Chapter 4

Chapter 4

Provisions of the bill

4.1        The bill clarifies the process through which an affected party may apply for the revocation of anti-dumping measures to be considered. Prior to the Siam decision:

...it was established practice for Customs and Border Protection...to conduct reviews consistent with the nature of the review request. If there was no request for measures to be revoked, Customs would not consider whether measures ought to be revoked.[1]

4.2        The bill seeks to introduce a distinct process for reviews that are considering whether measures should be revoked, compared to reviews limited to the level of the measures. This new process is characterised by the new requirement for a revocation review notice to be published, which will essentially announce that revocation is being considered. Such a notice will only be able to be published at an early stage of the review process, and will be a prerequisite for measures being revoked.

4.3        This chapter begins with an examination of the proposed changes to the descriptions in the Customs Act of the circumstances in which the question of revocation may be considered. Following this, the proposed revocation review notice system and revocation test are scrutinised.

Whether anti-dumping measures are 'no longer warranted'

4.4        The bill amends subparagraphs 269ZA(1)(b)(ii), 269ZA(3)(b)(ii) and 269ZC(2)(b)(ii), to change what:

4.5        The subparagraphs referred to above currently read:

If those measures had not been taken—the Minister would not be entitled to take any such measures;

4.6        The bill would replace the text in those provisions so they instead state:

The anti-dumping measures are no longer warranted.

4.7        By amending these provisions, in conjunction with an explicit revocation test (the version proposed by the bill is examined later in this chapter), the bill would remove the link inferred by the Siam decision to subsection 269TG(2)—the provision in Division 3 of the Customs Act that outlines what the Minister must be satisfied of when deciding whether to impose anti-dumping measures as a result of an initial investigation.

4.8        A similar amendment is made to paragraph 269ZB(d), which will require applications that are based on a view that anti-dumping measures are no longer warranted to provide evidence supporting their claim.

4.9        According to the Explanatory Memorandum, these amendments are:

...in order to make clear that the measures should not be revoked merely on the basis that the conditions to impose antidumping duties do not presently exist.[2]

4.10        While no view from submitters was received on the compatibility of this specific amendment with Australia's WTO obligations, the proposed change appears to be compliant with Articles 11.1 and 11.2 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (AD Agreement), which is relevant to reviews of anti-dumping measures. The words 'no longer warranted' proposed by the bill are familiar to Article 11.2, which allows interested parties to, subject to certain conditions, request that an examination of 'whether the continued imposition of the duty is necessary to offset dumping' take place, and provides that if 'the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately'.

4.11        The proposed amendment may also have some incidental benefits. In the Siam decision Bennet J commented that, in its present form, the construction of section 269ZC:

...is not without difficulty because of the series of negatives: the CEO must reject the application if not satisfied of one of the matters in subsection (2). Subsection (2) recites reasonable grounds for asserting that if measures had not been taken, the Minister would not be entitled to take them.[3]

4.12        By replacing the test used for assessing the matters to be considered in relation to an application, the amendment may improve the readability of that section.

Revocation review notice

4.13      The bill seeks to make it clearer to all parties what issues a review is considering. New paragraphs 269ZC(7)(ba) and (bb) will require a public notice published commencing a review to explicitly state whether the review is considering changes in variable factors and/or whether the measures are no longer warranted.

4.14      If a review was only considering variable factors, and an application to extend an existing review to consider whether the measures are no longer warranted has been accepted, the CEO will also be required to publish a notice explicitly stating that there may be reasonable grounds for a revocation recommendation to be made.

4.15      Public notices that are published based on either situation described above are defined in the bill as a revocation review notice. The process for affected parties to apply for a revocation review notice to be published is examined in the following section.

