Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Korean exporter gives assurances on cement clinker prices

Download PDFDownload PDF


The Hon. Barry O. Jones Minister for Science, Customs and Small Business

File No.





A Korean exporter of cement clinker has given assurances to

the Federal Government that any further exports to Australia would be at a price not injurious to the Australian industry.

This follows an inquiry by the recently-established Anti-Dumping Authority into alleged dumping of cement clinker in Australia.

The Minister for Science, Customs and Small Business, Mr

Barry Jones, said today that he had instigated the

Authority's inquiry following a preliminary inquiry by the

Australian Customs Service. The Customs inquiry found that

export prices to Australia were below the assessed normal

value in Korea and that this had caused material injury to Australian producers of cement clinker.

Mr Jones said he had agreed with the Authority's

recommendation that the exporter's undertaking be accepted and that the application of dumping duties be suspended indefinitely.

. . . / 2

Ministry of Industry, Technology and Commerce


The cement clinker report is the Authority's first since it came into operation in September 1988 following a review of

anti-dumping arrangements by Professor F Gruen of the

Australian National University.

A summary of the report is attached.

Copies of the report are available from the Authority

on ( 062) 76 1742 (Margaret McLeod).


Department of Industry, Technology & Commerce

Peter Toohey (062) 76 1641 (W)

(062) 58 2130 (H)

Ken Duffy (062) 76 1521 (W) (062) 31 7263 (H)


1.1 Summary

This chapter summarises the Authority's findings on certain matters referred to it, on 1 September 1988, by the Minister for Science, Customs and Small Business for inquiry and report. The Authority's reasons for its findings are not reported fully

here; for details of these and of other matters, the reader should consult the remaining chapters of, and the appendices to, this report.

The Minister's reference concerns the allegedly injurious dumping of cement clinker from Korea into Western Australia, and followed a preliminary finding by Customs that injurious dumping

had indeed taken place.

Cement clinker, the immediate precursor of cement, is produced in Australia at some fifteen plants, of which two are situated in Western Australia. These two producers, "Swan" and "Cockburn", are the complainants and are supported in their complaint by the rest of the industry. The complaint alleges that "Ssangyong", a Korean exporter, sold clinker to "Merman", a Western Australian importer, at dumped prices; that Merman produced cement from this dumped clinker and, trading as

"Atlas", competed with the complainants in the domestic market for cement; and that material injury was thereby caused to the domestic industry. (Full names of all the companies concerned are given in Chapter 2).

In deciding on its recommendations to the Minister in such a case, the Authority must consider:

(a) whether the exported goods were in fact "dumped", ie. sold at an export price which was less than their normal value in the country of export; and if so

(b) whether the Australian industry producing "like goods" suffered "material injury" and whether there was a causal link between the dumping and the injury; and if so

(c) what action (if any) to recommend that the Minister take.

These matters are treated in turn below.

1.1.1 Dumping

The Authority is in no doubt that the goods were dumped. The export prices of the five shipments ranged from 58% to 83% of their normal value in the country of export. '


1.1.2 Material Injury and Causal Link

(i ) “Like Goods”

The Authority is clear that the industry producing “like goods" to the dumped imports is the industry producing clinker. Some parties to the inquiry argued that “like goods" should be interpreted as cement rather than (or as well as) clinker; the Authority rejects this view.

(ii) Injury to the Western Australian Industry

All of the clinker in question was imported into Western Australia, in which State there are two domestic manufacturers, Cockburn and Swan.

The Authority finds that these manufacturers suffered injury, and that the injury was “material“ for the purposes of the legislation. The Authority further finds that there is a clear causal link between the dumping of clinker from Korea and the material injury to the Western Australian


It has to be said that much of the "injury" to the two local producers of clinker was a natural result of increased competition in a cement market which hitherto had been theirs alone, and that the results may not have been wholly baneful. In the Authority's view, the efforts of

the Western Australian industry to meet that competition have led to improved efficiency. For example, it is true that the number of people employed by these two companies has fallen since the imports began; but the Authority understands that it is unlikely that employment would rise again to its previous level even if the importer were to leave the market entirely, and it seems reasonable to conclude that part at least of the fall in employment represented the shedding of excess labour. It appears, too, that the industry is increasing the flexibility with which it can alter its product mix {as between clinker and

lime) to achieve outcomes more closely attuned to market demand and more profitable. All that said, the fact' remains that the increased competition stemmed from imports which had been dumped, a practice condemned as unfair.

(iii) Injury to the Australian Industry

The Authority has no evidence that the rest of the Australian industry - that large majority of it which is situated outside WA - suffered any direct injury whatsoever as a result of the dumping. There are ownership links between one Western Australian company and companies

elsewhere in Australia, so indirect damage is possible ~ but no evidence of such damage has been submitted.


Article 4 of the GATT Anti-Dumping Code allows the authorities of countries signatory to the Code to take, "in exceptional circumstances", anti-dumping action when the resultant injury is confined to an "isolated market" within the territory of the importing country.

Western Australia could conceivably be considered an "isolated market" of this sort, for the purposes of this case and at this time (interstate trade in clinker, especially but not exclusively among the eastern States, is

likely to become much more frequent over the next few years, as the Australian industry rationalises its structure).

A prior question, however, is whether the relevant provision of the GATT Code is applicable in Australian law.

The Authority has sought legal advice on this question. In broad summary, that advice is that the provisions of the Code can be used to resolve any ambiguity in the interpretation of the Australian legislation; that there

is, however, no ambiguity in our legislation's use of the term "Australian industry"; and that therefore the "isolated market" concept cannot be applied.

