Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Economics Legislation Committee—Senate Standing—Customs Amendment (Anti-Dumping Measures) Bill 2017 [Provisions]—Report, dated October 2017, and submissions


Download PDF Download PDF

The Senate

Economics

Legislation Committee

Customs Amendment (Anti-Dumping Measures) Bill 2017 [Provisions]

October 2017

© Commonwealth of Australia 2017

ISBN 978-1-76010-656-0

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License.

The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/

Printed by the Senate Printing Unit, Parliament House, Canberra.

iii

Senate Economics Legislation Committee

Members

Senator Jane Hume (Chair) Victoria, LP

Senator Chris Ketter (Deputy Chair) Queensland, ALP

Senator David Bushby Tasmania, LP

Senator the Hon Ian Macdonald Queensland, LP

Senator Jenny McAllister New South Wales, ALP

Senator Nick Xenophon South Australia, NXT

Secretariat

Mr Alan Raine, Acting Secretary Ms Hannah Dunn, Administrative Officer

PO Box 6100 Ph: 02 6277 3540

Parliament House Fax: 02 6277 5719

Canberra ACT 2600 E-mail: economics.sen@aph.gov.au

TABLE OF CONTENTS

Membership of Committee iii

Chapter 1.............................................................................................................. 1

Introduction .............................................................................................................. 1

Conduct of the inquiry ............................................................................................ 1

Background ............................................................................................................. 1

Human rights implications ..................................................................................... 2

Chapter 2.............................................................................................................. 3

Views on the bill ........................................................................................................ 3

Committee view ...................................................................................................... 4

Additional Comments by Senator Nick Xenophon .......................................... 7

Appendix 1 ........................................................................................................... 9

Submissions received ................................................................................................ 9

Chapter 1 Introduction

1.1 On 14 September 2017, the Senate referred the provisions of the Customs Amendment (Anti-Dumping Measures) Bill 2017 (the bill) to the Senate Economics Legislation Committee for inquiry and report by 6 October 2017.1

1.2 The purpose of the bill is to provide greater certainty in the determination of export prices for exporters to Australia (Exporters) that are subject to anti-dumping and countervailing duties in reviews of anti-dumping measures under Division 5 of the Customs Act 1901 (the Customs Act).2

1.3 The bill would facilitate the use of appropriate methodologies to determine an export price during a review of measure for those Exporters who have not exported the goods, or exported low volumes of the goods such that the export price cannot be reliably determined, during the period examined for the purpose of the review. This would allow specific information to be used to determine an export price and limit Exporters' ability to subvert the anti-dumping framework and benefit from inappropriately reduced rates of duty that do not remedy the injurious effects of dumping.3

Conduct of the inquiry 1.4 The committee advertised the inquiry on its website and wrote to relevant stakeholders and interested parties inviting submissions by 26 September 2017. The committee received 6 submissions, which are listed at Appendix 1.

1.5 No public hearings were held for this inquiry.

1.6 The committee appreciates the efforts of all stakeholders who contributed to the inquiry.

Background 1.7 The Australian Government is committed to free and fair trade, and considers that Australian businesses must be globally competitive and should not be shielded from genuine competition. However, dumping and foreign good subsidisation of goods exported to Australia does not reflect genuine competition and can distort markets and cause serious injury to Australian manufacturers.4

1.8 According to the Explanatory Memorandum:

1 Journals of the Senate, No. 63, 14 September 2017, p. 2009.

2 Explanatory Memorandum, p. 2.

3 Explanatory Memorandum, p. 2.

4 The Hon. Craig Laundy MP, Assistant Minister for Industry, Innovation and Science, Second Reading Speech, House of Representatives Hansard, 13 September 2017, p. 16.

2

Australia's anti-dumping and countervailing system is intended to provide a market-based remedy to injurious dumping and subsidisation. The remedy provided should be effective at preventing further injury.5

1.9 But the evidence suggests that this has not been the case:

…it has been identified that the current operation of the system is producing systemic outcomes that do not fulfil the intent of the system. In every instance that the low volume export behaviour was identified, and following the zero percent margin there was another process such as a later review or continuation inquiry, the exporters behaviour had led to the subsequent process resulting in a positive dumping margin. These outcomes are evidence that the remedial duties are being undermined.6

1.10 The Assistant Minister's Second Reading Speech outlined the problem in more accessible language:

Currently, there exists the possibility that foreign exporters subject to duties can subvert the reviews of measures process…Foreign exporters are able to deliberately limit exports of the dutiable goods for a period of time in order to obtain a more favourable rate of duty for future exports. This facilitates the opportunity for the exporter to resume dumping and continue to injure Australian industry.7

1.11 The measures proposed by the bill are intended to address issues associated with no or low volume exports where goods are subject to anti-dumping and countervailing duties. The proposed mechanism introduces three specific methods to determine export prices for the purpose of informing the level of dumping duty to be applied to future exports. In doing so, this would establish an export price that is reasonably reflective of the export price that would have existed had the Exporter made exports or made exports of a greater volume.

