Bills Digest No. 42, 2017–18
PDF version [299KB]
Paul Davidson
Economics Section
17
October 2017
Contents
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Selection of Bills Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Date introduced: 13
September 2017
House: House of
Representatives
Portfolio: Industry,
Innovation and Science
Commencement: The
day the Act receives Royal Assent
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at October 2017.
Purpose of
the Bill
The purpose of the Customs
Amendment (Anti-Dumping Measures) Bill 2017 (the Bill) is to amend the Customs Act
1901 (the Customs Act) so as to provide additional certainty to
exporters to Australia of the ascertainment of export prices in reviews of
anti-dumping measures.
Structure of the Bill
The Bill contains one Schedule which amends the Customs
Act.
Background
‘Dumping’ is a term used in international trade law to
refer to a situation where an entity in one country exports a product to
another country, at a price which is either below the price it normally charges
in its home market, or is below its costs of production.[1]
Anti-dumping therefore refers to the process and potential imposition of a duty
(a dumping duty) so to have the effect of removing the extent of the dumping.
The principal Australian laws dealing with anti-dumping
measures are contained in the Customs Act,[2]
which sets out the general inquiry process, and the Customs Tariff
(Anti-Dumping) Act 1975 which provides for the imposition of anti-dumping
and countervailing (anti-subsidy) duties.
Anti-dumping measures can be imposed after an
investigation is conducted by the Anti-Dumping Commissioner which recommends to
the relevant Minister that dumping duties be imposed, where there is evidence
of dumping. If the relevant Minister agrees with the recommendation then
dumping duties can be imposed.
Once dumping duties are imposed, interested parties
(generally either the exporter subject to measures or an Australian producer of
like goods) can request a review of the duties imposed. Generally, the purpose
of the review is to establish whether the extent of the duties imposed remains
fit for purpose, that is, that they remedy the extent of any dumping. The
review therefore needs relevant information, particularly about the relevant
prices of the goods. The Bill creates an additional method for ascertaining the
export price for the purposes of conducting an anti-dumping review in order to
prevent gaming of the system under the existing method.
Australia’s anti-dumping has attracted substantial
controversy and evolving legislative action over several decades, including the
Gruen Review in 1986, the Willett Review in 1996, a Productivity Commission
inquiry in 2009, and the Brumby Review in 2012 which led to the establishment
of the present Anti-Dumping Commission.[3]
Committee consideration
Selection of Bills Committee
At the time of writing, the Selection of Bills Committee
had deferred consideration of the Bill until its next meeting.[4]
Senate Standing Committee for the Scrutiny of Bills
At the time of writing, the Scrutiny of Bills Committee
had not considered the Bill.[5]
Policy position of non-government parties/independents
At the time of writing, the position of non-government
parties is not known.
Position of major interest groups
At the time of writing, the position of specific interest
groups is not known, although the Explanatory Memorandum to the Bill did note:
The Australian industry stakeholders who have expressed
concerns allege that the way the system treats exporters who have not exported
in a review period or have exported small quantities (as described above) is
encouraging exporters to adopt this behaviour to allow them to resume dumping
in the period following the review.[6]
Financial implications
The Government stated that the ‘revenue impact of the Bill
is unquantifiable due to the variable frequency and nature of anti-dumping
reviews. However, the revenue impact is likely to be small given the low
volumes of exports affected’.[7]
Statement of Compatibility
with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[8]
Parliamentary Joint Committee on Human Rights
At the time of writing, the Joint Committee on Human
Rights had not considered the Bill.[9]
Key issues and provisions
The Bill amends section 269TAB of the Customs Act,
which deals with ascertaining the export price of exported goods to Australia. Item
1 repeals subsection 269TAB(1A)—which deals with permissible deductions
(reimbursements) that the Minister may apply in ascertaining the export price
of the goods. Item 3 effectively reinstitutes it as proposed
subsection 269TAB(6), as a consequence of the main amendment proposed by item 2.
Item 2 proposes to insert a new methodology for the
calculation of the export price of goods which specifically applies when there
is a review of anti-dumping measures conducted under the Customs Act.
Currently, the export price is determined in three different ways (Box 1).
