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Wednesday, 9 May 2012
Page: 4410


Mr CRAIG KELLY (Hughes) (10:22):    I rise to speak on the Customs Tariff (Anti-Dumping) Amendment Bill (No. 1) 2012 and the Customs Amendment (Anti-Dumping Improvements) Bill (No. 2) 2012. Firstly, the coalition supports these bills. They are measures making sensible and practical changes which will help in a small way to address the inherent weakness of Australia's antidumping laws. Our support for this legislation exposes another myth that is perpetuated by this Labor government that we in the coalition oppose everything. Where we see legislation that has merit, such as that in these bills, we will support it but, where we see legislation proposed that has been poorly thought through or is nothing other than a political fix and is not in the best interests of Australia, the coalition will make no apology for vigorously opposing such legislation.

These bills are the third tranche of legislative changes to Australia's existing antidumping regime that Labor has made during this term of parliament and I understand that there are at least one or two additional bills to be introduced later this year. Why has it been necessary for these changes in our antidumping laws to be made in four or more separates tranches spread over 12 months? This remains a mystery that perhaps only the government can answer. It would have been far more efficient for all, especially Australian industry, if these changes to our antidumping regime had been made in one block of legislation, but unfortunately efficiency and this Labor government are not words that are often found in the same sentence. Going to the specifics of the bills, they firstly amend the dumping duty act in order to allow the minister to use different forms of interim dumping duties from those currently used. This change is consistent with the World Trade Organisation's antidumping agreement, which currently does not mandate the method for calculating the level of duty where an interim dumping duty is imposed. These amendments will enable the minister to impose either an ad valorem duty or a fixed amount of duty, a combination of the two or a floor price. Currently, the minister can only use a combination form of interim dumping duty, which is a fixed component or a variable component. This legislation simply gives the minister greater ability to impose the penalty duty required.

The bills also add new provisions to the act which will implement proposals to amend the subsidies provision in the Customs Act to better reflect the definitions and the operative provision of the World Trade Organisation Agreement on Subsidies and Countervailing Measures. In addition these bills amend division 6A, the 'Continuation of anti-dumping measures', of the act, which will enable measures to be amended, including by altering the level of applicable duty, if the minister decides to continue them. Currently, the only means of amending measures that are to be continued is the conduct of a separate review of the measures in close proximity to the continuation inquiry. Again, this gives greater flexibility in dealing with the problem of dumping. In addition, the bills repeal section 269TAC(13) of the Customs Act to remove the current limitations on determining profit when constructing the normal value of the relevant goods alleged to have been dumped in a foreign country. This deletion implements the government's response to recommendation 3.4 of the International Trade Remedies Forum report on the effectiveness of market situation provisions in the Customs Act.

Despite these changes, there are still many practical difficulties in determining when goods are actually dumped. For example, how do you calculate the normal price of a good? In markets where prices change frequently, responding to market conditions, is it the price last week? Is it the price last month? Is it the price last year? For commodities, is it what the price will be in the future? What about exchange rates? How do you calculate how a firm has actually calculated the exchange rate? A company may use an internal hedge, especially in the current market, where we have seen such extreme volatility in exchange rates. Further, 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 within one country?

Then there are the terms of sale. Price differentials, which often may seem to be price discrimination, may be explained by a difference in trading terms. If goods are purchased under a letter of credit this obviously has a different price, as if they were sold on trading terms with 30- or 60-day open terms. There are also credit risks and statutory warranties. All these factors need to be considered in the pricing of goods. Further, how do you actually apply a quantity discount? This is another calculation that Customs must make in determining whether goods have been sold below cost. This makes it very difficult, if not impossible, for an Australian Customs official to determine whether a good has been exported into Australia at a price that is different or lower than the exporter's home market.

When determining whether goods are being sold at higher prices in the Australian market, we need to make an apples-with-apples comparison. But this is very difficult because often the goods and products exported to Australia are simply not the same as those being sold in the home market. So where an apples-with-apples comparison cannot be made, although Customs officials can look to the price charged by an exporter in another country and make the calculation based on a combination of the exporter's production costs, other expenses and normal profit margins, it is simply impossible for Australian Customs officials to accurately determine what the price would be if the goods were theoretically only available in a foreign market. Thus, any estimation of prices by Customs is purely an arbitrary figure. These are just a few examples of the difficulties that our Customs officials face when implementing this legislation. A recent example of the problems in determining this arose in the electorate I represent where a dumping investigation was undertaken by the Australian Customs and Border Protection Service upon an application lodged by Advance Cables, Olex Cables and Prysmian Power Cables and Systems Australia on behalf of Australian industry producing like goods into an alleged dumping concerning electrical cables exported to Australia from the People's Republic of China. I am sure these firms felt that the goods were being dumped into the Australian market at below the cost of what they were made for in China. However, as a result of Customs and Border Protection's investigations, Customs determined that the electric cables exported from China to Australia had not been dumped and therefore terminated the investigation.