The Authority has therefore had to consider whether material injury has been caused to the Australian industry, taken as a whole.

There is no question that the industry, so defined, has suffered some degree of injury, for the simple reason that one part of it - amounting to perhaps ten per cent of the whole - has been injured.

There is a real question, however, as to whether the injury to the, whole industry has been "material". After all, the dumped goods have accounted for less than two per cent of the Australian market; and the loss of profits, while material to the Western Australian companies, amounts to

only about four per cent of the profits of the whole Australian industry.

The Authority is thus reluctant to conclude that the imports have caused material injury to the Australian industry as a whole. For one thing, such a conclusion could be seen as setting a wrong precedent: in future cases, unless quite unusual circumstances exist, the Authority will not accept that there has been material

injury where the domestic industry has the vast majority, and the dumped imports only two per cent, of the Australian market and where industry profits have dropped by only four per cent. (The Minister, in a separate reference, has '

asked the Authority to advise him on formal Ministerial Directions which he might give on issues such as the definition of "material injury", and the comments above are of course subject to the Minister's decisions on receipt of that report.) ' .


Do "quite unusual circumstances" exist in the present case?

One unusual feature is the structure of the Australian cement (and clinker) industry. Because of the difficulty of transporting cement, companies in the industry were originally established to serve quite discrete geographic markets: capital cities first, and then later States or similar regions. Only in recent years has there been any trade or competition across the borders of these regions. There still is practically no trade between Western Australia and other States.

Another feature of this case which is unusual - though less so - is that all the dumped imports have come into one State, Western Australia. The reason, of course, is the existence in that State of a cement producer who needs to purchase clinker, and whose purchases from Korea have been at dumped prices.

Taken together, these features lead to a peculiar danger. The Authority could conclude, on the bald figures stated above, that there has not been material injury to the Australian industry taken as a whole, and could therefore

recommend to the Minister that he take no action. But then the dumped imports into the west could continue (and perhaps increase) to the point where the Western Australian industry could suffer very severe damage, still without

"material injury" to the Australian industry as a whole. A predatory exporter (but note that the Authority reaches no judgement on the intentions of the exporter in the present case) could then turn his attention to another of the essentially discrete markets within Australia...

Such a scenario could lead the Authority to assess the "injury" to the Australian industry as a whole as more severe than the bald figures would suggest.

That scenario, however, appears unlikely. Ssangyong has informed the Authority that (a) the current situation in the Korean domestic market for cement and clinker, and the company's long-standing export commitments, make it most unlikely that the company will be able to export clinker to Australia in the next year or so; (b) if the situation

changes, any exports to Australia will be at non-injurious prices; and (c) that the company is willing, if necessary, to give a formal undertaking to this effect.

The Authority has considered recommending to the Minister that, in the light of that information, he find that the dumped imports have caused, and threaten, no material injury to the Australian industry - taken as a whole - producing "like goods". '

The Authority is, however, conscious of the current state of the Australian cement (and clinker) industry and in particular (a) of the need for rationalisation, and hence re-investment, within that industry and (b) of the comments

in the recent Report of the Cement Industry Committee on the subject of dumping and the need for a degree of certainty.


Considerable sums of money will have to be spent over the next few years by the Australian industry in the investment needed for rationalisation. The Authority accepts the (informal) word of the Korean exporter on likely developments - but no business would rely on the informal word of a competitor before taking decisions which could

put millions of dollars at stake.

The Authority has therefore considered seeking formal guarantees from the Korean exporter.

The exporter would probably be unwilling to give a guarantee along the lines of "no further exports"; in any case, the Authority would not seek such a guarantee, which could be seen as a restraint on fair (as well as unfair)

trade in clinker from Korea to Australia. The Authority's concern is confined to injurious dumping.

However, the exporter has also stated that if market conditions change and exports to Australia are resumed, these exports will be at "non-injurious" prices. The Authority believes that it should seek a formal guarantee

to this effect - which has indeed been offered. This would give the Australian industry a degree of certainty in planning its investment decisions.

This raises the question of what price might be seen as "non-injurious".

The Authority is aware of an offer by one of the Western Australian companies to supply the (present) importer with clinker on a long-term basis. That offer is at an ex-works price of $64 per tonne, corresponding to a free-into-store

price of $67 per tonne. The Authority notes that the clinker producer, were its offer accepted, would be supplying clinker at that price to a company (Atlas) which competes with it in the cement market. The Authority

further notes that this price (ex-works) is comparable to prices which have been quoted to Atlas by other Australian suppliers of clinker. For these reasons, the Authority cannot accept that imports could be injurious if they were priced at or above $67, free-into-store.

In the view of the Authority, a free-on-board price ex Korea which corresponds to a free-into-store price in WA of $67 per tonne is not injurious.

On the Authority's request, such a guarantee has now been given by Ssangycng. In doing so, that company states that

"We are very definitely of the opinion that there has been no injury to the .Australian industry by reason of Korean exports, and there is certainly no threat thereof in that there will be no exports in the

foreseeable future. Therefore, we believe that termination of this inquiry is the proper outcome and this price undertaking shall lapse."


.< . *

Having received the price guarantee, the Authority is confident that there is no threat of future exports from Korea at injurious prices. The Authority cannot accept an argument that, since there is now no threat, it should

allow to lapse the price guarantee which is the basis for its confidence: the argument seems circular.

1.1.3 Recommended Action

The Authority recommends to the Minister:

. that the price undertaking offered by the Korean exporter be accepted; and

. that the Minister's consideration of whether or not a declaration should be made under section 8 of the Customs Tariff (Anti-Dumping) Act be suspended indefinitely.