Under subsections 269TAB(3)–(4), the Minister has
discretion to determine the export price in the absence of sufficient
information, and the discretion to disregard any information that is considered
(by the Minister) to be unreliable.
Box 1: current approaches to ascertaining the export
price of goods exported to Australia
Subsection 269TAB(1) of the Customs Act provides
for three ways in which the export price is ascertained. In summary, those
ways are:
- Where the goods have been exported to Australia otherwise than by the
importer and have been purchased by the importer from the exporter, and the
purchase by the importer was an arms-length transaction—then the export price
is the price so paid, other than any part which represents a transportation
charge or any other matter arising after exportation.
- Where the goods have been exported to Australia otherwise than by the
importer and have been purchased by the importer from the exporter, and the
purchase by the importer was not an arms-length transaction, and the
goods are subsequently sold by the importer to a third party—then the export
price is the price at which the goods were sold by the importer, less any
prescribed deductions.
- In any other case—the export price is the price determined by the
Minister.
|
Source: Customs Act 1901, subsection 269TAB(1).
The central problem that the Bill aims to remedy is the
ascertainment of the export price in accordance with subsection 269TAB(1), in
relation to reviews of anti-dumping measures. This is because where the export
price of the goods is less than the normal value of those goods[10]
dumping has occurred.[11]
For the purposes of reviewing anti-dumping measures which are in place, the
default rules of ascertaining the export price currently apply (Box 1).
The general purpose of anti-dumping reviews are to ensure
that measures remain fit for purpose in that they are targeting dumped goods
and only provide the minimum necessary remedy. Once measures are in place, an
exporter will be subject to anti-dumping duties as determined. However, as
noted in the Explanatory Memorandum:
An unintended consequence of the current legislation allows
Exporters to receive a less effective anti-dumping duty by not exporting, or
exporting small volumes at a higher price, for a period of time, before
applying for the duty to be reviewed.[12]
In effect, under the current provisions, it is possible
for exporters to game the system by selectively constraining exports and/or
charging a high price for them once dumping duties are imposed. Generally,
reviews of anti‑dumping measures can only be conducted annually,[13]
so it is possible for exporters to depress volumes and/or increase prices
during that 12 month period to ensure that the export price of the goods is
closer to (or above) the normal value of those goods. If that were the case,
then either a nominal duty (or no duty) would be imposed as the level of
detriment to the Australian industry producing like goods would be negligible.
With the Minister having then set a nominal duty (on acceptance of a
recommendation by the Anti-Dumping Commission), the exporters increase their
volume and/or decrease the price of their exports, thus injuring Australian
producers of like goods.
Those Australian producers generally have to wait a period
of 12 months before a review can be conducted, during which time dumping is
occurring. If dumping is found by the Anti-Dumping Commission in a subsequent
review and a recommendation made to the Minister to impose dumping duties is
accepted, then dumping duties are imposed. A repeating cycle can then begin
whereby the exporters selectively constrain their exports during the next
period prior to calling for a review of the anti-dumping measures. Item 2
proposes to avoid that occurrence by permitting the Minister a different method
of ascertaining the export price when conducting anti‑dumping reviews.
The amendments proposed by item 2 would create a discretion
by which the Minister may determine that an appropriate export price be
ascertained by reference to the current provisions in subsection 269TAB(1)
in relation to the relevant export price for a review of anti-dumping measures.
Item 2 inserts proposed subsection 269TAB(2A)
which provides that the Minister may determine the export price in accordance
with proposed subsection 269TAB(2B) if:
- the
price is being ascertained in relation to an exporter of goods subject to an
anti-dumping review and
- the
Minister determines that there is insufficient or unreliable information to
ascertain the price due to an absence or low volume of exports of those goods
to Australia.
The Ministerial determination about an absence or low
volume of goods is determined having regards to: the previous volumes of
exports by that exporter; the pattern of trade for like goods; and factors
affecting the pattern of trade for like goods which are outside the control of the
exporter.
Proposed subsection 269TAB(2B) provides that the
export price is that which is determined by the Minister having regard to any
of the following:
- the
export price that is established in accordance with subsection 269TAB(1) (see
Box 1 above) for any of the decisions outlined in proposed subsection
269TAB(2D)[14]
- the
price paid for like goods by the exporter in arms-length transactions of a
Ministerially-determined appropriate third country[15]
- the
export price for like goods exported to Australia from the country of export by
another exporter for any of the decisions outlined in proposed subsection
269TAB(2D).
