Chapter 3
Australia's anti-dumping and countervailing framework
3.1
Australia's anti-dumping and countervailing framework is a product of a
number of reviews and reforms undertaken to increase its efficiency and
effectiveness, as well as to ensure that it complies with Australia's WTO
obligations. This chapter begins by providing a brief outline of relevant parts
of the enabling Act and the major reviews and reforms to the system. It
describes the investigative and review processes, including the roles of
Customs, the Minister and the Trade Measures Review Officer. It then examines
the different approaches to administering the system adopted by comparable
jurisdictions that are relevant to the discussion of the bill.
Australian anti-dumping and countervailing law
3.2
Australian anti-dumping law is framed by Australia's obligations
under the General Agreement on Tariffs and Trade (GATT), the Agreement on
Implementation of Article VI (the Anti-Dumping Agreement, or AD Agreement)
and the Agreement on Interpretation and Application of Articles VI, XVI and
XXIII (the Subsidies and Countervailing Measures Agreement, or SCM
Agreement). The Customs Act 1901 (the Act) and the Customs Tariff
(Anti-Dumping) Act 1975 are the principal legislation relating to
anti-dumping.
Customs Act 1901
3.3
The Act vests certain powers in the Minister (currently the Minister for
Home Affairs) and in the Chief Executive Officer (CEO) of Australian Customs
and Border Protection Service (Customs) and, where necessary, allows for the
delegation of the powers of the CEO.
3.4
Within the Act, Part XVB contains the provisions relevant to Australia's
anti-dumping and countervailing framework, and was significantly amended
in 1994 and 1998 to reflect Australia's international obligations as part of
the Uruguay Round of the GATT.
3.5
Part XVB is divided into ten divisions, as follows:
- Division 1 outlines preliminary matters such as the definitions
of various terms;
- Divisions 2 and 3 outline the process the CEO of Customs and the
Minister must follow, and matters they must have regard to, when considering
anti-dumping and countervailing matters;
- Division 4 provides for importers to apply for an assessment of
duty payable;
- Divisions 5 and 6 deal with reviews of anti-dumping and
countervailing measures that are in place, as well as providing for accelerated
reviews for new exporters;
- Division 6A outlines the process for considering whether to
continue anti-dumping and countervailing measures that are otherwise due
to expire;
- Division 7 outlines procedural and evidentiary matters; and
- Divisions 8 and 9 establish the position of the Trade Measures
Review Officer (TMRO), set out their powers and functions, and provide for
reviews by the TMRO of certain decisions by the Minister or the CEO of Customs.
Administration of Australia's
anti-dumping and countervailing law
3.6
As defined by the Act, Customs manages Australia's anti-dumping and countervailing
system and makes recommendations to the relevant minister. Among other things,
it is the Minister who decides whether to issue a dumping or countervailing
duty notice. Customs summarised its functions regarding anti-dumping as
including:
...investigating applications by manufacturers, conducting
reviews and inquiries and advising the minister on whether measures should be
imposed, varied, continued or revoked. Customs and Border Protection is also
responsible for implementing decisions of the minister. Hence, we monitor
compliance with measures imposed and we provide information and assistance to
parties who may be interested in making a claim or parties who are subject to
measures.[1]
3.7
Customs also has a key role in advising interested parties of their
rights and obligations in accessing the system.[2]
3.8
Under the Act, the Minister is the ultimate decision-maker on the
imposition and review of anti-dumping and countervailing measures. The Minister
can commence an anti-dumping or countervailing investigation on his or her own
initiative, and also has powers to extend the timeframes at various stages of
the investigation, as well as to suspend an investigation if he or she chooses
to accept an undertaking.
3.9
The Act also allows aggrieved parties, in cases of dispute with Customs'
or the Minister's decisions, rights to review through the TMRO in the
Attorney-General's Department. However, the TMRO is restricted by the Act in
what decisions it can review.
3.10
The roles of Customs, the Minister and the TMRO are discussed in detail
later in the chapter.