4.16      Proposed subsections 269ZDA(1A) and 269ZDB(1A) would enforce the revocation review notice system by placing restrictions on how anti-dumping measures may be revoked. They provide that:

4.17      The Explanatory Memorandum describes the purpose of these amendments as being:

...to afford procedural fairness to all parties, so that the Minister will not be able to revoke measures unless a revocation review has been conducted and affected parties have had an opportunity to make submissions on the question of whether the anti-dumping measures concerned should be revoked. Additionally, this amendment will ensure that if revocation is to be considered, it must be raised early in the investigation to ensure ample time to examine whether revocation of the measures is warranted.[4]

4.18      JELD-WEN submitted that they consider proposed subsections 269ZDA(1A) and 269ZDB(1A) to be inconsistent with the WTO's AD Agreement, as Article 11.1 of the AD Agreement provides that 'an anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing material injury', and that introducing a 'bifurcated review process' which differentiated between reviews of variable factors and whether measures should be revoked would be inconsistent with the AD Agreement.[5]

4.19      JELD-WEN further explained their reasoning as follows:

There is no requirement in Article 11.2 that the revocation of anti-dumping measures be conditional upon the relevant authorities having published a particular notice. Rather, having undertaken a review under that Article, the relevant authorities must form a view as to "whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both" and, if the authorities determine that the antidumping measures are no longer warranted, then they must be revoked.[6]

4.20      The Law Council and LIV reasoned that, based on Article 11.1 and decisions subsequently made by the WTO Panel:

...the relevant authorities have no discretion in whether or not to consider whether the measures should be revoked. Rather the authorities are obliged to consider whether the measures remain necessary to offset dumping and, if so, to what extent. It, therefore, is the Law Council and LIV’s view that consistent with Article 11.2 of the Anti-Dumping Agreement, and for that matter Article 11.1 of the Anti-Dumping Agreement, every review of measures should involve a review of whether the measures remain warranted. Reviews should not be confined to a review of the variable factors (i.e. export prices, normal value and non-injurious prices) only.[7]

4.21      The Law Council and LIV recommend that in place of a requirement for a revocation review to commence after the publication of a revocation review notice, every review of anti-dumping measures should not only review the variable factors, but also whether the measures are in fact still warranted.[8]

Publishing a revocation review notice

4.22      Under the proposed revocation review notice process, the Minister may require a revocation review notice to be published (either on his or her own initiative or as a result of a recommendation by the CEO of Customs).

4.23      The bill extends the circumstances where a review may be extended. Currently, if an application for review is accepted but it only relates to how the measures affect particular exporters, and the CEO considers the review should be expanded to include how the measures affect other particular exporters or exporters generally, paragraph 269ZC(4)(b) allows the CEO to recommend to the Minister that the review be so extended. Replacement paragraph 269ZC(4)(b) will allow the CEO to recommend to the Minster that the review be extended to include any additional matter. The Explanatory Memorandum envisions that such additional matters would include:

...extending the review to examine the measures as they relate to other particular exporters, exporters generally, or exporters from other countries subject to the anti-dumping measures. It may also include expanding a review that would otherwise only examine the level of the measures to include an examination of whether the measures should be revoked.[9]

4.24      If the Minister agrees that the review should be extended to include revocation, then the CEO must publish a revocation review notice.

4.25      Other than the Minister requiring a revocation review notice to be published, the bill will provide two other methods for a notice to be published and, therefore, for revocation to be considered as part of a review. An affected party may lodge an application to initiate a review to consider whether the measures are no longer warranted or, if a review of the variable factors has already been initiated, they may request extending that review to consider whether the measures are no longer warranted. If an application arising from one of these circumstances is accepted by the CEO of Customs, then the CEO must cause a revocation review notice to be published. The two distinct application processes that the bill would introduce are discussed in the following paragraphs.

Requests to initiate a review that considers revocation

4.26      Currently, an affected party may apply for a review of anti-dumping measures if there appear to be reasonable grounds for asserting that the relevant variable factors have changed or, if those measures had not been taken, the Minister would not be entitled to take any such measures. An application can, therefore, propose that the measures be revoked.

4.27      As noted earlier, the bill amends one of the factors affected parties can address when lodging an application measures to be reviewed. Instead of addressing whether the Minister would be entitled to take the measures, the bill will require that evidence be provided that the anti-dumping measures are "no longer warranted". Other than this change, affected parties will still be able to lodge a request for a review considering revocation to be initiated. If an application is accepted, however, that review will be considered under the new revocation review notice process.

