Chapter 8

Chapter 8

Amendments affecting the conduct of an investigation or review

8.1        This chapter examines the amendments proposed by the bill which will affect the conduct of an investigation or review. Fundamentally, the functionality of these amendments is restricted by the 155 day timeframe within which Customs is required by law to undertake an investigation. This overall timeframe can only be extended once by the Minister. Given that Customs needs to verify all information it receives as part of its investigation, and offer opportunities for other affected parties to defend their case, this could put further pressure on an already constrained system. It could also lead to further confusion surrounding Customs' final decisions, and increased risk of litigation.

8.2        Without substantial improvements to the resourcing of Customs, these and potentially other amendments to Australia's anti-dumping and countervailing administrative framework would fail to reduce the burden on users of the system and improve the system as a whole.

8.3        The committee made recommendations in chapter 4 that looked specifically at these resourcing and time constraints (recommendations 1 and 2). Recommendations into each of the amendments relating to changes to information requirements are made below.

Allowing new or updated information to be considered during the investigative & review stages

8.4        Under the bill, the CEO and the TMRO must have regard 'to any new or updated information that is provided...by an interested party that reasonably could not have been provided earlier'. [1]

8.5        The amendments seek to allay industry frustrations with the anti-dumping and countervailing system, which imposes tight timeframes for the provision of information to Customs, allows the CEO to disregard information that is provided after the closing date for submissions has passed, and requires that the TMRO only consider information that was before the CEO and the Minister at the time of the investigation. This has resulted in the inability for new or updated information to be provided at various stages during the investigation process, and made it more difficult to prove material injury was being sustained by the industry:

There is an option to pursue errors of law through the federal court, but this is limited and does not permit review of the merits of the finding. Some mechanism needs to be provided to enable representations outside a Federal Court appeal of errors of law.[2]

8.6        However, Customs noted that, in practice:

Acceptance of submissions after the cut-off date is a common occurrence in relation to all interested parties (e.g. exporters, importers, industry). Late submissions have only been rejected where they would impact negatively on the ability to issue a Statement of Essential Facts, make a recommendation to the Minister, or complete other required processes within the required timeframes.[3]

Does the amendment achieve its objective?

8.7        Australian Paper stated that the amendments had the 'potential to reduce the time required to lodge an application for measures since the applicant will have the ability to lodge further information as it comes to hand (often slowly from overseas sources)'.[4]

8.8        Others disagreed. For example, JELD-WEN did not support the proposed amendments as they defeated the purpose of review by the TMRO of the Minister's decision, which was 'based on information before the Minister at the time he or she made the reviewable decision. In effect,...[the amendment] extends the investigation to a time after [emphasis added] the Minister has made a decision'.[5]

Interaction with other sections of the Act

8.9        Customs was also unclear as to how these mandatory requirements would interact with other subsections, including 269TDAA(3) and 269TEA(4), which state that the CEO is not obliged to consider late submissions if to do so would prevent the timely publication of the statement of essential facts or timely preparation of the report to the Minister. It would also be difficult for the CEO, in Customs' view, to determine whether information 'reasonably could not have been provided earlier'.[6]

8.10      Moulis Legal pointed out that while investigating authorities need to allow applicants due process, it may result in insufficient time for affected parties (Australian importers and exporters of goods into Australia) to defend themselves. This is because 'the prospect that interested parties might not be given adequate opportunity to defend their interests in the case of late-submitted information is higher than in the case of information submitted at an earlier stage of the investigation'.[7]

8.11      Customs noted in its submission to the 2009 Productivity Commission's inquiry that the amount of time required for an investigation is:

...dependent on many factors including the number of interested parties, number of countries involved, complexity of issues...and available resources... In the period July 1999 to May 2009 Customs...undertook 69 investigations. Of these 28 were completed within the 155-day timeframe. The remaining 41 were extended by an average of 57 days.[8]

8.12      Consequently, it appears likely that the amendment, in its current form, could result in further cases where Customs would request extensions of the review timeframes, contrary to the aim of the amendment.