Reviews and reforms of the Australian system
3.11
Australia's anti-dumping and countervailing system has undergone seven
major reviews between 1986 and 2010. These were the:
- Gruen Report (1986), which terminated the role of the Industries
Assistance Commission (IAC), and implemented a two-tier system administered by
Customs and the Anti-Dumping Authority (ADA). It also introduced three year
sunset clauses for measures and specific time limits for various assessment
process stages;
- Senate Standing Committee on Industry, Science and Technology inquiry
(1991), which reduced the assessment timeframes introduced and extended
the default term for measures to five years, allowing for reviews prior to
automatic termination of the duties;
- Turning Point Report (1993), which reviewed overall Customs
service with changes to administrative duty penalties;
- Uruguay Round Legislation review (1995), which introduced changes
to promote higher transparency of the inquiry process;
- Willet Report (1996), which abolished of the ADA due to criticisms
of system 'taking too long, creating duplication, inconsistency, uncertainty
and additional cost'.[3]
It also led to significantly shorter statutory timeframes for investigation
were introduced, and a new system for collecting duties;
- Joint study conducted by Customs, DRET, DFAT and the TMRO (2006),
which improved access to and understanding of the system. It resulted in the
creation of enhanced guidelines for users and the establishment of a Dumping
Liaison Unit to assist small to medium sized enterprises. It also improved
access to case precedents, legal advice, as well as decisions by courts, the
WTO and the TMRO in relation to anti-dumping and countervailing cases.
Improvements were made to the analysis and reporting of material injury and
causal links. It also increased transparency by requiring explanations to be
provided of confidential information deleted in public versions of confidential
reports; and
- Productivity Commission inquiry (2009), which examined the
effectiveness of Australia's anti-dumping system and made recommendations on
the appropriate future role of an anti-dumping system within the Government's
overall policy framework. Its recommendations are currently under consideration
by the Government (see appendix 3 for a list of the Commission's
recommendations).
The investigative process
3.12
For Customs to begin an investigation into dumping or subsidisation, it
must either receive an application from an interested party or be directed to
initiate an investigation by the Minister.
3.13
The process in which an applicant can apply for an anti-dumping or
countervailing notice is depicted in Figure 3.1. The maximum timeframe for
Customs to investigate and report to the Minister is 155 days; however, the
Minister can approve an extension of time, where necessary.
Figure
3.1: Australia's anti-dumping/countervailing application process
![Figure 3.1: Australia's anti-dumping/countervailing application process](c03_1.jpg)
Source:
Customs, Anti-dumping and Countervailing Investigation Process, August 2007, http://www.customs.gov.au/webdata/resources/files/Anti_dumping_and_countervailing_investigation_process1.pdf (accessed: 18 April 2011).
Application process
Prima-facie or screening stage
3.14
For Customs to initiate an investigation into dumping or subsidisation
of goods, an application must be submitted by an interested party that needs to
satisfy prima facie requirements that it is: (a) in writing; (b) in the
approved form; and (c) supported by a sufficient part of the industry.[4]
Once lodged, Customs has up to 20 days to determine whether the
application meets the mandatory requirements.
Investigation stage
3.15
Once reasonable grounds for the publication of a dumping or
countervailing notice have been established, Customs will commence an
investigation, issuing a public notice inviting all interested parties to
respond. During this period, it will also send questionnaires to all known
importers and exporters,[5]
with separate questionnaires for importers and exporters in each of the
countries. Customs will also gather and verify information from producers,
importers and exporters through verification visits as well as through other
forms of consultation. Depending on the case, they may also employ forensic
accountants, interpreters and industry experts.
3.16
If during the investigation Customs determines that dumping has
occurred, it must then establish whether the relevant Australian industry’s
performance has deteriorated, whether any injury suffered would be considered material
and, if so, whether it was dumping that caused the material injury to the
industry. It must not attribute any injury that has resulted from other factors
to dumping. Customs must also assess during this period whether future dumping
threatens to cause material injury to the Australian industry.
Preliminary Affirmative
Determination
3.17
Where the CEO is satisfied that: (a) there is sufficient evidence of
dumping and injury or threat of injury to an Australian industry, and (b)
injury or threat of injury is caused by the dumping, Customs may make a
Preliminary Affirmative Determination (PAD) from day 60 of the investigation.
