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Tuesday, 28 February 2012
Page: 2080

Mr CRAIG KELLY (Hughes) (17:24): I rise to speak in support of the Customs Amendment (Anti-Dumping Improvements) Bill (No. 2) 2011. According to the explanatory memorandum, this bill seeks to implement a few new aspects to Australia's existing antidumping regime, including establishing a new appeals process to replace the existing appeals mechanism; establishing the International Trade Remedies Forum, which will be a stakeholder body of representatives from manufacturers, producers and importers, as well as industry associations, trade unions and relevant government agencies; and providing for flexible extensions to time frames for an investigation, a review of measures, the continuation of an inquiry or a duty assessment. Those extensions are to enable robust analysis where investigations involve particularly complex arrangements or involve large numbers of countries or interested parties, and to enable consideration of a response to critical new information that could not reasonably have been provided earlier.

Although the coalition will be supporting this package of modest amendments, I would like to make a few comments on the bill: firstly, to dispel the misinformation being peddled by the government about the effect that these changes will have to Australia's antidumping regime; secondly, to highlight the government's hypocrisy in terms of their claim to be protecting Australian industry; and, thirdly, to highlight the further hypocrisy in the alarming degree of divergence of our legislative approach to dumping on an international and domestic basis.

To start with, the purpose of Australia's antidumping regime is to protect Australian manufacturers and producers from dumped or subsidised imports that would affect their viability. We all support that. However, the explanatory memorandum to this bill states that dumping:

occurs when an overseas supplier exports goods … at a price that is designed to ultimately lower competition.

This is simply incorrect. Under the World Trade Organisation's definition, dumping is not just selling goods below cost for an anticompetitive purpose. The World Trade Organisation's definition of dumping also includes merely selling a good for a lower price in a foreign market than is charged for the same good in the exporter's domestic market. Effectively, antidumping legislation attempts to ensure that a firm makes the same level of profits on an export sale as it does on a domestic sale and that the export sale is not subsidised.

Under World Trade Organisation agreements, dumping is, rightfully, condemned if it merely causes or threatens to cause material injury to a domestic industry of an importing country. There is no threshold under WTO regulations to prove that a firm alleged to have engaged in dumping had a substantial degree of market power, that the dumper had a substantial share of the market, that the dumping continued for a sustained period, that the dumper had the purpose of damaging a competitor or competition or that there existed a dangerous probability of recoupment. All that is required for dumping to occur, under WTO rules, is that goods are sold for a lower price in a foreign market than is charged for the same goods in the domestic market and that there is the possibility of it causing material injury to a domestic competitor. Essentially, dumping is merely geographic price discrimination on an international basis—the selling of the same goods at different prices in different markets—where the markets are able to be segmented by international borders.

If we are to stand here in this parliament, with speaker after speaker condemning dumping—geographic price discrimination —across international markets because it causes or threatens to cause material injury to an Australian business, we must also condemn geographic price discrimination when it occurs internally, within our borders, and causes or threatens to cause material injury to an Australian based business. Otherwise, we in this place are hypocrites.

Yet, while we legislate for strengthening our provisions to deal with international geographic price discrimination under our own domestic competition laws, we have all been all but silent on the issue of geographic price discrimination when it occurs internally, within our own borders. This silence and inaction has allowed the Australian supermarket duopoly to use the anticompetitive practice of geographic price discrimination, or dumping, across segmented domestic markets, to destroy competition and to cause material injury to small Australian businesses.

In the home of free market capitalism, the USA, the Robinson-Patman Act has a specific provision against geographic price discrimination. That act provides, in part:

It shall be unlawful for any person engaged in commerce, in the course of such commerce … to sell, or contract to sell, goods in any part of the United States at prices lower than those exacted by said person elsewhere in the United States for the purpose of destroying competition, or eliminating a competitor …

American legislators have considered a violation of this act so detrimental to competition, to economic opportunity and to consumers that any person engaged in such geographic price discrimination can, upon conviction, be subject to one year's imprisonment. Likewise, EU competition law has provisions to deal with geographic price discrimination within internal boundaries of the EU. Yet under our competition laws here in Australia we have no effective provision to deal with geographic price discrimination. Therefore, across Australia today, we see the supermarket duopoly using the anticompetitive weapon of geographic price discrimination to drive their more efficient small business competitors from the marketplace, after which they slug consumers with excessive price increases.

Just one example is in Western Sydney, which I am sure the member sitting at the table, Mr Bowen, will remember. A survey found that one member of the supermarket duopoly was charging between 51 per cent and 402 per cent higher prices in one market than it was charging for the same items in another market less than four kilometres away. This caused material injury to a smaller competitor by driving it from the market, after which prices were jacked up by close to 100 per cent. Although such discrimination is not only anticompetitive and manifestly unfair and unjust to the general public, especially the elderly and the less mobile, when it comes to acting to repair Australia's competition laws to ensure that we have an effective provision against geographic price discrimination this parliament has gone missing.

