Chapter 5

Importer to bear the onus of proof

5.1        This chapter discusses item 12 of the bill. This item provides that the importer of goods which is subject to anti-dumping application bears the onus of proof to demonstrate that the goods have not been dumped or subsidised for export into Australia.

5.2        A frequent suggestion that has been made in many reviews into Australia's anti-dumping and countervailing framework is that the onus of proof of dumping should be shifted from the complainant industry to the importer.[1]

5.3        Item 12 of the bill seeks to reduce the financial burden on companies by inserting a new section (269TCA) which shifts the burden of proof onto the importer of the alleged dumped or subsidised good. The amendment envisages a situation where, once Customs receives an application form, it will be able to approach the overseas manufacturer and importer and the onus will be on them to prove they are not dumping.

5.4        Any material lack of cooperation on the part of the importer of the imported goods would lead to a presumption that the imported goods are, in fact, dumped goods.

Amendment 'levels the playing field'

5.5        Unions and some industry members 'warmly' welcomed the amendment.[2] For example, the Construction, Forestry, Mining and Energy Union (CFMEU) supported the amendment, as:

This amendment is necessary in order dissuade domiciled importing firms from not cooperating with the Australian Customs and Border Protections service out of commercial interest which has been a characteristic of a number investigations recently conducted by Customs. Non-cooperation or refusing to answer to the case levelled against the exporters in exporting countries or the importers in Australia implies guilt and should be treated this way.[3]

5.6        The Australian Industry Group (AIG) contended that reversing the onus of proof from Australian industry to the importers 'may go some way to "level the playing field"',[4] while CSR Limited noted that:

Customs devotes a substantial effort to the applicant's business, with intense scrutiny of accounts. Importers or overseas manufacturers are less likely to provide such data and it is unlikely Customs provide the same degree of scrutiny when investigating overseas. The benefit of the doubt for uncooperative participants should lie with the applicant and importer data which is less available and transparent should be treated with caution. Most of the exporters in China in the Viridian case did not co-operate.[5]

5.7        However, other submitters were highly critical of the proposed amendments on procedural, equity and legal grounds, as discussed below. 

Conformity with WTO obligations

5.8        The Australian Council of Trade Unions (ACTU) contended that 'nothing in clause 12 of the bill is inconsistent with the WTO rules set above'.[6] It argued that even if passed:

• Customs will still have to notify affected foreign governments of receipt of a complaint (s 269TB(2B));
• Customs may still reject the complaint if there do not ‘appear to be reasonable grounds’ for making the complaint (s 269TC(2));
• After accepting a complaint, Customs must still provide foreign firms (and domestic importers) with an opportunity to put their case (s 269TC(7), (8));
• If foreign firms (and/or governments) provide a response, this may suffice to rebut the presumption that clause 12 of the Bill would impose, and satisfy Customs that no dumping or subsidisation has occurred.[7]

5.9        The ACTU further noted that Customs will have 'express authority to rely on the facts available' to come to the conclusion that dumping has occurred, and that 'this is already the position under Australian law'.[8]

5.10      However, this view was not shared by legal experts and the Department of Foreign Affairs and Trade (DFAT), who stated that the amendments would result in a breach of Australia’s international obligations. Moulis Legal argued that the amendment breached Article 6 of the AD Agreement and Article 12 of the SCM Agreement. In particular, it noted that:

...Article 6.10 of the Anti-Dumping Agreement requires an investigating authority to determine an individual margin of dumping for each known exporter (from the exporting country) or producer of the product under investigation. The CEO would fail in his or her investigative obligation, and would deny exporters and producers their WTO rights, if the CEO were to place an onus on importers to prove that dumping or subsidisation had not occurred.[9]

5.11      DFAT also stated that this amendment would be inconsistent with the AD and SCM Agreements, as it is the CEO’s duty, and not the importer's, to make the determination of dumping and/or subsidisation following an investigation that Customs undertakes.[10] It noted that under the AD Agreement, the determination of material injury must be:

...based on positive evidence and involve an objective examination of both (a) the volume of the dumped imports and the effect of the dumped imports on prices in the domestic market for like products, and (b) the consequent impact of these imports on domestic producers of such products.[11]

5.12      In addition, DFAT noted that the WTO agreements do in fact cover situations where there is a ‘material lack of cooperation’, as Article 6.8 of the AD Agreement provides that:

In cases in which any interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available.[12]

An undue and unfair burden on importers?

5.13      If the main arguments surrounding the inconsistency of the amendment with Australia's WTO obligations centre on 'facts available' to Customs in making a determination on dumping/subsidisation, a key issue is whether the importers, who now bear the onus of proof, would be able to establish such facts.

5.14      Customs was concerned that the amendment would be problematic in practice due to the very limited knowledge or evidence that importers have about the industry potentially affected by dumping. For example, importers would not have the information required to determine normal values and export prices. For Customs to determine whether dumping is occurring, it makes specific numerical findings as follows:

The start point for [calculations of the factors that determine whether dumping is occurring] is data provided by the Australian industry as prima facie evidence of dumping in its application... In practice importers may have little, if any, relevant evidence to determine these issues. Generally, exporters... are the best source of this evidence.[13]

5.15      This view is corroborated by the Australian Steel Association (ASA), which argued that the imposition of the onus of proof on importers would be a 'denial of natural justice'[14]:

Importantly it needs to be recognised that in respect to ASA member steel imports the sales are an ARMS LENGTH transaction and neither the importer or beneficial owner of the imported goods have access to the necessary cost, financial or sales data of their overseas supplier....importers are totally reliant on their overseas supplier co-operating fully with "Customs", and for reasons of commercial confidentiality, importers do not get access to this required financial and sales data.[15]

Does the amendment achieve its objective?