Customs may then impose provisional measures in the form of securities. The
securities are temporary additional duties designed to prevent material injury
while the investigation continues.
Statement of essential facts
3.18
At or before day 110 of the investigation,[6]
Customs is required to place on the public record a Statement of Essential
Facts (SEF) on which it proposes to base its recommendations to the Minister.
Interested parties have 20 days from the day the SEF is placed on the public
record to respond. Any submissions not received within this 20 day period may
be disregarded.
3.19
In the remaining days of the investigation, Customs will review the
evidence in light of the most recent submissions and finalise its report and
recommendations to the Minister.[7]
Based on the CEO's report, the Minister will decide whether to publish a
dumping duty notice or countervailing duty notice for the imposition of
measures.
Rights of appeal
3.20
In the case of dispute, the aggrieved party has rights to review through
the Trade Measures Review Officer (TMRO) in the Attorney-General's Department, who
is a statutory appointment made by the Minister to provide an independent
administrative appeal mechanism.
3.21
Applicants also have judicial rights of review through Federal Court
action. However, in both cases, rights of appeal are limited as the TMRO has no
investigative function, and judicial challenges to Customs' decisions can only
be made on points of law.
3.22
Interested parties have up to 30 days to appeal to the TMRO. The TMRO
must reject an appeal application if it fails to provide sufficient particulars
concerning the finding(s) of the CEO and/or Minister. Parties may respond to
the TMRO's notice of appeal within 30 days of its publication. The TMRO's
review is limited to a maximum period of 60 days.
3.23
The TMRO may only consider information that was before the CEO and/or
the Minister at the time the finding(s) were made. While the TMRO may
substitute a decision of the CEO to reject an application, it does not have the
power to overturn a decision of the Minister. In other words, the TMRO can only
recommend that the Minister require Customs to re-investigate the matter.
3.24
In addition to the administrative and judicial rights of review
available under Australia's legislative framework, where a member country of
the WTO considers that actions taken by another member country are not in
accordance with the terms of the AD Agreement and/or the SCM Agreement,
specific dispute settlement procedures are available under the WTO framework.
3.25
After an anti-dumping or countervailing duty has been imposed, an
affected party can seek a review of the measures as they affect an exporter(s)
on the following grounds:
(a) variable factors—one or more of the variable factors have changed (i.e.
normal value, export price and/or the non-injurious price underlying an
anti-dumping duty notice); or
(b) revocation—if those measures had not been taken, the Minister would not
be entitled to take any such measures.
3.26
However, unless specifically requested by the Minister, reviews will not
normally be considered until an interim duty rate has been in place for a
minimum period of twelve months (in accordance with WTO agreements). Subsequent
requests for review (again, with an allowance for Ministerial request) will be
considered at twelve monthly intervals from notification of the decision on any
previous review.
3.27
There are special circumstances in which an accelerated review may be
sought, outlined in Division 6 of Part XVB of the Act. This process allows
a review to be sought when a review of the notice would not be available, but
is only open to new exporters.[8]
Continuation review
3.28
Anti-dumping and countervailing measures can be imposed for five years,
unless revoked earlier. No later than nine months prior to the expiry of an
anti-dumping or countervailing measure, the CEO must issue a public
notice indicating their imminent expiry, and inviting interested parties to
lodge applications for the continuation of the measures. If no applications are
received by the due-by date specified in the notice, then the measure expires
on the specified expiry date.
3.29
If, on the other hand, an application is received, then the CEO must
decide whether to reject the application or not in accordance with section
269ZHD of the Act. If the CEO rejects the application, a notice is given to the
applicant detailing reasons for the rejection.
3.30
If the CEO does not reject the application, then he or she must publish
a notice proposing to inquire into whether the continuation of the measures is
justified. The remaining stages of the process are similar both in timeframe
and in process to that of an anti-dumping/countervailing application.
