Chapter 6

Rebuttable presumption of dumping

6.1        This chapter discusses items 3, 4 and 7 of the bill which presume that where dumping and material injury has been proven, the material injury is the result of the dumping.

6.2        It is important to note that the increasingly globalised nature of trade invariably leads to significant pressures on industries that are heavily exposed to the global macroeconomic environment. As such, a domestic industry may suffer 'injury' from many factors linked to the global economic activity, including changing trade patterns, domestic macroeconomic and fiscal policies, and the economic outlook for Australia and its trading partners. Indeed, many stakeholders, including Australian Paper, acknowledged that other factors can contribute to causing injury do domestic producers:

Again, it is very much like the injury issue. It is very hard to separate the different causes. Right now we have a dollar that is up around US$1.09. We have the looming prospect of a carbon tax. We have dumping and subsidies to the tune of, probably, 20 or 30 per cent out of the emerging Asian economies. Which one is the straw that breaks the camel's back?[1]

6.3        To remain internationally competitive and domestically viable, Australian producers (and exporters) need to adapt to these shocks, and often these global forces have resulted in significant structural changes in Australian industries. This point was highlighted by the Australian Workers' Union (AWU) during the public hearing:

Australian exporters are world competitive by definition and need to adapt to the pressures associated with the two-speed economy, including higher exchange rates and interest rates.[2]

6.4        By failing to distinguish between injury caused by this wider range of factors and injury attributable by dumping, a risk arises that anti-dumping and countervailing measures may come to be seen as a protectionist tool both locally and internationally. It would also potentially lead to a lower incentive for domestic industries that are exposed to global economic shocks to adapt to these pressures, resulting in increasing inefficiencies in the domestic industry and leaving them further vulnerable to these shocks.

6.5        Furthermore, the imposition of measures that have wide-ranging repercussions, not necessarily restricted to the immediate petitioning industry, reaffirms the need for the decision to impose such measures to be based on substantial evidence and consideration of all factors.

Rebuttable presumption of dumping

6.6        Under the current legislation, when determining whether material injury has occurred as a result of dumping/subsidisation, the Minister must take into account other factors that may be causing injury to the industry. He or she must not attribute injury from these other factors to dumping or exportation of those goods. The legislation allows that in reaching a determination of whether to impose anti-dumping or countervailing duties, only material injury that is solely due to dumping/subsidisation is considered.

6.7        The bill removes the requirement for the Minister to consider other factors, and substitutes into subsection 269TAE(2A) that, in instances where dumping has been proven and material injury has been proven, a rebuttable presumption exists whereby the material injury is determined to be as a result of the dumping rather than any other factor.

6.8        Lending support to the amendment, CSR Limited explained in its submission that it had applied for anti-dumping measures to protect its Viridian brand in 2010:

When Customs completed the Statement of Essential Facts they were of the view that dumping had occurred. However the day before they were due to present their advice to the Minister, they terminated the investigation claiming they could find no material injury. An appeal to the TMRO was successful, finding that Customs needed to review their findings.[3] 

6.9        CSR Limited noted that if this amendment were in place, the Viridian case 'would have succeeded and not been terminated'.[4]

Does the amendment achieve its objective?

6.10      Customs noted that in an anti-dumping investigation, it is required to determine whether or not there is injury and whether that injury was caused by dumping and/or subsidisation. This requires Customs to carefully consider all 'available evidence'. Customs further pointed out that under Australian legislation, an application for anti-dumping measures must contain sufficient evidence that dumping has caused material injury.[5] For it to determine that a good is dumped, therefore, it needs to consider the other factors which the bill seeks to remove.

Conformity with WTO obligations

6.11      The concept of substantial evidence is deeply entrenched in the WTO agreements. For example, Article 3.5 of the AD Agreement states that:

...The demonstration of a causal relationship between the dumped imports and the injury to the domestic industry shall be based on an examination of all relevant evidence before the authorities. The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports.[6]

6.12      The amendments would therefore be in breach of Australia's international obligations under the AD and SCM Agreements. Despite its support for the amendment, CSR Limited also was unsure whether these amendments would 'stand up under WTO rules'.[7]

6.13      This was a point noted by other submitters, including the LCA and LIV, Moulis Legal and DFAT, which believed that the amendments were also inconsistent with Article 5.2 of the AD Agreement:

To allow such a presumption would undermine the clear distinction between dumping (which in its own cannot be remedied) and dumping causing material injury (which can be remedied). Pursuant to GATT Article VI, the WTO Anti-Dumping Agreement and the SCM Agreement, measures can only be imposed if a determination has been made on each of three issues: dumping/subsidisation, injury and causation...Simple assertion, unsubstantiated by relevant evidence, cannot be considered sufficient to meet the requirements of ...[Article 5.2][8]

6.14      The critical issue is what Customs considers to be 'positive evidence'. This was highlighted during an exchange at the public hearing between Senator Xenophon and Mr Percival, representing JELD-WEN:

Senator XENOPHON:...It [Article 3.1] says it [anti-dumping/countervailing findings] must be based on positive evidence, but isn't there a threshold issue if you cannot obtain the positive evidence because a party is withholding that evidence...? How do you deal with that?...

Mr Percival: ...The issue there becomes part of the investigation procedure, and there are provisions in the WTO agreement which do address this. It says that the first thing is to try to get positive evidence from the importers and exporters to provide whether dumping is occurring or not. If they do not cooperate, there are provisions in the WTO agreement which say Customs can rely on the best information available.

Senator XENOPHON: I value your evidence, but how do you define a lack of cooperation? That in itself is the subject of disputes, isn't it?

Mr Percival: The way I understand Customs to assess lack of cooperation is that after they have initiated an investigation they send to all known importers and exporters questionnaires...Those that respond are considered to be cooperating at that point in time. Customs, depending on the numbers that were involved...would go out and investigate each one of those. That is when they put in their forensic people and their auditors, and that is when they spend a week or two overseas checking that information and verifying it. That is when...the issue that you are concerned with is dealt with: are these accounts sustainable, doctored or what have you?...If during that process information is withheld or they decline to participate, they are also considered to be non-cooperating.

Senator XENOPHON: It goes to the question of the quality of the investigation and the resources as well, doesn't it?

Mr Percival: Yes.

Senator XENOPHON: And that is one of the criticisms of industry.[9]

Committee view

6.15      The committee understands that there have been anti-dumping cases, such as the Viridian case, where decisions made by Customs were unclear and where the lack of cooperation from importers and exporters could have played a decisive factor. However, this is an issue that is more closely related to the transparency of Customs' decisions, as well as the level of resourcing and expertise dedicated to investigating anti-dumping and countervailing applications.

6.16      In addition, the rebuttable presumption amendment reduces the information verification role of Customs, as there would be a lower incentive for Customs to pursue the veracity of information provided from both the complainant and opposing parties to an anti-dumping/countervailing application. This would weaken the evidence-based nature of an investigative process, and limit Customs' ability to conform with the Act's requirements under section 269TC, which require reasonable grounds to be established for the publication of a dumping or countervailing duty notice. 

6.17      Further, the amendment is likely to not conform with Australia's international obligations under Articles 3 and 5 of the AD Agreement, and Articles 11 and 15 of the SCM Agreement.  

Recommendation 4

6.18      The committee recommends the Senate reject items 3, 4 and 7 of the bill.

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