5.16      Despite its aim, the reversal of onus of proof would not necessarily lead to lower burden on domestic producers. This is because the application is initiated by the domestic producers, who would still be required to include in the application form supporting data and evidence that Customs uses in its prima facie screening of the applications. The Act would still require the applicant to establish reasonable grounds for the publication of a dumping duty notice or a countervailing duty notice.

5.17      Should the application be progressed to the investigation stage on the grounds of "threatening to cause material injury" to the industry, the potential inadequacy of the data given by importers could still limit Customs' ability to establish the variable factors and to calculate dumping margins necessary to impose anti-dumping measures.

5.18      In seeking to reverse the onus of proof, the amendments therefore may inadvertently penalise importers who may be acting in the best interest of their business (by seeking the lowest cost alternative) and who do not necessarily have an understanding of the general market dynamics for the industry affected by dumping or subsidisation. It also creates a negative spill-over effect, and shifts the cost of applying for a dumping or countervailing duty from the immediate industry affected to other sections of the Australian economy. The Institute for International Trade (IIT) argued that:

Even if there is injury or damage, the costs of anti-dumping measures benefiting a few may in some circumstances be disproportionate to the wider community impacts and costs. If injury is simply presumed without need for further proof by the complaining party, in some circumstances it may serve to artificially inflate the perceived costs to those few beneficiaries, relative to the wider impacts. This may in turn convert a free kick into a free ride, ultimately leading to the risks and anti-competitive consequences of long-term protection.[16]

5.19      The Law Council of Australia (LCA) and Law Institute of Victoria (LIV) recommended that the amendment not be proceeded with as:

Not only is it unreasonable to impose a statutory obligation upon a party that that party cannot discharge but then to provide the resulting lack of cooperation gives rise to a rebuttable presumption that that importer’s imports are dumped when, again, the importer is not in a position to rebut that presumption is unreasonable.[17]

Other approaches

5.20      Customs noted that importers and end-users 'generally cooperate and provide relevant information, as to not do so would likely result in a finding adverse to their commercial interests'.[18] It added that it deems that an interested party is non‑cooperative where they: (a) do not provide the information requested in the exporter questionnaire, (b) do not respond to the questionnaire in time, or (c) do not permit verification of information supplied in response to a questionnaire.[19]

5.21      The major consequence for exporters of non-cooperation is that they may be subject to an 'all other rate' of dumping or countervailing duties, which is higher than the rates for cooperating exporters.[20]

5.22      If the critical issue for domestic producers and unions is a lack of cooperation from importers and exporters, then there are other, potentially less burdensome avenues that could be used as an incentive for cooperation. There already exist, for example, under subsection 269ZV(1) of the Act, penalties for providing misleading information to the Trade Measures Review Officer (TMRO):

A person must not give the Review Officer any written information that the person knows to be false or misleading in a material particular. Penalty: 20 penalty units.[21]

5.23      JELD-WEN argued in its submission that similar provisions, consistent with domestic legislation and international obligations, could be made when interested parties refuse to provide access to information, or provide misleading information, during the course of an investigative period. It noted that:

Imposing penalties, similar to those applying under the companies' code where parties are found to have submitted deliberately misleading financial and management information. Where a party, either the applicant or an objector, is found to have deliberately breached the guidelines applying to the provision of information, it should be required to meet the costs of the other party.[22]

Committee view

5.24      The committee believes that the proposal to reverse the onus of proof, requiring importers to substantiate that dumping is not taking place, would result in an unfair burden being imposed on importers which may not have access to the information required to substantiate that dumping is not occurring.

5.25      Further, the amendment is not likely to reduce the cost of accessing the system. This is because of requirements in other sections of the Act that the domestic industry would still be required to fulfil as part of the initial application, such as providing sufficient evidence that dumping has occurred and that it is causing material injury to the industry.

5.26      Considering the difficulties that both Customs and the petitioning industries currently face in ascertaining what constitutes 'material injury', the lack of a clear definition of 'material lack of cooperation' could create further uncertainty in Customs' determinations and potentially result in increased litigation.

5.27      The reversal of onus of proof would also likely be in breach of Australia’s international obligations under Articles 3, 5 and 6 of the AD Agreement, and Articles 11, 12 and 15 of the SCM Agreement. This could result in increased and costly litigation both through the appeals process as well as part of the WTO's dispute settlement process.

5.28      The committee believes, however, that ABS restrictions on import statistics can create difficulties for users of Australia's anti-dumping and countervailing system.  Improving the accessibility of this import data should, therefore, benefit users of the system, particularly smaller manufacturers who may have difficulties in obtaining these statistics from other sources.

Recommendation 3

5.29      The committee recommends that to address the recurring issue of import data restrictions that place a significant evidentiary burden on complainants in anti-dumping/countervailing applications, the Government should require the Australian Bureau of Statistics to improve access to non-confidential import data and to reduce the suppression of import data on grounds of confidentiality where public records of the data exist.

Navigation: Previous Page | Contents | Next Page