Chapter 7

Amendments affecting the application process and the preliminary stages of an investigation or review

7.1        The bill introduces a number of amendments that change the information requirements for both the applicants as well as the information considered by the CEO of Customs and the TMRO during an investigation or review.

Restricting supporting data to no more than the 90 day period prior to the application

7.2        Item 8 of the bill inserts a new subsection 269TB(1A) that an application for anti-dumping or countervailing measures must:

(a) be in the form prescribed by the regulations and contain the information required by the form; and

(b) require supporting data relating to no more than the last 90 days; and

(c) be accompanied by any other information or documents prescribed by the regulations.

7.3        The Explanatory Memorandum indicated that one of the intents of this amendment was to make the application form a legislative instrument.

Consistency with domestic legislation

7.4        Customs expressed concern that the amendment would contravene both Part XVB of the Act[1] and other Australian legislation. It noted that under the Legislative Instruments Regulations 2004, 'an instrument prescribing or approving a form is not a legislative instrument' (Item 5 of Part 1, Schedule 1). The Explanatory Memorandum to the Regulations explains the rationale for this:

...prescribed or approved forms are administrative in character because they facilitate the processing of an application for an entitlement. They do not determine or alter the content of the law.[2]

7.5        Customs also queried the objectives of this amendment, arguing that the current application form was designed in consultation with Australian industry, and while it does not specify a minimum period for data provision, the request for sufficient historical data is intended to 'demonstrate that injury has been attributed to dumping, not that injury has been occurring for the past three years'.[3] For an investigation to be initiated there needs to be sufficient prima facie evidence that the injury has caused dumping, which may lead to less applications making it through the screening stage.

7.6        This view was reiterated by JELD-WEN, who contended that:

No meaningful conclusions could be drawn from such limited information that would warrant the initiation of an investigation...If the Australian industry has evidence that imports pose an imminent and foreseeable threat of material injury to the Australian industry and those imports are at dumped prices, there is nothing in either Australia's anti-dumping regime or under the Anti-Dumping Agreement that would preclude an application from being lodged and being acted upon by Customs. Finally, it is incongruous to impose anti-dumping measures or countervailing duty measures for a period of 5 years based on 90 days of information.[4]

7.7        The Law Council of Australia (LCA) and Law Institute of Victoria (LIV) agreed, recommending that a provision be inserted 'requiring applicants to include not less than 12 months of data demonstrating material injury unless the applicant is claiming threat of injury'.[5]

Conformity with WTO obligations

7.8        The Department of Foreign Affairs and Trade (DFAT) noted that while not directly contravening WTO obligations, it could be inconsistent with the general rules agreed to by the WTO members, and therefore, result in increased action against Australia through the WTO's Dispute Settlement Body. Under the WTO Anti-Dumping Committee’s Recommendation Concerning the Periods of Data Collection for Anti-dumping Investigations:

...the period of data collection for dumping investigations normally should be twelve months, and in any case no less than six months, ending as close to the date of initiation as is practicable;...[and] the period of data collection for injury investigations normally should be at least three years, unless a party from whom data is being gathered has existed for a lesser period, and should include the entirety of the period of data collection for the dumping investigation.[6]

Committee view

7.9        The significant timeframe (five years) over which measures can be imposed requires that sufficient evidence be gathered to substantiate an anti-dumping or countervailing measure. The committee is concerned that the amendment would not require sufficient data to be collected to allow applicants to substantiate their case, thereby leaving Customs with no option but to reject their application for lack of sufficient evidence.

Recommendation 5

7.10      The committee recommends the Senate reject item 8 of the bill.

Allowing applications from small manufacturers who account for less than 25 per cent of production to be considered

7.11      According to the Explanatory Memorandum, some small manufacturers have 'advised that they do not feel comfortable liaising with other manufacturers because they don't wish to share information, or they may not be aware of all of the details, may not have the resources, or they may not want to draw attention to themselves'.[7]

7.12      Under the current legislation, and in line with the relevant WTO agreements, applications for anti-dumping and countervailing measures need to have sufficient support. The applicant needs to demonstrate, under subsection 269TB(6), that persons (including the applicant) who produce or manufacture like goods in Australia and who support the application account for:

a) more than 50 per cent of the total production or manufacturer of like goods produced or manufactured by that portion of the Australian industry that has expressed either support for, or opposition to, the application; and

b) not less than 25 per cent of the total production or manufacture of like goods in Australia.

7.13      While these hurdles will remain, the bill inserts a new paragraph (269TB(6)(b)) that would provide if supporting applications have been lodged in respect of the application under paragraph 269TC(4)(baa)—these supporting applications can be allowed to cumulate until the persons lodging those supporting applications together with the applicant account for not less than 25 per cent of the total production or manufacture of like goods in Australia. The application can then be considered by the CEO of Customs as normal.