Requests to extend an existing review to consider revocation

4.28      The bill inserts subsections 269ZCA, 269ZCB and 269ZCC. These new provisions outline the process by which affected parties may apply to extend a review of anti-dumping measures that has already commenced to include revocation, and the circumstances in which such a review may be extended.

4.29      At present, submissions made by interested parties may raise the question of revocation. Customs' current procedure for assessing such submissions is as follows:

A review may have commenced based on an applicant’s claims about the changed variable factors. Where, in the course of that review, an interested party other than the applicant makes claims concerning revocation, Customs and Border Protection will consider these. The ability for Customs and Border Protection to consider and report on such revocation claims will depend on the time available and the nature of the information provided concerning revocation which can be investigated.[10]

4.30      Under section 269ZD of the Customs Act, Customs is obliged to have regard to submissions that are lodged within 40 days of the publication of the notice commencing the review, and is not obliged to have regard to submissions received after that date if it would prevent the timely publication of the Statement of Essential Facts.

4.31      Customs may also consider revocation if, as part of its inquiries, it considers there are grounds to do so, and provided that Customs indicates that it is considering revocation in the Statement of Essential Facts:

An application for a review may concern variable factors only and make no comment about revocation. In this case Customs and Border Protection will focus upon the variable factors. If, in the course of the review, Customs and Border Protection finds grounds to recommend revocation the SEF and the final report will address that matter. If no grounds for revocation are found Customs and Border Protection will report accordingly and the report will largely be confined to the variable factors.[11]

4.32      The new subsections introduced by the bill would allow for affected parties, provided they offer sufficient evidence substantiating their claim, to apply for the scope of a review that is only examining the level of the measures to be extended to include whether the anti-dumping measures are no longer warranted. If this application is accepted, a revocation review notice would then be published.

Cut-off date for applications

4.33      The provisions would require such an application to be lodged within 40 days of the commencement of the review. This 40 day deadline corresponds with the deadline for Customs to receive submissions in response to the notice initiating the review (if Customs are to be required to have regard to them). However, in the review which led to the Siam decision, Customs stated that the timing of the submission which first suggested the measures be revoked, lodged at day 45 of the review:

...limited Customs’ ability to undertake an extensive examination of issues relevant to whether the measures, as they relate to SPE [Siam], should be revoked.[12]

4.34      Applications to extend reviews which are lodged on or near the expiry of the proposed 40 day deadline may create similar issues for Customs. On the other hand, if the deadline was brought forward, it may not allow sufficient time for affected parties to:

4.35      Statutory deadlines already cause difficulties for businesses during some periods of the year. As noted in Report 134, Dow and Siam claimed limited staffing resources over the Christmas and New Year period impacted the ability of Dow to prepare and lodge their earlier submission.[13]

Information to which the CEO of Customs must have regard

Late submissions

4.36      The bill introduces a new subparagraph 269ZD(2)(a)(iii). The effect of this provision would be that, when formulating the Statement of Essential Facts, the CEO would be required 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'.

4.37      This provision would place a positive requirement on the CEO to have regard to submissions received after the day 40 deadline, but allows some discretion to ensure that the Statement of Essential Facts is published by day 110 of the review, in accordance with the statutory timeframe.

4.38      When read in conjunction with subsection 269ZD(3) that is currently in the Customs Act,[14] the effect of the proposed amendment appears to be in order to avoid any doubt as to the circumstances in which the CEO must have regard to submissions received after the deadline, and the circumstances in which the CEO has discretion not to have to regard to late submissions.

Committee view

4.39      The committee notes that the issues addressed by proposed subparagraph 269ZD(2)(a)(iii) may be relevant to other aspects of the anti-dumping process, as Statements of Essential Facts are also required to be published as part of investigations that examine whether to impose or continue anti-dumping measures. The provisions of the Customs Act that require a Statements of Essential Facts to be released in response to those other investigations are also framed in a similar way to the section relevant to Statements of Essential Facts prepared for reviews.