Conformity with WTO obligations

8.13      From a WTO-compliance perspective, the Department of Foreign Affairs and Trade (DFAT) was concerned about the consistency of the amendment with Article 6.4 of the AD Agreement and Article 12.3 of the SCM Agreement, which require investigative authorities 'on request, [to] provide opportunities for all interested parties to meet those parties with adverse interests, so that opposing views may be presented and rebuttal arguments offered'; and that 'the authorities shall whenever practicable provide timely opportunities for all interested parties to see all information that is relevant to the presentation of their cases, that is not confidential...and that is used by the authorities in an anti-dumping investigation, and to prepare presentations on the basis of this information'.[9]

8.14      DFAT also noted that allowing submission of new or updated information later in the investigative and review process raised other WTO concerns:

Trading partners would likely argue that if the TMRO (during review) and/or Customs...(during a subsequent reinvestigation) considered new or updated information then they should be seen as still conducting the initial investigation. They would likely argue that the entire process (i.e. the original investigation, the TMRO review and Customs[']...subsequent reinvestigation) should all be completed within the WTO timeframe. Given the time this process takes, and the additional time that would be added by considering new or updated information, it is quite possible that the time taken for the investigation would exceed the 12-18 months set down by WTO rules.[10]

Customs Amendment (Anti-dumping Measures) Bill 2011

8.15      On 2 March 2011, the Customs Amendment (Anti-dumping Measures) Bill 2011 was introduced into the House of Representatives by the government. Among other things, the bill seeks to introduce a new subparagraph 269ZD(2)(a)(iii) into the Act. This amendment would require the CEO, when formulating the Statement of Essential Facts as part of a review under Division 5, to have regard to any submissions that relate generally to the review but are received after the deadline for submissions (day 40 of the review), if doing so 'would not prevent the timely placement of the statement of essential facts on the public record'.

Committee view

8.16      The committee is concerned that the ultimate workability of this amendment rests on the introduction of the rebuttable presumption of dumping. Otherwise, this amendment introduces additional resource pressures on both Customs and the TMRO which, without expanding the investigative timeframes or increasing resources, would result in additional administrative burdens.

8.17      The changed role of the TMRO under the amendments makes the boundaries between investigation and review unclear, and introduces business uncertainty. Applicants would be unaware of the costs of responding to new or updated information both at the investigation and review stage. The impact on the timeliness of the investigation and review from considering additional information also remains unclear. Consequently, the amendments introduce administrative and time costs on both users and administrators of the system.

8.18      In addition, the amendments are inconsistent with sections of 269TDAA and 269TEA of the Act, and risk contravening Australia's international obligations under the AD Agreement and SCM Agreement.

8.19      The committee considers, however, that the amendment proposed by the Customs Amendment (Anti-dumping Measures) Bill 2011 that would require the CEO, where circumstances allow, to have regard to submissions received after the statutory deadline when formulating the Statement of Essential Facts for a review under Division 5, would be an improvement to that process. The committee believes this amendment should similarly be made to the other investigative and review processes related to anti-dumping and countervailing measures.

Recommendation 7

8.20             The committee recommends that the Senate reject the amendments proposed by the bill to allow new or updated information to be considered during various stages of an investigation or review.

8.21             The committee recommends that Part XVB of the Customs Act 1901 be amended to require that, when the CEO of Customs is formulating the statement of essential facts as part of an investigation under Division 2, review under Division 5 or continuation investigation under Division 6A, he or she must have regard to any other submission received by Customs relating generally to the investigation or review if, in the CEO’s opinion, having regard to the submission would not prevent the timely placement of the statement of essential facts on the public record.

Consulting industry experts during investigative and review stages

8.22      The bill introduces a number of amendments[11] to the Act that require that Customs must consult with persons with expertise in the relevant Australian industry and related Australian industries during the investigative and review stages.