For that small business in Western Sydney, once it was driven from the market, what did it matter whether the goods were dumped into its market by an overseas based firm or by a larger competitor operating in thousands of domestic markets? It made no difference at all. Under our existing laws, that small business would have a remedy if the dumping were undertaken by a larger foreign competitor, but it would have no remedy if this were undertaken by a larger domestic competitor.

An effective and workable dumping regime treads a very fine line. An antidumping regime that is too complex can easily be used as a protectionist measure which harms the Australian economy. For example, many Australian manufacturers rely on imported components to manufacture goods in Australia. However, an antidumping regime that is too complex can result in these manufacturers being tied up in red tape defending a dumping claim made against a vital business input that they have obtained from overseas.

We also need to tread very carefully before finding a foreign company guilty of dumping and before imposing countervailing duties. We need to be very careful before implementing such an overvigorous antidumping regime that is burdensome to free trade, as other countries may implement similar measures against Australia. In the past, Australian exports have rarely been subject to antidumping duties, and only one product from Australia has ever been subject to countervailing measures by a WTO member. This was back in 2000, when the European community imposed countervailing duties on synthetic polyester fibres exported from Australia.

However, as one of the few people in this place who has had to make things in Australia and export them into international markets, and having participated in international trade fairs across the globe, I can assure you that it is the practice of many Australian exporters to sharpen their pencils when competing in an international marketplace, and they are prepared to accept lower levels of profit on exports that they are on domestic sales. Under WTO rules, sharpening your pencil for an export order or selling goods in an export market for less than you would in a domestic market is considered dumping.

We also need to be very clear about this bill. It is not about stopping cheap imports. It has only the potential to stop goods being imported into Australia when they are sold below cost or below the price for which they are sold in a foreign market. Therefore, I am greatly concerned by the 'Don't dump on Australia' campaign being waged by the leaders of the Australian Workers Union. The union's website makes the following assertion:

The fate of AWU members rests with the creation and enforcement in Australia of a strong anti-dumping regime.

The truth is that the fate of AWU members has very little to do with the creation and enforcement of a strong antidumping regime. The fate of AWU members, and that of workers around Australia, rests with Australian industries remaining internationally competitive.

If the Australian Workers Union were truly concerned about the fate of its members it would be doing everything humanly possible to make sure Australian industries can remain internationally competitive, and they would be voicing their opposition, loud and clear, to this government's policy of burdening Australian firms with the world's largest carbon tax. Instead, we have had absolute silence from the AWU on the introduction of the world's largest carbon tax, which will simply place Australian industry at a competitive disadvantage. We can have the strongest antidumping provisions in the world, but if we have a government that is prepared to inflict upon Australian industry the world's largest carbon tax, placing it at a competitive disadvantage, this will allow firms to produce goods overseas at lower costs than they can be produced for in Australia, and this will cost Australia jobs. Yet officials at the Australian Workers Union are abandoning their union members by failing to stand up to this government and oppose its carbon tax.

There is also the practical difficulty of determining when goods are dumped. What is the normal price for a good? How is that calculated? Is it the price last week, is it the price last month or is it the price last year? For commodities, is the price going to be in the future? What about exchange rates? How do you calculate exchange rates, especially in the current market, where we see such extreme currency fluctuations?

How do you calculate the price in the domestic market, where different costs may result in the same goods being sold at different prices in different regional markets in the one country? And then there are the terms of sale. How can any price differential be explained by different trading terms, credit risks or statutory warranties? Was there a discount for quantity? This makes it very difficult, if not impossible, for an Australian Customs official to determine whether a good is being exported into Australia at a price that is different from the exporter's local market.

And when determining whether goods are being sold at higher prices in foreign markets, how do you compare apples with apples, as many products exported to Australia are simply not the same as those being sold in home markets? Where an apples to apples comparison cannot be made, Customs officials can look to the price charged by an exporter in another country to make a calculation based on a combination of the exporter's production costs, other expenses and normal profit margins. It is simply impossible for an Australian Customs official to accurately determine what the price would be if the good were theoretically available in a foreign market. Thus, any estimation of prices by Customs is purely an arbitrary figure. These are just a few of the difficulties that our Customs officials face in implementing this legislation.

If this government were serious about having a new and beefed up antidumping regime, you would think the government would be giving Customs new resources to adequately investigate claims of dumping. But the government is not actually increasing the resources available to Australian Customs officials to deal with these added responsibilities. The only conclusion is that the government is not serious about having an effective antidumping regime in Australia. This bill and the AWU's Don't Dump on Australia campaign are nothing more than a smokescreen to divert attention from the undeniable fact that imposing the world's largest carbon tax on Australian industry will make it more expensive to manufacture goods in Australia and will send production offshore, resulting in more and more goods being imported into Australia. That is the complete hypocrisy of this government, for which they stand condemned.