We must also recognise that an effective and workable dumping regime treads a very fine line. An antidumping regime that is too harsh and is too complex can easily be used as a protectionist measure, which harms Australian industry and harms Australian jobs. 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 dumping claims for a vital business input which they need in their processes here in Australia.

We also need to be aware that this could also work against us in Australia. When most Australian exporters go overseas and try to sell their goods on overseas markets they do their pricing with a sharper pencil and that would be against World Trade Organisation rules. However, these modest amendments to Australia's antidumping laws are not a cure against the many factors that are causing the declining competitiveness of Australian industry. The facts are that while many Australian companies may consider that goods are being dumped into Australia because they seem cheap, the reality is that as a nation we are giving away many of our competitive advantages.

In business, you can only succeed if you have a competitive advantage and you safeguard it, for your competitive advantage is your lifeblood. A company may be able to survive for a while if it has competitive parity but if this turns into a competitive disadvantage, extinction is just around the corner. In Australia, our labour costs are traditionally a competitive disadvantage. We will never be able to compete—nor do we want to—with China and India on labour costs. But one of our greatest competitive advantage is our low-cost electricity supplies. Abundant supplies of high-quality black coal, generating low-cost electricity, is one of the few competitive advantages we have here in Australia. But this government, in an act of economic treason, has surrendered this national competitive advantage. A recent report released by the Energy Users Association of Australia shows average electricity prices in Australia are now amongst the highest in the world and, once the world's biggest carbon tax takes effect, Australian industry will be paying the world's highest electricity prices. Interestingly, South Australia, which boasts about having more wind turbines than anywhere else in Australia, can now also boast that they not only have the highest electricity prices in Australia but have the highest electricity prices in the world.

It is important to note that, under the World Trade Organisation's definition, 'dumping' is not just selling goods below cost for an anticompetitive purpose. The WTO'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 in an export market as it does on a domestic market for the sale of the same good.

Under World Trade Organisation agreements, dumping is rightfully condemned if it causes or merely threatens to cause material injury to a domestic Australian industry. Essentially, when it all boils down, 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, especially where it causes or threatens to cause material injury to an Australian business. Otherwise, if we fail to do so, we are nothing more than hypocrites. While it is important that we have effective laws to deal with geographic price discrimination when it occurs across political boundaries and internationally, I say it is equally important that we also have strong laws when it occurs internally in Australia. Yet, unlike other countries, Australia has no provisions in our competition laws to deal with anticompetitive geographic price discrimination when it occurs across different markets within Australia. In the home of free market capitalism, the USA, the Robinson-Patman Act has a specific provision against geographic price discrimination. This 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 …

These laws simply do not exist in Australia's competition laws.

We should never forget that under these laws it was the notorious Standard Oil company, that was broken up into 34 separate companies, all competing against each other, found to engage in the practice of geographic price discrimination. The strategy used by Standard Oil was to sell oil below cost in one domestic market to drive the competitor's profits down and force them to exit the market, while in another area, where other independent businesses had already been driven out of the market, they raised prices. This would be unlawful across international borders. In America where it is done internally within their borders it is also unlawful. Unfortunately, here in Australia we have nothing to prevent it under our competition laws.

Further, while these bills seek to address goods being sold into Australia at lower prices than their cost in the home market it would appear the real problem we have in Australia is not with goods being sold at lower prices but with goods being sold at higher prices—virtually a reverse dumping. It is clear now that Australian consumers pay some of the highest prices in the world for goods. Take as one example Coca-Cola, which is a syrup manufactured in the USA and shipped to licensed bottlers in over 200 countries worldwide. Yet here in Australia the everyday price of Coke in our supermarkets is 50 to 100 per cent higher. Again, it appears that Australian consumers are paying higher prices for goods exported from overseas countries, not the opposite. So if we need to have this legislation in place to deal with antidumping we also need to investigate why Australian consumers are paying higher prices, because that also places us at a competitive disadvantage.