8.23      It also provides timeframes for consultation with industry experts for the review stages. During a review, it prescribes that Customs must consult with industry experts within 20 days of Customs receiving an application for review of anti-dumping or countervailing measures. During a review for the continuation of anti-dumping or countervailing measures—where measures are due to expire—the bill prescribes that Customs must consult with industry experts within a period of 60 days.

8.24      The AWU considered these amendments to be beneficial:

The use of industry experts, accounting experts and other skilled resources, which have not been available to Customs, would also allow a better understanding of the supply chain, the values created and profit derivation, would lead to more robust outcomes, rather than looking at simple price measures and comparisons.[12]

8.25      The AIG was also supportive:

We think that there should be the ability to consult independent experts from outside Customs. Basically, there is a strong concern at the moment that relative industry expertise in either the application of the investigation or the review process is not taken into account. We would very much support the provision or the ability for there to be consultation with outside industry experts as part of the investigation review process. This could be with people who not only are Australian but also are offshore, if they have relevant skills, expertise or knowledge to bring to the table. What we think that does is to bring forward outside views to allow Customs to maybe think much more widely and perhaps globally in how they manage these cases and these claims as they go forward and to seek other input from people who may have information to bear.[13]

8.26      While the Law Council of Australia (LCA) and Law Institute of Victoria (LIV) supported the proposed amendments, they clarified that:

...consideration should be given to defining “related Australian industries” to include those Australian industries that use like goods as inputs to manufacture. The LCA and LIV reiterate their concern that such consultants be required to be independent of the parties to the investigation in question and that they not only have the requisite expertise but also appropriate qualifications.[14]

Workability of the amendment

8.27      Customs strongly opposes these amendments. Aside from stating that industry consultation already occurs, Customs asserted that the amendments may result in significant cost implications and increased risk of litigation under the Administrative Decisions Judicial Review Act 1977 on the grounds of failure to take into account a relevant consideration.[15]

8.28      The major concern for Customs was the lack of clarity in the amendments over the requisite qualifications or experience a person would need to be considered an industry expert, how such experts would be identified or engaged, and how to deal with conflicting advice given by different experts.[16]

8.29      Customs was also concerned about the practicality and purpose of the amendment to consult with industry experts within 20 days of Customs receiving an application for review of anti-dumping measures.[17]

Conformity with WTO obligations

8.30      DFAT raised similar concerns to those identified under the amendments to allow new or updated information during the investigation/review stage. Again, it noted potential discrepancies between the amendments and Australia's WTO obligations.

Committee view

8.31      The specific nature of many of the goods subject to anti-dumping and countervailing measure investigations often requires industry expertise to assist in determining the variable factors that Customs needs to establish before it can make a determination of whether material injury is being caused by dumping or subsidisation. Consequently, the committee supports greater utilisation of industry experts during an investigation period.

8.32      The low number of industry consultations (see Chapter 4) that Customs has undertaken since 2008-09 (10 per cent of all new investigations) warrants further investigation. A legislative requirement, however, for Customs to consult with experts as part of all investigations and reviews could result in unnecessary costs. It is possible that there may be situations where the information available to Customs is sufficient for it to not consult with an expert, but Customs would still be required to do so as a result of this provision. The committee considers the decision whether to engage an expert as part of a particular investigation or review should be left to Customs' discretion.

8.33      The committee believes that in their current form, the amendments do not adequately define or provide guidance for Customs or the TMRO to identify who the industry experts and 'related industries' are and how to deal with cases of conflicting advice. In addition, the requirement for the TMRO to consider additional information which was not available to the CEO, such as that supplied by experts, is beyond the TMRO's current function as an avenue for administrative appeal. Also, the TMRO may not have the same level of expertise or corporate knowledge as Customs in understanding a specific industry, or identifying industry experts, as section 269ZO of the Act requires that the TMRO (although eligible for reappointment) only hold office for a period not exceeding three years. This could create further confusion and inconsistencies between the conduct of the investigation and in subsequent reviews undertaken by the TMRO.