1.12 In highlighting the benefits of the proposed approach, the Assistant Minister considered that:

This change will increase Australian manufacturing industry's confidence in the strength of the anti-dumping system by removing an unintended consequence of reviews of measures which could be exploited by foreign exporters. This will ensure that the system continues to operate as intended to provide relief from injurious dumping for Australian manufacturers.8

Human rights implications 1.13 The bill does not engage any of the applicable rights or freedoms, and, as such, is compatible with human rights.

5 Explanatory Memorandum, p. 14.

6 Explanatory Memorandum, p. 14.

7 The Hon. Craig Laundy MP, Assistant Minister for Industry, Innovation and Science, Second Reading Speech, House of Representatives Hansard, 13 September 2017, p. 16.

8 The Hon. Craig Laundy MP, Assistant Minister for Industry, Innovation and Science, Second Reading Speech, House of Representatives Hansard, 13 September 2017, p. 16.

Chapter 2 Views on the bill

2.1 All stakeholders that provided submissions to the bill supported the proposed introduction of measures to strengthen Australia's anti-dumping system.

2.2 BlueScope Steel explained how the anti-dumping system had been gamed by international steel exporters and noted that the bill was:

…designed to address the unintended consequences of this gap in existing legislation that allows exporters to subvert and undermine the intent and integrity of Australia's anti-dumping system.1

2.3 Similarly, the Manufacturers' Trade Alliance, an informal group of Australian manufacturers and producers that have applied experience with the Australian anti-dumping system, believed that the bill would:

…reduce the incidence of exporters and importers exploiting Australia's anti-dumping system and restore confidence among manufacturers of its effectiveness.2

2.4 Likewise, the Australian Manufacturing Workers' Unions (AMWU) concluded that:

This legislation improves Australia's anti-dumping system by ensuring a more transparent and efficient review mechanism to avoid circumvention.3

2.5 In terms of how the bill addresses the problem identified, the Australian Steel Institute considered that the proposed response:

…is proportional in that it would only affect the relatively few instances [where an export price cannot be determined] and is only a small change to how reviews are currently undertaken.4

2.6 A number of stakeholders also noted that the bill will more closely align the Australian anti-dumping regime with its peers. For example, the Australian Steel Institute commented that:

This amendment brings Australia more closely into line with the antidumping rules of other comparable jurisdictions and will help ensure Australian manufacturers access timely and effective redress from injurious dumping in line with Australia's WTO [World Trade Organisation] rights and obligations, thereby helping to support local jobs and investment.5

1 BlueScope Steel, Submission 2, p. 2.

2 Manufacturers' Trade Alliance, Submission 3, p. 2.

3 Australian Manufacturing Workers' Union, Submission 5, [p. 2].

4 Australian Steel Institute, Submission 1, [p. 1].

5 Australian Steel Institute, Submission 1, [p. 1].

4

2.7 While supporting the bill as a step in the right direction, some stakeholders noted that other legislative measures may be required to further strengthen the anti-dumping system.6 The Construction Forestry Mining and Energy Union (CFMEU) submitted that:

…a lot more can and should be done to make Australia's anti-dumping and countervailing system as responsive to the needs of local industries as systems in the United States, Canada and the European Union.7

2.8 In addition, the CFMEU considered that:

…further regulatory action could need to be implemented in the near future particularly if the exporter behaviour continues or the new approach outlined in the bill to prevent the circumvention of the intent of duties through the review method fails or the circumvention occurs by some other way through the review method.8

2.9 The CFMEU went on to highlight that:

With the results of the United States Section 232 Investigation into steel imports likely to be released soon it is time that Australia strengthens our regulatory arsenal when it comes to the prevention of the dumping of goods which cause material injury to local firms, and certainly prevents the circumvention or other avoidance of anti-dumping duties we have in place. If this does not occur it is conceivable that excess global capacity will find its way to Australian shores, devastating local industry.9

2.10 The AMWU also indicated that it remains 'open to further changes to the anti-dumping system to ensure that injurious dumping is stamped out'.10

2.11 Further, the AMWU recommended that the proposed review of measures system be reviewed after two years, noting that:

Given the length of time required to move to retrospective duties, waiting five years before initiating a review of the current system could mean we are stuck with this system for the best part of a decade even if it fails to stop exporters gaming the system.11

Committee view 2.12 The committee believes that free and fair trade is important to economic growth and provides very real benefits for Australian businesses and consumers. However, current dumping and government subsidisation of goods exported to

6 See Australian Workers' Union, Submission 6; Construction Forestry Mining and Energy Union, Submission 4; and, Australian Manufacturing Workers' Union, Submission 5.