Proposed subsection 269TAB(2C) permits the Minister
to deem that such exports have occurred in the absence of exports of those
goods.
Proposed subsection 269TAB(2G) provides that in
ascertaining the export price, adjustments may be made to the price ascertained
under proposed subsection 269TAB(2B) by the Minister where the Minister
determines that such adjustments are necessary to reflect what the export price
would have been had there not been an absence or low volume of exports.
Item 4 provides that the amendments will apply to:
- review
applications lodged, or requests made, on or after the commencement of Schedule
1
- reviews
currently on foot but for which a declaration has not yet been made
- review
applications lodged, or requests made, before the commencement of Schedule 1,
but for which a notice of a review had not been made at commencement.
In practice this means that reviews which are currently on
foot may be subject to the new methodology provided for by item 2, which
would amount to a retrospective change in relation to those reviews. As noted
in the Explanatory Memorandum:
This will avoid applying a disproportionately low duty to
reviews already underway. Failing to do so, could allow Exporters to subvert
the intent of the anti-dumping system and produce an unfair outcome for
Australian industry.[16]
However, the Government does not explain why it is
necessary to retrospectively apply the new methodology to reviews currently on
foot. Those reviews, once concluded, could be re-reviewed in a further 12
months’ time. There is no estimate of much of an ‘unfair’ outcome would be
generated by not prospectively applying the amendments in the Bill, but given
that the total amount of duty impact is small,[17]
it is not likely to be significant.
[1]. Marrakesh
Agreement establishing the World Trade Organization (WTO Agreement),
done in Marrakesh 15 April 1994, [1995] ATS 8, (entered into force for
Australia and generally 1 January 1995), Appendix: General Agreement on
Tariffs and Trade (GATT, 1947) Article VI.
[2]. Particularly
Parts XVB and XVC, Customs Act 1901.
[3]. For
a summary of these reviews and reform of Australia’s anti-dumping system, see
Senate Economics Legislation Committee, Customs
Amendment (Anti-dumping Measures) Bill (No. 1) 2015 and Customs Tariff
(Anti-dumping Measures) Amendment Bill 2015, The Senate, May 2015,
pp. 3–6.
[4]. Senate
Selection of Bills Committee, Report,
11, 2017, The Senate, 14 September 2017.
[5]. Senate
Standing Committee for the Scrutiny of Bills, Index
of Bills considered by the Committee, The Senate, 16 September 2017.
[6]. Explanatory
Memorandum, Customs Amendment (Anti-Dumping Measures) Bill 2017, p. 12.
[7]. Ibid.,
p. 4.
[8]. The
Statement of Compatibility with Human Rights can be found at page 28 of the Explanatory
Memorandum to the Bill.
[9]. Parliamentary
Joint Committee on Human Rights, Index
of Bills and legislative instruments, Parliament of Australia, 12
September 2017.
[10]. As
ascertained in accordance with Customs Act, section 269TAC.
[11]. Additional
requirements relate to material injury to an Australian industry producing like
goods: Customs Act, paragraphs 269TG(1)(a)–(b). The imposition of dumping
duties is in accordance with the Customs Tariff
(Anti-Dumping) Act 1975, section 8.
[12]. Explanatory
Memorandum, Customs Amendment (Anti-Dumping Measures) Bill 2017, p. 2.
[13]. Customs
Act, subsection 269ZDBC(1A).
[14]. Proposed
subsection 269TAB(2D) provides for decisions relating to dumping duties,
countervailing duties, reviews of anti-dumping measures, anti-circumvention
inquires, accelerated review, and continuation of anti-dumping measures.
[15]. Proposed
subsection 269TAB(2F) provides that without limiting the matters in
determining whether a third country is appropriate, regard may be had to
whether the volume of trade with the third country is similar to the volume of
trade with Australia, and whether the nature of the trade with the third country
is similar to the nature of the trade with Australia.
[16]. Explanatory
Memorandum, Customs Amendment (Anti-Dumping Measures) Bill 2017, p. 3.
[17]. Ibid.,
p. 4.
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