Recommendation 8

8.34      Pursuant to recommendations 1 and 2, the committee recommends that the Government examine the underlying reasons for the low level of consultation with industry experts, and how this affects the outcome of investigations of the Australian Customs and Border Protection Service.

Forecasting, potential impacts and economic factors that may be considered

8.35      The bill makes a number of changes to Part XVB of the Act related to the matters the CEO considers at various stages of an anti-dumping and countervailing investigation, and the economic factors the Minister may have regard to when determining material injury.

8.36      The bill would amend the list of economic factors outlined in section 269TAE of the Act that the Minister may have regard to when determining whether material injury to an Australian industry has been caused or is threatened, by making the following changes:

8.37      Currently, subsections 269TD(2) and 269TDAA(2) of the Act require, in deciding whether to make preliminary affirmative determination and in formulating the statement of essential facts, that the CEO:

a) must have regard to:

i) the application concerned; and

ii) any submissions concerning publication of the notice that are received by Customs within 40 days after the date of initiation of the investigation; and

b) may have regard to any other matters that the CEO considers relevant.

8.38      Through amendments to both subsections noted above, the bill expands the factors that the CEO 'must have regard to' to include:

Clarity of amendments

8.39      The LCA and LIV had reservations about the reference to the 'multiplier effect', considering it to be a:

...general economic term but its precise effect and impact depends on a number of factors that may vary according to the circumstances. It is unclear how this would operate in practice. The LCA and LIV believe this proposed amendment should be deleted or its operation be clarified.[18]

8.40      DFAT was unclear as to the meaning of 'market operation', and was 'unable to form a view on the WTO consistency of its inclusion'.[19]

Do the amendments achieve their objective?

8.41      Customs noted that it is unclear how these amendments would affect existing administrative practice. In its submission, it noted that during its conduct of an investigation, it considers:

...price, volume and profit effects as well as other economic factors, including investment in the industry in assessing the extent and causes of injury to Australian industry... In addition to examining the number of persons employed, Customs and Border Protection will also consider the nature of the employment (eg hours worked and whether there has been a shift from full-time to part-time employment).[20]

8.42      It pointed to a number of cases over the last five years which highlighted its consideration of these factors, including:

8.43      The issue for many submitters, however, was that it was unclear whether Customs considered these factors in each case it investigated. This was highlighted in an exchange between Senator Cameron and representatives from JELD-WEN:

Senator CAMERON:... One of the provisions of the existing act that would be affected by the amendment is 269TAE(3)(m), which is the ability of persons engaged in the industry to raise capital in relation to the production or manufacture of goods of that kind or like goods and investment in industry. So it says you can raise these issues if it has these effects. The Customs and Border Protection submission this morning says that when they conduct an investigation they look at price, volume, profit effects and other economic factors. You have raised on a number of occasions the Australian workers that you employ. Are they simply another economic factor in this legislation?

Dr Silberberg: I would like to know the instances where Australian Customs has taken into account the flow-through effects of alleged dumping. I think, in respect of the cases that JELD-WEN has participated in, the scope of the investigation seems to be somewhat confined and does not take into account, to my knowledge, impacts on employment in other sectors and investments in capacity.[22]

8.44      Customs noted that all economic factors are considered when information is available, consistent with Article 3.4 of the AD Agreement, which requires an evaluation of the actual and potential effects on a range of factors.[23]

Conformity with WTO obligations

8.45      DFAT noted in its submission that 'to the extent that the amendments require consideration of impacts on a "related Australian industry" that does not come within the WTO definition of "domestic industry", this would be inconsistent with Australia's WTO obligations'[24], and by default, this would apply to consideration of a 'multiplier effect' which may involve industries not covered in the WTO's definition of "domestic industry".

8.46      Further, DFAT noted that Article 4.1 of the AD Agreement provides that domestic industry 'shall be interpreted as referring to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products'.[25]

Committee view

8.47      The committee believes that in their current form, the amendments do not adequately define the new factors that the CEO must consider during an investigation. This could create further confusion during the conduct of an investigation and in subsequent reviews.