International comparisons
3.31
Australia's anti-dumping and countervailing system is regularly compared
to other international jurisdictions, with changes often proposed to align it
with the US and Canadian systems. At this point, it is important to note that
although these jurisdictions are all signatories to the WTO AD and SCM Agreements,
some of the differences between their systems and Australia's have arisen due
to:
(a) the Australian reforms which were undertaken and were a result of
extensive consultation with affected parties;
(b) the considerable flexibility afforded by the AD and SCM Agreements in
interpreting certain aspects of the agreement and its implementation;
(c) the relative size of their economies and the market structures;[9]
and
(d) the differences in their legal and economic frameworks.[10]
3.32
Customs contends that comparisons between the outcome of Australian
investigations and foreign jurisdictions are 'problematic' due to the differing
circumstances of each case and due to differences in:
- the periods examined in
determining whether goods have been dumped;
- the goods being investigated;
- the parties involved in the
investigation;
- the domestic markets; and
- the legal frameworks, for
example Australia recognises China as a market economy for anti-dumping
purposes, but the EU, US and Canada do not.[11]
3.33
In addition, the systems in place in other countries are often
criticised themselves,[12]
with a number of practices under question subject to negotiation and discussion
as part of the Doha Round:
Senator XENOPHON: ...You have made a number of assertions in
your submission that this would be in breach of our international obligations.
How do the US, Canada and Europe deal with these issues? In a sense, they seem
to be more vigilant in terms of the potential impact on local manufacturers
than we seem to be, particularly the US with steel imports.
Mr Hudson: Hopefully I can address this in part. There are
increasingly situations where measures in respect of certain goods are being
applied internationally. For example, I think we have talked of extruded
aluminium. There were Canadian measures which were put into place, there are
Australian measures which are now in place and the US has initiated an
investigation. I do not quite know how far that has got. The US has got a
different system, which is still WTO compliant but—
Mr Percival: Um—...
Senator XENOPHON: Mr Percival, you are not sure? It must be
WTO compliant.
Mr Hudson: Indeed, it must be—
Mr Percival: It is not.
Senator XENOPHON: It is not?
Mr Hudson: It is possibly not....
Mr Percival: On your question about the US and other
countries, I could be wrong but I think it might have been DFAT representatives
who said that disputes in the WTO are predominantly about antidumping rules.
The US gets regularly hauled into there. Their practice of zeroing has been
found three times to be non-compliant.[13]
3.34
While the systems are not strictly comparable, and some international
practices are questionable from a WTO compliance perspective, it appears that
the interpretation of the agreements has significant bearing on both the
successful advancement of an application to an investigation stage, and the
final outcome of investigations.
3.35
Furthermore, the broad-ranging nature of the bill's amendments
necessitate a comparison between approaches to administering anti-dumping and
countervailing claims, particularly as some of these differences (summarised in
Table 3.1) have significant flow-on effects on the outcomes of investigations.
Table 3.1: International comparison of anti-dumping
and countervailing systems
Issue
|
Australia
|
EU
|
USA
|
Canada
|
Investigation
Timeframe
|
155 days
|
365 days
|
280 days
|
210 days
|
Bifurcated
administration
|
No Customs
|
No European Commission
|
Yes
Dumping –
US Department of Commerce
Injury
and Causal Link –US International Trade Commission
|
Yes
Dumping – Canada Border Services Agency
Injury
and Causal Link – Canadian International Trade Tribunal
|
Decision
maker on the imposition of the measures
|
Minister
for Home Affairs
|
Council
of Ministers
|
US
International Trade Commission
|
Canadian
International Trade Tribunal
|
Review
of decision
|
TMRO Judicial Review
|
Judicial Review
|
Judicial Review
|
Judicial Review
|
Consultation
of interested and affected parties
|
Public notice Questionnaires sent Industry
verification visits
|
Public notice Questionnaires sent Industry
verification visits
|
Public notice Questionnaires sent Industry
verification visits Public
hearing
|
Public notice Questionnaires sent Industry
verification visits Public hearing
|
National
Interest Test
|
No
|
Yes
|
No
|
Yes
|
Anti-dumping
and countervailing duties
|
Minimum
export price and fixed rates of duty for dumping. Fixed rates of duty for
countervailing.