A win for small to medium enterprises

7.14      This amendment was supported by trade unions. The CFMEU argued that the amendments may contribute to overcoming some factors preventing the application of anti-dumping duties on dumped imports such as firms feeling unable to make complaints because of:

• the small size of their industry would lead them to be too easily identifiable by large customers (who may be directly involved in the dumping activity) with a track record of commercial retribution; and
• the globalised nature of their businesses creating a conflict of interests as some domestic manufacturers are owned by global businesses that also import competing product into Australia.[8]

Interaction of amendment with other sections of the Act

7.15      Customs, however, noted that it is unclear over how this amendment was 'administratively workable', as the bill, in its current form, does not amend subsection 269TB(4)(e). Therefore, the initial application is still required to be supported by a 'sufficient' part of the Australian industry.

7.16      In the prima facie stage of the investigation, Customs screens forms to ensure that they comply with the approved form. Under section 269TC(1), an application:

...must be rejected unless it is supported by a sufficient part of the Australian industry. These amendments will allow the industry support threshold to be met by a single application considered together with supporting applications. Under the amendments the supporting applications will not be called for until after a decision not to reject an application has been made. However, it will be impossible to pass the amendment industry support threshold test unless supporting applications are lodged prior to the CEO's consideration of the application under s.269TC(1).[9]

Conformity with WTO obligations

7.17      The LCA and LIV, Moulis Legal and DFAT argued that the amendment contravened WTO Article 5.4 of the AD Agreement, and 11.4 of the SCM Agreement. Moulis Legal explained that:

The Bill envisages a scenario in which an application made without the support of a sufficient part of the Australian industry will not be rejected. Under the Bill an "invitation" for supporting applications to come forward, in an attempt to meet the 25% threshold of support, is to be issued in the notice that is published under Section 269TC(4) when the CEO has decided not to reject the application. We believe that such a notice effectively initiates an investigation. At that point in time the CEO would not be satisfied that the application was supported by producers responsible for the production of not less than 25% of the relevant goods, meaning that a breach of either of Articles 5.4 or 11.4 will arise.[10]

Committee view

7.18      The committee is concerned that the amendment is not consistent with other sections of the Act, which undermines the ability of the amendment to achieve its objective of increasing the access of small to medium enterprises to Australia's anti-dumping and countervailing system. It is also likely to be inconsistent with Australia's international obligations under Article 5.4 of the AD Agreement and Article 11.4 of the SCM Agreement. Consequently, the committee does not support the amendment.

Including trade union organisations in the definitions of interested and affected parties

7.19      Currently, any "person" may apply for anti-dumping or countervailing measures to be imposed.[11] However, if the application is accepted, only interested parties are invited to lodge a submission on the application or Statement of Essential Facts, and only affected parties may lodge an application for a review of measures already in place.

7.20      The bill amends the definitions of interested and affected parties under subsection 269T(1) of Division 1 (Preliminary) and section 269ZX of Division 9 (Review by Review Officer) by including in the definitions 'a trade union organisation some of whose members are directly concerned with the production or manufacture of like goods'.[12]

7.21      Customs submitted the amendment would not 'affect the ability for a trade union to make an application for anti-dumping or countervailing measures, which already exists'.[13] Customs also noted that its current practice was to include trade unions on the list of interested parties to an investigation whenever such an organisation expresses interest in a particular investigation.[14] Customs further indicated, however, that in practice this has rarely occurred.[15]

7.22      DFAT, the LCA and LIV, and other legal experts did not see any difficulties with adding trade union organisations under the definitions of interested and affected parties, as the list of 'interested parties' under the WTO agreements 'shall not preclude Members from allowing domestic or foreign parties other than those mentioned above to be included as interested parties'.[16]

7.23      However, other submitters raised issues of equity in representation. The IIT argued that the inclusion of unions in the definitions raises the question of who else should or should not be included, making it very difficult to draw the line of what constitutes an interested or an affected party:

If Australian trade unions are to be treated as 'interested parties', are there other groups in Australian society who may also claim that they are affected by the impacts of anti-dumping measures? How many 'experts' could be consulted, whose information must be considered? What may be regarded as 'related Australian industries'?[17]

7.24      Perhaps demonstrating this, some submitters suggested further extending the definition to include other parties they deemed 'interested'. JELD-WEN and CSR Limited, as well as legal experts (the LCA and LIV), supported moves to extend the definition to include Australian industries that use like goods as inputs to manufacture. They argued that, like trade unions these industries:

...may be directly affected by the imposition of anti-dumping and countervailing duties...[and the] interests of such industries should be taken into account'.[18]

7.25      A less prescriptive approach, such as the Productivity Commission's recommendation to include a 'public interest test' may 'satisfy this provision, provided that other legitimate interests are taken into consideration and not only those of trade unionists employed by upstream producers'.[19] However, this view was strongly opposed by other submitters. The Australian Paper Association claimed that 'every affected exporter and importer will argue a "lessening" of competition'.[20]

Committee view

7.26      The committee notes that while the intent of the amendment is to allow trade union organisations to represent their members both as an interested and affected party, the legislation in its current form would still require trade union organisations to satisfy the requirement that their application still represent more than 50 per cent of the total production or manufacturer of like goods produced or manufactured by that portion of the Australian industry that has expressed either support for, or opposition to, the application; and not less than 25 per cent of the total production or manufacture of like goods in Australia.

7.27      Any adjustments to the definition should ensure that the system remains balanced, fair, and accessible to those parties most likely to be affected by potential anti-dumping or countervailing notices. Consequently, the committee believes that the amendments should be expanded to include Australian downstream users in the definition of 'interested' and 'affected' parties.

Recommendation 6

7.28             The committee recommends that items 1, 2 and 32 in Schedule 1 of the bill which expand the definitions of 'interested' and 'affected party' to include trade union organisations be adopted, and that the definitions be further extended to include Australian industries that use like goods as inputs to manufacture.

Allowing earlier implementation of provisional anti-dumping measures

7.29      The bill removes the 60 day requirement before the CEO can make a Preliminary Affirmative Determination (PAD)—that is, it allows Customs to collect securities from importers of the alleged dumped/subsidised goods as soon as an investigation has been initiated. The bill would also allow Customs to take securities if, as part of a TMRO review of a Customs decision, the TMRO has given public notice that there are reasonable grounds to reinvestigate a matter.

7.30      Some submissions supported the amendment related to the PAD, arguing that it minimised the damage to affected industries caused by dumping.[21]

7.31      Customs noted that under section 269TN of the Act, retrospective anti-dumping duties can already be applied, under certain circumstances, up to 90 days prior to the imposition of securities.[22]

7.32      However, DFAT argued that this specific amendment was likely to directly contravene Article 7.3 of the AD Agreement, which stipulates that:

Provisional measures cannot be applied "sooner than 60 days from the date of initiation of the investigation".[23]

7.33      JELD-WEN submission corresponded with DFAT's assessment, but further noted that:

...the CEO of Customs is unlikely to have sufficient information before him or her to make a preliminary affirmative determination prior to the expiration of the 60 day period as he or she would not have responses from importers and exporters in response to Customs importer and exporter questionnaires. The CEO of Customs would not possess positive evidence upon which to base a preliminary affirmative determination. This proposed amendment should not be proceeded with.[24]

7.34      In addition, CSR Limited was unclear how the earlier introduction of a PAD would significantly change outcomes:

PAD has limited application of 6 months for anti-dumping and 4 months for countervailing duties. Theoretically, Customs can introduce a PAD early in the process, but this is not common practice. The earlier measures are introduced the less ongoing damage to the applicant/industry. It is not clear that the 60 day provision will change any outcomes.[25]

7.35      On the amendments that allow the taking of securities once the TMRO has given public notice of a review, the LCA and LIV submitted that they did not support the provisions. They submitted that the proposed amendments would contravene Article 7.1 of the AD Agreement which requires a preliminary affirmative determination of dumping and consequent injury to the local industry. The LCA and LIV consider:

No such determination would have been made in the circumstances here contemplated. While the Trade Measures Review Officer may determine that a re-investigation is warranted, it does not follow that he has concluded that there is dumping and the consequent injury to the local industry. That there are or may be “reasonable grounds to warrant the reinvestigation” of a finding or findings in an application is not a determination that there is dumping causing material injury to the local industry.[26]

Committee view

7.36      The early implementation of provisional anti-dumping measures is clearly beneficial to the domestic industry affected or threatened to be affected by dumping or subsidisation, as it would have the obvious effect of increasing the price of imported goods, thereby minimising potential damage to sales. However, the potential for reduced competition necessitates that preliminary affirmative action only occur where Customs has sufficient information to make such a decision.

7.37      Given the difficulties that Customs appears to have in adhering to the statutory timeframes imposed by the Act, and for applicants to prove causality between dumping and material injury, the committee is unclear how the amendment would lead to changes to current practices.

7.38      In addition, the amendments are likely to contravene Australia's WTO obligations. Consequently, the committee does not support the amendment.

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