8.48      Customs has indicated that it considers all economic factors where possible. The key, therefore, is for Customs to be transparent about the methodology it has used during its investigation. This extends to which factors were considered and the reasons for a determination that these factors do not show that material injury has occurred.

Recommendation 9

8.49      The committee recommends that the Government require Australian Customs and Border Protection Service (Customs) to:

Amendments to treatment of confidential information by the CEO and the Minister

8.50      The bill introduces a number of amendments[26] to the Act that affect the treatment of confidential information by both the CEO and the Minister. These are discussed below.

Amendments to treatment of confidential information by the Minister during his/her consideration of anti-dumping and countervailing matters

8.51      A number of provisions under the Act[27] exist currently that detail how the Minister (and the CEO) must treat confidential information that was provided to ascertain the normal value, export price or non-injurious price required to determine dumping margins/subsidisation. Under subsection 269TG(3A):

If any person who has provided information to assist the Minister to ascertain the normal value, export price or non-injurious price of goods ...claims, in writing, that the information is confidential or that the inclusion in a notice under that subsection of that value or price would adversely affect the person's business or commercial interests:

(a) in accordance with subsection 269ZI(9) the Minister is not required to include in the notice a statement of that value or price; but

(b) upon request the CEO may notify that value or price to persons who, in the CEO's opinion, would be affected parties in any review of the rate of interim duty imposed on like goods to the goods to which the declaration relates.[28]

8.52      The bill repeals these paragraphs, instead substituting the following:

(a) in accordance with subsection 269ZI(9), the Minister is not required to include in the notice a statement of that value or price; and

(b) that value or price must not be published in any other way.

8.53      Similar amendments were made in subsections 269TH(4), 269TJ(12) and 269TK(6).

8.54      The amendments were seen by some submitters as unnecessary, as refraining from publishing commercially sensitive material already occurs in practice. However, concerns were raised that the amendments in their current form would result in decreased transparency of the process. For example, the International Institute for Trade (IIT) noted that:

...in consideration of duty assessment applications, claims of confidentiality or adverse business or commercial effects would be determined by the person supplying the information. This may affect the transparency of the process. Currently, the decision-maker [the Minister] forms an opinion on adverse effect.[29]

8.55      Customs considered that the amendments would not provide natural justice for importers, arguing that:

Customs...provides natural justice by disclosing details on the level of anti  dumping duties to bona fide importers. If these details were not disclosed, importers would not be aware of their tax liability until after importation, and would not know how the level of duty has been calculated.[30]

8.56      This was mirrored by the LCA's and LIV's stance, who questioned the constitutionality of the amendment based on the grounds that:

The effect of the proposed amendments is not only to preclude the Minister from disclosing confidential [information]... but also to preclude the CEO from disclosing, upon request, such information to, for example an importer of like goods... In short, this would preclude importers from ascertaining the rate of tax being imposed on their imports. Such lack of transparency is not acceptable and is of questionable constitutional validity.[31]

8.57             DFAT noted a discrepancy between the Explanatory Memorandum, which suggested that what must not be published 'in any way' is the information provided that assisted the Minister to ascertain the 'value', 'amount' and price, and the actual amendments of the bill which suggested that it is the 'value', 'amount' and 'price' themselves that must not be published in any way.        

8.58      DFAT clarified that the WTO agreements allow non-confidential summaries of confidential information to be provided, which is the current practice in Australia. The AD and SCM Agreements[32] only provide for confidential information not to be summarised in such a way only in 'exceptional circumstances' where 'information is not susceptible of summary'. In this instance, parties must provide a statement outlining reasons why summarisation is not possible. According to DFAT:

It is thus only in "exceptional circumstances" that the obligation to publish information "in any ... way" can be avoided. By instituting a blanket prohibition on publication "in any ... way", these amendments would be inconsistent with Australia’s WTO obligations.[33]

Committee view

8.59      One of the critical and difficult issues for administering Australia's anti-dumping system is balancing the confidentiality of information received by Customs (from domestic producers, importers and exporters) and the need for access to this information by the other parties involved in an investigation or review.