A higher rate of
duties for non-cooperating exporters.
|
Ad-valorem
duty, specific duty (fixed value for certain amount of goods), or a variable
duty (minimum import price) for dumping.
Fixed rates of duty
for countervailing
|
Ad-valorem
duty for dumping.
Use
of zero pricing.
Fixed rates of duty
for countervailing.
|
A floor price equal
to each cooperating exporter's normal value - duty is paid if export price is
less than floor price. An ad-valorem duty is set for all non-cooperating
exporters.
|
Lesser
Duty
|
Yes
|
Yes
|
No
|
Yes
|
Treatment
of China
|
Market
Economy
|
Economy
in Transition
|
Non-Market
Economy
|
Economy
in Transition
|
Source: adapted from Customs, Submission 33 to Productivity Commission's
inquiry into Australia's anti-dumping and countervailing system, 2009, p.
7.
Investigative timeframes
3.36
While maximum duration of an investigation for WTO members is specified
under WTO rules,[14]
one of the striking differences between the Australian system and that in other
comparable jurisdictions is the substantially lower investigation timeframe
Australia has adopted. Customs explained in its submission to the Productivity
Commission's inquiry that:
The objectives of timely and efficient resolution of investigations
and providing certainty in the market place were reinforced by provisions which
conferred power upon decision-makers throughout the investigation or review
process to disregard submissions received if there was insufficient time
remaining for proper consideration. The limitations on what could be considered
on review were also intended to 'ensure the outcome of dumping inquiries is
decided as quickly as possible'.[15]
Administration and the power of
the administrator
3.37
Unlike Australia and the EU, which both have one agency to investigate
dumping and countervailing claims, the bifurcated system in the US and Canada
separates the determination of dumping, injury and causal link between two investigative
agencies (see Table 3.1).
Role of authorities
3.38
The overall focus and number of additional functions performed by the
administrators also tends to differ. Customs, for example, has a number of
functions, with its primary role being border protection. In contrast, the
primary responsibility of the United States International Trade Commission
(USITC) is to administer trade remedy laws, provide independent analysis and
support on matters of tariffs, international trade, and US competitiveness.
This creates different skill sets, expertise and capacities each administration
can draw on when undertaking anti-dumping and countervailing investigations.
Investigation team
3.39
The composition of investigative teams is another point of disparity.
Investigative teams under the US system are assigned six members with different
areas of expertise: an investigator, economist, accountant/auditor, industry
analyst, attorney and supervisory investigator.
3.40
Customs, on the other hand, indicated that:
The typical number of resources required to manage a simple
anti-dumping investigation is three investigations staff. The typical number of
resources required to manage a complex anti-dumping and countervailing
case...is five investigations staff. Additional resources including support
staff from within the branch are brought into the team at certain times during
an investigation to undertake domestic and international verification visits.[16]
3.41
While Customs acknowledged that 'there appears to be a greater degree of
specialisation in material injury and dumping analysis under the European system
relative to Australia',[17]
it did note that independent experts were engaged to assist with analysis of
issues during complex investigations.
Administrative powers
3.42
Certain jurisdictions also have greater powers. The Canadian and US
agencies are semi-judicial in nature and have power to subpoena. Canadian
authorities have the power to require a party to provide evidence, however the Canadian
Border Services Agency (CBSA) have 'rarely, if ever' exercised this power. The
USITC approach is similar, in that it also has statutory subpoena powers,
however, this power is 'very rarely' used. While the US Department of Commerce
does not have similar powers, 'information is provided on a voluntary basis and
failure to cooperate results in the use of some sort of facts available
determined by the particular circumstances of the case'.[18]
3.43
The Act does contain the power, under section 214B, to compel Australian
based interested parties to provide information. However, Customs has indicated
that it 'very rarely used these provisions for its anti-dumping and
countervailing investigations. Information is generally provided by interested
parties on a voluntary basis'.[19]
Consideration of injury
and the public/national interest test
3.44
In addition to the WTO requirements, in the EU and Canada, a public
interest test is used to consider whether the imposition of anti-dumping or
countervailing duties is in the national or public interest. While this is part
of every EU investigation, the public interest inquiry in Canada is not
strictly applied in each case.