7 Construction Forestry Mining and Energy Union, Submission 4, p. 3.

8 Construction Forestry Mining and Energy Union, Submission 4, p. 3.

9 Construction Forestry Mining and Energy Union, Submission 4, p. 3.

10 Australian Manufacturing Workers' Union, Submission 5, [p. 2].

11 Australian Manufacturing Workers' Union, Submission 5, [p. 2]. See also Australian Workers' Union, Submission 6.

5

Australia does not represent genuine competition and can distort markets, injure Australian manufacturers and put Australian jobs at risk.

2.13 The committee recognises that aspects of the anti-dumping system are not working as intended and agrees with stakeholders that the proposed measures to address gaming of the anti-dumping system are necessary to protect Australian industry. The committee is also confident that the new measures will not diminish the international perception of the integrity and transparency of Australia's anti-dumping system.

2.14 The committee notes that the amendments proposed by the bill will only change the review of measures process and recognises the need for governments to work closely with industry stakeholders to regularly assess opportunities for further

reform to strengthen Australia's anti-dumping system.

Recommendation 1

2.15 The committee recommends that the bill be passed.

Senator Jane Hume

Chair

Additional Comments by Senator Nick Xenophon Eliminating 'Dumping' Headwinds for Australian Industry 1.1 The dumping and, in effect, foreign government subsidisation of goods exported to Australia is harmful to Australian manufacturers, producers and jobs and must not be allowed to occur. Opportunistic and predatory exporters who dump such goods look for weak international targets that don’t enforce their WTO rights. For too long Australia has been seen as a 'soft touch' for such predatory practices in effect an easy dumping ground for those who seek to bend and break WTO rules. Therefore Australia must be seen to be tough and responsive with respect to this non-compliant activity under WTO rules.

1.2 So while I support the recommendation of the Committee that this bill be passed, much more can and must be done. I set out some further measures below that need to be urgently implemented.

1.3 Initiating and prosecuting an anti-dumping claim can be arduous and expensive. As such:

(a) An independent advocacy and advisory service similar to the previous International Trade Remedies Advisory Service is needed to assist SME Australian producers determine whether a prima facie case of dumping, countervailable subsidies or duty circumvention exists, to prepare and lodge an application with the Commission and to support an applicant through the anti-dumping screening, investigation and administrative review processes.

(b) The current application process to complain about dumping has been criticized as extremely complex, expensive and bureaucratic from those in industry that I have spoken to. Adopting a simplified application process for SMEs is essential. The European Commission's approach would still satisfy the need to be WTO compliant but would reduce the burden on the Australian industry applicant to extract and present, in some cases, extraneous and irrelevant information.

(c) The shift to the European Commission styled 'inquisitorial' styled application process would see the Commissioner drawing out the relevant merits of a case without placing a 'blanket' burden on the Australian industry SME applicant to do so. This ensures that the best available information forms the basis of a decision to initiate, what invariably turns into an expensive and time consuming formal investigation process for industry, market stakeholders and the taxpayer.

1.4 The Anti-dumping Commissioner needs to have an increased focus on countervailable subsidy investigations. As Australia has become more effective in investigating the dumping of imported goods causing material injury to Australian producers, the role of countervailable subsidies has continued to grow. The

8

investigation of foreign governments' countervailable subsidy programs is extremely expensive and beyond the reach of most Australian industry members. To address this growing problem the Commissioner needs to direct additional resources to this.

1.5 Consistent with the recommendations of the 2012 Brumby 'Review into Anti-Dumping Arrangements', the Anti-dumping Commissioner needs to further address the shortage of staff with appropriate skill sets to execute his functions. The increased use of independent non-government experts, especially during exporter verification visits, needs to be implemented as a matter of urgency.

1.6 The power to collect any short-fall in duty payable needs to be addressed immediately. The current optional Duty Assessment process encourages exporters and importers to continue to trade in dumped goods, in some cases by greater magnitudes of dumping, with no risk of back capture of underpaid duties.

Recommendation 1

1.7 That the bill be passed, but the additional measures outlined in paragraph 1.3 through 1.6 above be implemented as soon as practical.

Nick Xenophon

Senator for South Australia

Appendix 1 Submissions received

Submissions

1. Australian Steel Institute

2. BlueScope Steel

3. Manufacturers’ Trade Alliance (MTA)

4. Construction Forestry Mining & Energy Union (CFMEU)

5. Australian Manufacturing Workers’ Union

6. Australian Workers’ Union (AWU)