with cases which require a speedier preliminary finding or where the complaint is of a particularly complicated nature and where, as a consequence, the timetable just cannot be met. If information requested from interested parties to a complaint is not forthcoming within the requested time frame decisions will be made on the evidence available to the Department at the time. To counter import source switching to countries not named in the original complaints, it may be necessary to take preliminary action on the basis of tentative normal values established as a result of previous investigations or other information available to the Department. This will be done if it is necessary to extend a complaint where significant quantities of goods are imported from countries not named in the existing dumping notices and where there is reasonable cause to believe such shipments are at dumped prices. To ensure that the effects of provisional security action are not eroded, securities will not be returned automatically to importers when dumping or subsidisation complaints are suspended on the basis of acceptance of voluntary undertakings by exporters in respect of future exports. The Government believes that these administrative initiatives will significantly strengthen the procedures for dealing with complaints of dumping or subsidisation, while ensuring that overseas suppliers and importers are given ample opportunity to supply information and submit rebuttal arguments against any allegations of unfair trading practices.

I now turn to the major changes proposed by this Bill. By clause 3 the existing definition of business associates in section 4 of the Act is being aligned with the similar definition of 'related persons' in the valuation provisions of the Customs Act. Currently, the Customs Tariff (Anti-Dumping) Act includes provisions which enable the Minister to disregard the invoiced export price for certain import transactions between business associates and to determine the export price for those transactions on the basis of the price for the first arms length sale of the goods in Australia by the importer, less prescribed deductions covering all costs normally incurred beyond free-on-board level. This enables action to be taken to counter sales dumping, or so-called hidden dumping . Hidden dumping occurs when the parties to the transaction arrange to set the export price shown on the invoice at or above the normal value but also arrange to subsequently share the profit on the export sale. An importer can then sell the goods at a loss to gain market share.

The provisions of clause 4 will permit the Minister to determine the export price in such transactions, which involve parties who are not business associates. The provisions of clause 4 will also enable the Minister to accept the invoiced export price for transactions between associates once it has been determined that the relevant parties trade at arms length, notwithstanding their association. Under the existing provisions of the Act, where the exporter does not sell like goods to those exported in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions it is necessary for the Minister to initially seek to obtain pricing information from other sellers of like goods in that market before applying any other criteria for establishing a normal value. For example, this may be a constructed price based on the exporter's costs of production, selling and administration expenses and a reasonable profit. The amendments proposed by clause 5 will mean that, in future, where the Minister is satisfied that it is not practicable to obtain within a reasonable period pricing information in relation to sales by sellers other than the exporter, the normal value may be assessed using other provisions of section 5. Where the Minister so directs, the Customs Tariff (Anti -Dumping) Act currently provides for normal values to be determined on the basis of the highest price paid for like goods sold in the ordinary course of trade in the country of export for export to a third country. In confirmity with the GATT anti-dumping code, clause 5 of the Bill will allow the highest export price to a third country selected for normal value purposes to be a representative price.

Another very important provision relates to the Minister's powers to determine the normal value of goods in circumstances where prices for like goods to those exported are sold for consumption in the country of export and have been, for an extended period, sold at a price level which would not permit recovery of all costs incurred in the production and sale of the goods. In other words, domestic sales in the exporting country are being consistently made at a loss. The provisions of clause 5 provide that such sales will not be regarded as having been made in the ordinary course of trade if they have been made over an extended period and in substantial quantities and are not at prices which permit recovery of all costs within a reasonable period. The normal value may then be established having regard to any remaining sales of like goods that are not at a loss made in the domestic market of the exporting country during the period subject to investigation, if they are made in sufficient quantities to be representative. In the absence of such sales a normal value will normally be constructed on the basis of the cost of production of the goods, selling and administration expenses plus a reasonable profit margin. The European Economic Community and the United States have legislated to give effect to these concepts . Where sales are not made in the domestic market of the exporting country, normal values may, at times, be assessed on the basis of prices for export sales to third countries. The amendments proposed by clause 5 will enable such sales, when made at a loss, to be disregarded for normal value purposes.

Clause 6 of the Bill proposes the inclusion of an indicative but not exhaustive listing of those factors to which the Minister may have regard when determining, for the purposes of the Act, whether material injury has been caused, or threatened, to an Australian industry. This provision is designed to give effect to the requirements of Article 3 of the GATT anti-dumping code and Article 6 of the GATT code on subsidies and countervailing duties. The Customs Tariff (Anti- Dumping) Act currently provides that the dumping duty is a sum equal to the amount by which the amount of the export price of goods is less than the amount of the normal value of the goods. The Minister may however, by notice published in the Commonwealth of Australia Gazette, direct that the dumping duty in respect of goods is to be an amount ascertained by reference to the value, or to the weight or other measure of quantity of the goods, provided that that amount does not exceed the difference between the export price and the normal value.

The provisions of clause 7 will make it clear that under the latter provision the Minister may determine the amount of dumping duty on goods to be a sum sufficient to prevent injury to industry. Clause 10 proposes a complementary change to the provision in relation to the determination of countervailing duties. Other necessary machinery amendments of a technical nature, which are included in the Bill, are set out in the explanatory memorandum which has been circulated.

I said earlier that it is this Government's firm policy to deal quickly and effectively with unfair trading practices by exporters to this country which cause or threaten injury to Australian industries. The Government believes that the measures in this legislative package when combined with the improved administrative procedures will ensure that the Government's policy in this matter is fully met. At the same time it is considered that the changes will ensure that the necessary investigations of complaints are conducted in accordance with Australia's international rights and obligations and in a manner preserving the rights and interests of all interested parties to those complaints.

During the review a wide range of proposed modifications to the legislation were submitted by various interested parties. I commend all parties contributing to the review for their extremely detailed and constructive submissions. For the information of honourable members I will comment on some issues upon which proposals for change were submitted but where, after careful consideration, the Government has decided not to adopt the proposals. One such issue is secondary dumping-the inclusion of dumped components or raw materials into a manufacturer product which is subsequently exported.

Complex problems of definition and interpretation of inputs to the manufacturing process in other countries would be involved in any anti-dumping action. For this reason an investigation of secondary dumping in other countries would be complex and protracted and it would be extremely difficult in terms of access to evidence to prove any allegations. It is also unlikely that the countries supplying dumped components or raw materials would agree to Customs officers conducting the necessary investigations in their countries. The Government will, however, continue to pursue the matter in the GATT with a view to having a satisfactory formula developed internationally on this issue within the GATT anti-dumping code. On the question of goods purchased by tender, Commonwealth purchasing procedures are being examined to determine whether, at the time of evaluation, tender documents should require all relevant information to be supplied by the tenderer to enable normal values to be assessed for any imported goods to be supplied under the contract.

The last issue on which I will comment is freight dumping, involving the remission or reduction of overseas freight. In this regard countervailing duties may be imposed where freights are less than normal freight as defined in the Customs Tariff (Anti-Dumping) Act, and injury is thereby caused or threatened to an Australian industry. The Government believes the existing provisions to be sufficient and has decided to make no alterations.

The amendments proposed by this Bill are expected to have little effect on revenue collections for 1983-84. When dumping or countervailing duties are imposed, overseas exporters normally increase their export prices to levels which avoid any additional impost on goods at the time of importation. The measures are designed to ensure that Australian industries continue to be protected from unfair trading practices relating to imported goods. I commend the Bill to the House.

Debate (on motion by Mr Moore) adjourned.