3.45
During their investigations, Canada and the US also consider whether
anti-dumping and/or countervailing measures have been imposed by other jurisdictions.
Customs noted that in the event all exporters contacted during an anti-dumping/countervailing
investigation fail to cooperate, then it will consider information gathered
from other countries subject of the same investigation.[20]
Access to and treatment of information
Collection and availability of statistical data
3.46
While all jurisdictions undertake verification visits to the complainant
parties, the overall level of public and industry consultation in gathering
information differs.
3.47
Customs relies on a number of different forms of communication to notify
interested parties of the initiation of an investigation. Firstly, it invites
interested parties to lodge a submission through its public notices published
in major newspapers and Australian Customs Dumping Notices. Secondly, it relies
on email and post to invite submissions. To do this, it utilises its own import
database to identify the most interested parties, including exporters,
importers and traders. Thirdly, its alternative, more indirect, form of
communication is through its electronic public record, which allows interested
parties to monitor anti-dumping and/or countervailing applications once
initiated, and to respond to submissions, reports and other published
information. Customs noted that in relation to the third form of communication:
It is very likely interested parties would be aware of an
investigation. Experience has shown that organisations with an interest that
are not included on the initial interested parties list, become aware of the
investigation as it proceeds, generally with sufficient time to make
submissions.[21]
3.48
Customs primarily relies on the complainant and domestic industry to
provide evidence to support their claims of injury attributed to
dumping/subsidisation. To verify the information it receives from interested
parties, it conducts a number of visits to the applicants and companies, both
domestic and foreign, that have chosen to participate in the investigation.[22]
3.49
Unlike the EU and Australia, the Canadian and US systems also hold
public hearings as part of their injury inquiry. Both allow parties in support
of and in opposition to the application an opportunity to summarise and present
their legal and factual argument and testimonials. Cross examination of
witnesses is only allowed under the Canadian system, and public hearings in
that jurisdiction often take place over a three to five day period.
3.50
The breadth of information available to investigative authorities and
applicants also differs, due to the varying level of data collection and
availability of the central body for information collection.
3.51
For example, some submissions pointed to the 'common' suppression of
country of origin information in Customs/ABS import statistics in tariff codes
affected industries that often have to resort to applications for
anti-dumping/countervailing measures.[23]
This is often contrasted with the US system, which requires the full disclosure
of individual import data on a transaction by transaction basis with full
detail of 'what is being imported by who, from where, and at what price'.[24]
Treatment of confidential information
3.52
Canada and Australia both require parties submitting information claimed
to be confidential to provide for the public record a non-confidential version
of the information, with sufficient detail summarising the confidential parts
of the application.
3.53
Under both systems, the designation as confidential and inclusion of
such information as part of the investigation is ultimately the decision of the
investigative authority. In Australia, if Customs disagrees with the party's
claim of confidentiality, or the party 'refuses either to include the
information in the public record or to prepare a summary, the CEO may disregard
the information, unless the information is demonstrated to be correct. There
are no specific tests in the legislation as to what constitutes
"correct"'.[25]
3.54
Where the systems also differ is in providing access to confidential
information to other users of the system, which reflects, in the case of the US
and Canada, the public hearing process. Canada's system specifies the parties
who can access the confidential information to be the counsel (any person
acting on behalf of a party) and experts (operating under the direction or
control of the counsel). However, this can only be allowed once the tribunal
receives a Notice of Representation and a Declaration and Undertaking signed by
the council. Breaches of confidentiality could result in fines up to $1 million
and 'potential prohibition from appearing before the Tribunal in any future
proceedings for...[both] counsel or expert'.[26]
3.55
While all submissions to the inquiry must have a public version, the US
has a developed a system for treating confidential information. Through the questionnaires,
the USITC obtains extensive company-specific Business Propriety Information
(BPI) from US producers, importers and purchasers and from foreign producers.