4.40      Submissions made during the review process may differ in nature to those received during an initial investigation because, as demonstrated by the review which led to the Siam decision, they can raise questions of revocation which may not have been the original purpose of the review. However, for consistency and to improve the operation of the anti-dumping system generally, it may be appropriate that a requirement for the CEO to have regard to information received after day 40 of a review (if he or she considers it would not delay the process) to also be applied to investigations considering the imposition of measures and whether measures should be continued past their expiry.

4.41      Nevertheless, the committee notes that the private senator's bill currently before the Senate regarding Australia's anti-dumping system proposes specific amendments which would require the CEO to have regard to new or updated information that reasonably could not have been provided earlier at various stages of anti-dumping investigations and reviews. As the bill being considered by this report only considers the review process, the committee is of the view that it is more appropriate for this issue to be considered as part of its inquiry into the broader private senator's bill.

Customs' ability to recommend that a review be extended to consider revocation

4.42      By introducing the revocation review notice process, which is a more rigid procedure for how reviews may consider the question of revocation, the bill could lessen the ability of interested parties to suggest revocation compared to current practice.

4.43      At present, Customs considers submissions by interested parties other than the applicant made in response to the public notice initiating the review and the Statement of Essential Facts. If these submissions included information that demonstrates the measures were no longer warranted, Customs could then use this information to recommend to the Minister that the measures be revoked.

4.44      The process envisaged by the bill only allows the revocation of measures if a revocation review notice has been published. With the exception of decisions made by the Minister on their own initiative, a revocation review notice may come about as a result of an application made by an affected party or a recommendation from the CEO of Customs to the Minster. These must be made within the first 40 days of the review in order for the Minister to make a decision within the first 60 days of the review.

4.45      As a result, the ability for Customs to utilise submissions from interested parties other than the applicant to consider whether the question of revocation should be included in a review may be reduced. If an interested party were to lodge its submission near the deadline (day 40), Customs may not have sufficient time to examine and verify the claims made, and decide whether to recommend to the Minister that the review be extended to include revocation, as the deadline proposed in the bill for Customs to do this is also day 40. However, as the Minister has until day 60 to extend the review on their own initiative, it is possible that the Minister could still consider such a submission.

New revocation test

4.46      The bill inserts a new test for revocation into the Customs Act. Paragraph 269ZDA(1A)(b) will provide that the CEO of Customs must recommend the measures be revoked[15] unless he or she is satisfied as a result of the review that revoking the measures would lead, or be likely to lead, to a continuation of, or a recurrence of, the dumping or subsidation and the material injury that the measures are intended to prevent.

4.47      The Explanatory Memorandum describes the purpose of the new revocation test as being:

...to make it clear that the revocation test is prospective and hypothetical. That is, anti-dumping measures should not be revoked merely because there is an absence of injurious dumping in the review period. The questions will be whether, if as a result of the review anti-dumping measures are revoked, dumping or subsidation causing injury to the Australian industry will likely continue or recur.[16]

4.48      As noted in Chapter 2, the Full Court in the Siam decision found that the division of the Customs Act which addresses reviews of measures does not expressly outline how revocation is to be addressed, and that the question of revocation raised in submissions on the application could only be resolved in the Siam case by reference to subsection 269TG(2)—which outlines what the Minister must be satisfied of when initially deciding whether to impose anti-dumping measures.

4.49      It is apparent that the revocation test proposed by this bill essentially replicates the test outlined in Division 6A of the Customs Act that relates to the continuation of measures that are otherwise due to expire.[17]

4.50      One of the key aspects of the new revocation test is the reference to 'a continuation of, or a recurrence of, the dumping or subsidation and the material injury that the measures are intended to prevent' (emphasis added). As the test for revocation reviews that is proposed is effectively a copy of the test used for considering the continuation of measures, the provisions of the WTO AD Agreement[18] that govern each need to be examined. Article 11.2, which is relevant to reviews, states:

The authorities shall review the need for the continued imposition of the duty, where warranted, on their own initiative or, provided that a reasonable period of time has elapsed since the imposition of the definitive anti-dumping duty, upon request by any interested party which submits positive information substantiating the need for a review. Interested parties shall have the right to request the authorities to examine whether the continued imposition of the duty is necessary to offset dumping, whether the injury would be likely to continue or recur if the duty were removed or varied, or both. If, as a result of the review under this paragraph, the authorities determine that the anti-dumping duty is no longer warranted, it shall be terminated immediately (footnotes omitted, emphasis added).