8.60      The committee is concerned that the amendments to the treatment of confidentiality by the CEO and the Minister would reduce the transparency, equitability and accessibility of Australia's anti-dumping and countervailing system. Coupled with the amendment which proposes to reverse the onus of proof, it will place an even more significant and onerous burden on importers. 

8.61      The committee further notes that there would be internal inconsistency in the Act between the treatment of confidentiality during the Minister's consideration of anti-dumping and countervailing matters and how Customs would treat confidential information that is to be published on the public record. This is because the bill does not amend subsection 269ZJ(5) of the Act, which requires Customs to keep a public record during the investigation process.

8.62      There also appear to be inconsistencies with Australia's international obligations under the WTO's AD and SCM Agreements. Consequently, the committee does not support the amendment.

Amendments to treatment of confidentiality by the CEO during his/her consideration of duty assessment applications

8.63      Under paragraph 269X(3)(a) of the Act, where the CEO proposes to take into account any relevant information that was not supplied to the CEO by the applicant (i.e. information supplied by a third party), the CEO must:

...give the applicant a copy of the information that he or she proposes to take into account unless, in the opinion of the CEO, the provision of that information would adversely affect the business or commercial interests of a person supplying the information.[34]

8.64      The bill repeals the paragraph, substituting instead:

(a)give the applicant a copy of the information that he or she proposes to take into account, unless the person supplying the information has claimed that the information is confidential or that the provision of that information to any other person would adversely affect the business or commercial interests of the person supplying the information; or

(aa) if paragraph (a) applies—give the applicant a summary of that information in a form that allows a reasonable understanding of the information without breaching that confidentiality or adversely affecting those interests;...

8.65      JELD-WEN, the LCA and the LIV supported the amendment, arguing that it 'enhanced transparency'.[35] DFAT also commented that the amendment 'did not appear to raise any WTO issues'.[36]

8.66      Customs, however, envisaged difficulties in administering the amendment, as it could potentially require the CEO to produce non-confidential summaries of third party information:

It is unclear whether the consent of the third party is required (to confirm that the non-confidential summary does in fact not breach the claimed confidentiality) and what happens if a non-confidential summary cannot be agreed upon. It would be easier to administer a provision similar to that in s.269ZJ(5), which would require the third party to provide the non-confidential summary and give the CEO power to disregard the information if an adequate non-confidential summary is not provided.[37]

8.67      However, Customs' suggestion does not address the underlying issue which interested parties face when dealing with the consequences of information being classified as confidential. If the CEO disregards information provided because the third-party cannot provide a non-confidential summary, this may affect the outcome of an investigation as it may reduce the evidence before the CEO which could have led to a positive finding. As the CFMEU explained:

It is anticipated that providing the opportunity for counter argument by the applicant, interested parties and industry experts of ‘commercial in confidence explanations’ by firms accused of dumping would void the instance of unjust and incorrect findings being made...It would be anticipated that such an amendment is consistent with attempting to overcome the problem of inaccurate findings such as ‘no dumping’ or ‘no dumping causing material injury’ being made.[38]

8.68      An alternative approach was proposed where certain professions could be given access to information that is deemed confidential, provided they enter into a legally enforceable confidentiality undertaking. JELD-WEN suggested this may 'enhance the quality of decision making', but also would:

...cause both applicants and objectors to think very carefully about the quality of the information that they submit to customs in their submissions.[39]

Committee view

8.69      The committee is concerned the proposed amendment is problematic from an administrative point of view as by requiring Customs to summarise third party information, it increases the risk of information that a party considers was commercial-in-confidence being published inadvertently.

8.70      However, there are legitimate reasons for ensuring that third-party information be accessible where it is crucial to the investigation while still protecting the confidentiality of the information.

Recommendation 10

8.71      The committee recommends that the Government consider introducing a framework for certain professions to be able to access information supplied to Customs and the Minister on a commercial-in-confidence basis, provided they enter into a legally enforceable confidentiality undertaking.

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