Questionnaire data is considered confidential if the aggregate data only
includes one or two companies, or if they include three or more companies and
one company accounts for at least 75 per cent of the total or two account for
least 90 per cent of the total. In these cases, discussion in public documents
will only discuss non-numerical trends and characterisations of the data.
3.56
An Administrative Protective Order (APO) exists to protect the
confidentiality of such information. Only specified parties are allowed to
apply for access to BPI under APO, and are limited to representatives of an 'interested
party'.[27]
However, these individuals are 'strictly forbidden' from divulging BPI obtained
under APO to clients or other individuals not on the APO service list, with
severe sanctions implemented against individuals who breach this requirement,
including: disbarment from practice in any capacity before the USITC; referral
to the United States Attorney, referral to the ethics panel of the appropriate
professional association; and other administrative sanctions as the USITC
determines to be appropriate.[28]
Calculations of dumping margins
and duties
3.57
While the AD Agreement does outline certain steps that must be
undertaken to establish dumping margins and duties, it also affords a great
deal of flexibility in interpretation. This flexibility in interpretation has
resulted in significantly divergent international practices.
3.58
To illustrate, according to the Australian Workers' Union (AWU), the
same product from a Chinese aluminium manufacturer has a 40 per cent dumping
margin imposed on its product in Canada, 60 per cent in the United States, but
only 6 per cent in Australia.[29]
3.59
While other factors may reflect these differences, the methodology used
to calculate the duty may potentially lead to such situations. Indeed, one
practice often cited as significantly inflating dumping margins calculated by
the US is the practice of "zeroing". The process involves removing
export prices above the dumping margin price, and averaging the remaining,
dumped prices. Through this averaging process, the dumping margin calculated
will tend to be significantly higher due to the omission of the lower
non-dumped prices.[30]
3.60
The treatment of China (i.e. whether it is given a market economy status
(MES), or is classified as an economy in transition (EIT), or a non-market economy
(NME)), could also result in differences between the level of measures imposed,
and the success of anti-dumping/countervailing applications between the
countries.
3.61
Given the prevalence of China in Australian anti-dumping investigations
and measures, this is a point worthy of further consideration. Anti-dumping
rules provide various methods for calculating the normal value[31]
of goods depends on the classification of its market. Historically, the
determination of normal values for countries classified as NME increases the
likelihood of a positive dumping finding. This is because it involves using the
price of a surrogate or third country to determine the domestic price in the
exporting country, which is invariably a higher cost producer. Australia's
treatment of China as a market economy results in a higher burden of proof in
the prima facie stage of an investigation when an industry first alleges
dumping.[32]
The burden of proof of dumping on the applicants 'would be much higher than a
calculation based on third country production costs'.[33]
3.62
In addition, the use of the 'lesser duty' rule also results in much
lower duties imposed under the Australian, EU, and Canadian systems than under
the US system. The US imposes anti-dumping measures based on the dumping
margin, even if a lesser duty would be sufficient to remove the injury. Under
the former systems, however, the lesser duty rule is applied, where, even where
the dumping margins are 'high, but where it is found that a 'lesser duty' would
be sufficient to ward off the injury suffered and/or likely to be suffered by
the [European Union] Community (or domestic) industry, only the lesser duty
will be imposed and vice versa'.[34]
While both practices are legal and in conformity with the WTO agreements, under
the agreements, the lesser duty rule is optional.
Summary
3.63
The above section suggests that the flexibility afforded under the WTO's
AD and SCM Agreements is only one of many factors that differentiate the
Australian anti-dumping and countervailing system from other comparable
jurisdictions. Other factors, such as domestic legislation and reforms, the
resourcing and priorities of the administrative system, as well as the economic
framework of a country (including its size, composition and exposure to trade),
also play a role.
3.64
Ultimately, what is driving the perception that Australia is not taking
advantage of this flexibility is its treatment of China as a market economy.
Given the prevalence of China in Australian anti-dumping initiations and
measures, the calculations underpinning investigations of the dumping and/or
subsidisation of Chinese goods play a critical role in the overall outcomes of
Australian investigations.
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