4.51      Article 11.3, which is relevant to the continuation of measures, states:

Notwithstanding the provisions of paragraphs 1 and 2, any definitive anti-dumping duty shall be terminated on a date not later than five years from its imposition (or from the date of the most recent review under paragraph 2 if that review has covered both dumping and injury, or under this paragraph), unless the authorities determine, in a review initiated before that date on their own initiative or upon a duly substantiated request made by or on behalf of the domestic industry within a reasonable period of time prior to that date, that the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury. The duty may remain in force pending the outcome of such a review (footnotes omitted, emphasis added).

4.52      As shown above, Article 11.3 refers to the continuation or recurrence of both dumping and injury, while Article 11.2 separates these issues, with the concepts of 'continue' and 'recur' seemingly only linked explicitly to injury.

4.53      Perhaps because the test being proposed for revocation is based on that currently used for the continuation of measures, it is also apparent that the text in proposed paragraph 269ZDA(1A)(b) more closely matches the text contained in Article 11.3, rather than the text of Article 11.2.

4.54      JELD-WEN may have had this apparent discrepancy in mind when forming its alternative proposal for a revocation test. JELD-WEN's recommendation on this matter, as shown below, is more expressly linked to the text contained in Article 11.2 of the AD Agreement:

Division 5 of the Part XVB of the Customs Act 1901 should be amended to expressly provide that any review conducted under that Division must consider whether the anti-dumping measures are "necessary to offset dumping or subsidisation, whether the injury would be likely to continue or recur if the measures were removed or varied or both" and, if it is determined that the anti-dumping and/or countervailing measures are no longer warranted, then they must be revoked.[19]

4.55      The intent of Article 11 has been examined and clarified as a result of various WTO disputes. In US—DRAMS, the Panel suggested that an interpretation of Articles 11.2 and 11.3 could only be meaningful when read in conjunction with Article 11.1—which requires that an anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury.[20] Of relevance, the Panel also examined the issue of whether an anti-dumping measure needed to be revoked as soon as dumping was found to not be occurring. In doing so, the Panel noted that the investigating authority may need to examine the causal link between injury and dumped imports, and if they were considering whether injury was likely to recur, they would also need to consider if the dumping would recur:

First, we note that the second sentence of Article 11.2 refers to an examination of "whether the continued imposition of the duty is necessary to offset dumping."  We note further that this sentence is expressed in the present tense.  In addition, the second sentence of Article 11.2 does not explicitly include any reference to dumping being "likely" to "recur", as is the case with the injury review envisaged by that sentence.

However, the second sentence of Article 11.2 requires an investigating authority to examine whether the "continued imposition" of the duty is necessary to offset dumping.  The word "continued" covers a temporal relationship between past and future.  In our view, the word "continued" would be redundant if the investigating authority were restricted to considering only whether the duty was necessary to offset present dumping.  Thus, the inclusion of the word "continued" signifies that the investigating authority is entitled to examine whether imposition of the duty may be applied henceforth to offset dumping.

Furthermore, with regard to injury, Article 11.2 provides for a review of "whether the injury would be likely to continue or recur if the duty were removed or varied" (emphasis supplied).  In conducting an Article 11.2 injury review, an investigating authority may examine the causal link between injury and dumped imports.  If, in the context of a review of such a causal link, the only injury under examination is injury that may recur following revocation (i.e., future rather than present injury), an investigating authority must necessarily be examining whether that future injury would be caused by dumping with a commensurately prospective timeframe.  To do so, the investigating authority would first need to have established a status regarding the prospects of dumping.  For these reasons, we do not agree that Article 11.2 precludes a priori the justification of continued imposition of anti-dumping duties when there is no present dumping.[21]

4.56      The Panel also referred to Article 11.3 to assist its interpretation of Article 11.2, noting that it refers to the recurrence of dumping, and that if an anti-dumping measure had to be revoked as soon as dumping ceased, this possibility 'could never arise'.[22]

4.57      Further, despite the differences in text between the two articles, the Panel also observed that because both reviews under Article 11.2 and 11.3 'have the same practical effect of prolonging the application of anti-dumping duties beyond the five year point of an initial sunset review...there could be reason to support a view that authorities are entitled to apply the same test concerning the likelihood of recurrence or continuation of dumping for both Article 11.2 and 11.3 reviews'.[23]

4.58      As a result, it does not appear necessary to further examine any possible consequences arising from the separation of the concepts of dumping and injury by the text in Article 11.2 of the AD Agreement in order to consider the revocation test proposed by the bill.

Other amendments

4.59      The bill inserts definitions of 'revocation declaration', 'revocation recommendation' and 'revocation review notice'. These definitions explain the new terms inserted into the Customs Act that assist in differentiating between reviews considering the level of measures and reviews that may consider revoking the measures.

4.60      Minor issues addressed by the bill include a typographical error in subsection 269ZA(5) and some repetitive text in paragraph 269ZC(1)(b).

Interaction with Customs Amendment (Anti-Dumping) Bill 2011

4.61      As noted in Chapter 1 and elsewhere in this report, the Customs Amendment (Anti-Dumping) Bill 2011, a private senator's bill which also proposes amendments to Australia's anti-dumping framework, is currently before the Senate. That bill is also being examined by this committee in a separate inquiry.

4.62      In the event that both bills are passed in their first reading form, an important consideration is the interaction of the amendments, particularly in cases where they amend or repeal the same sections.

4.63      The bill which is the subject of this report deals exclusively with the review process. The private senator's bill has a broader scope and largely focuses on the initial application and investigation process; however it does propose some amendments to the review process.

4.64      The change made to the definition of 'affected party' to include trade unions proposed by the private senator's bill applies to reviews of anti-dumping measures. This report does not seek to assess the virtue of this amendment, as this provision will be examined in detail by the report into the private senator's bill. However, the proposed amendment does not appear to have specific consequences for the intent of this bill being realised.

4.65      Additionally, both bills seek to amend aspects of section 269ZC by repealing aspects of the section and substituting new text. This section deals with the CEO's consideration of applications for review and stipulates that the CEO must reject the application and inform the applicant if certain thresholds are not met (as discussed in paragraphs 4.4–4.12).

4.66      The committee notes an issue may arise if both bills are passed, as they both seek to repeal paragraph 269ZC(1)(b) and substitute it with new text.


Committee view

4.67      The committee considers that the revocation test constructed by the Full Federal Court in Minister of State for Home Affairs v Siam Polyethylene Co Ltd [2010] FCAFC 86 is likely to affect negatively the ability of the reviews process, in its current form, to meet the objectives of Australia's anti-dumping and countervailing system. Failure to address the issues raised by the Siam decision would likely create situations where, if a review makes a finding of no dumping or no injury, the measures will need to be revoked regardless of whether the measures have been effective in limiting the extent to which dumping causing injury can occur. The committee considers that the new revocation test and related amendments proposed by the bill will address this issue.

4.68      The committee also considers that it is important that the anti-dumping and countervailing system continues to comply with the WTO obligations to which Australia has committed. The committee does not consider decisive evidence has been presented which demonstrates that this is not the case in respect of the amendments proposed by the bill.

4.69      Additionally, the committee notes that some submissions suggested that certain amendments, such as those introducing the revocation review notice framework, appear to go further than what may be strictly required to resolve the issues raised by the Siam decision. The committee considers, however, that the revocation review notice system, in conjunction with the new revocation test, will improve the current review process. The new system will make it clearer to all parties what issues are under consideration in a review and will ensure all information is presented to Customs in a timely fashion so they have the ability to thoroughly consider it, while allowing some flexibility for late submissions to be considered if the circumstances allow it.

4.70      Importantly, the amendments ensure procedural fairness to all parties by avoiding situations where Customs is required to consider revocation at a late stage in the review process without the opportunity for other parties to fully respond.

Recommendation 1

4.71      The committee recommends that the Senate pass the bill.

 

Senator Annette Hurley
Chair

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