Bills Digest No. 49   1997-98 Customs Legislation (Anti-Dumping) Amendment Bill 1997


Numerical Index | Alphabetical Index

WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

Customs Legislation (Anti-Dumping) Amendment Bill 1997

Date Introduced: 25 June 1997
House: House of Representatives
Portfolio: Industry, Science and Tourism
Commencement: The amendments relating to the method for determining normal value commence on a day to be fixed by proclamation, or failing that, six months after the Bill receives Royal Assent. The amendments relating to interim dumping and countervailing duties are taken to have commenced on 1 January 1993.

Purpose

The major amendments:

  • provide a new method for determining normal value in respect of goods exported from countries whose economies are in transition from command to market economies; and
  • ensure interim dumping and countervailing duties can be imposed prior to a final assessment of duties payable.

Background

Anti-Dumping

Dumping occurs when products from one country are exported to another country at prices less than their normal value.(1)

Australian anti-dumping law is the product of Australia's obligations under the General Agreement on Tariffs and Trade, the Agreement on Implementation of Article VI (the Anti-Dumping Code) and the Agreement on Interpretation and Application of Articles VI, XVI and XXIII (the Code on Subsidies and Countervailing Duties). The Customs Act 1901 and the Customs Tariff (Anti-Dumping) Act 1975 are the principal legislative instruments relating to anti-dumping.

Where an application claiming dumping has been lodged with the Anti-Dumping Authority (ADA), which administers Australia's anti-dumping system, the ADA must determine whether there are sufficient grounds to initiate an investigation. Within the statutory 25 day period allowed for consideration of a claim, the ADA considers matters including whether the goods meet the produced in Australia requirements, injury factors, the adequacy and accuracy of price evidence produced and whether a causal link exists between the alleged dumping and injury to an Australian industry.

Countervailing Duties

Countervailing duties are duties imposed on imports to offset government subsidies to producers or exporters in the exporting country.

Normal value of goods

Section 269TAC of the Customs Act 1901 sets out the criteria that must be followed when determining the normal value of goods exported to Australia. Determination of normal value of goods is central to a determination of whether goods are being dumped because dumping occurs when the products of one country are exported to another country at prices less than their normal value. Basically, the method used to determine normal value is to use the price paid in the country of export. Other methods used for determining normal value include constructing a value from the cost of production, administrative, selling and general costs, and where appropriate an amount for profit, or applying the price paid for like goods sold to an appropriate third country.(2) Where insufficient information has been supplied, or is not available, to determine normal value under any of the latter methods, the normal value is determined by the Minister having regard to all available information.(3)

Subsection 269TAC(4) of the Customs Act 1901

Subsection 269TAC(4) of the Customs Act 1901 sets out certain of the methods to be used by the ADA to determine normal value where the government of the country of export has a monopoly, or substantial monopoly, of the trade of the country and determines, or substantially influences, the domestic price of all goods in that country. These circumstances describe the situation in a so called a 'command economy'. Where the Minister determines that a command economy situation exists and other methods for calculating normal value are not appropriate, the calculation methods specified in paragraphs 269TAC(4)(c)-(f) must be used. These methods include:

a value equal to the price of like goods produced or manufactured in a country determined by the Minister or sold for home consumption in the ordinary course of trade in that country, being sales that are arms length transactions (paragraph 269TAC (4)(c)); and

a value equal to the price payable for like goods produced or manufactured in Australia and sold for home consumption in the ordinary course of trade in Australia, being sales that are arms length transactions (paragraph 269TAC (4)(f)).

Rationale for proposed amendments

The major amendments proposed by the Bill provide a new method for determining normal value in respect of goods exported from countries whose economies are in transition from command to market economies.

Until recently the methods for determining normal value in subsection 269TAC (4) were used to determine normal value for goods exported from command economies by reference to information obtained in a third country. As noted in the Second Reading Speech to the Bill, the Australian Customs Service has received legal advice that has limited the application of the calculation methods in subsection 269TAC (4). Effectively, the Government cannot use the methods in respect to goods from economies which are in transition from command to market. As a consequence, determination of normal value in respect of goods from transitional economies must be made in accordance with the remaining provisions of section 269TAC. As stated in the Second Reading Speech to the Bill:

These provisions at present do not distinguish between "market economies" and those which are considered to be "in transition". Therefore, normal values for exports must be ascertained by the application of the same methodologies that are required to be applied in the ascertainment of normal values for exports from countries such as the United States of America and Germany. That is, there is presently no flexibility available for investigating authorities to treat exports from economies which are in transition differently from exports from other countries.

Interim dumping duties

Where a positive preliminary finding of dumping occurs, action is usually taken against future imports by the imposition of provisional duties, that is, interim dumping duties. The rate of duty is based on the dumping margin found during the preliminary finding inquiry, that is, the difference between the normal value (non-injurious price) and the export price of the goods.

Interim and final dumping duty are imposed by section 8 of the Customs Tariff (Anti-Dumping) Act 1975 on goods subject to a notice under section 269TG of the Customs Act 1901. Basically, subsections 269TG(1) & (2) of the Customs Act 1901 provide that final and interim dumping notices apply to goods or like goods when the amount of the export price is less than the amount of the normal value of the goods. As correctly noted in the Explanatory Memorandum to the Bill, in the case of interim dumping duties the export price and normal value have not been calculated because their collection is "intended to be pending final assessment of the interim dumping duty payable". As such, it is arguable that it is not possible to impose interim dumping duty until the actual amounts of export price and normal value are calculated. The Government has accepted this argument and the amendments proposed by items 5 and 6 of Schedule 1 of the Bill seek to resolve the perceived problem.

Main Provisions

The purpose of item 2 of Schedule 1, which inserts new subsections 269TAC(5D)-(5G), is to provide for a new method of determining normal value for goods exported to Australia from countries whose economies are in transition from command to market.

Under proposed subsection 269TAC(5C) where the Minister is satisfied that:

  • goods are exported to Australia from a country which in the past the government had a monopoly, or a substantial monopoly, of the trade of that country, or substantially influenced domestic prices of goods in that country; and
  • the above circumstances no longer apply; and
  • a price control situation exists in relation to like goods to those exported;

the normal value of the exported goods is an amount determined by the Minister having regard to all relevant information.

A definition of "a price control situation" is contained in proposed subsection 269TAC (5C). A price control situation will exist in relation to like goods to those exported if:

  • the exporter sells like goods in the country of export and the domestic selling price of those goods is controlled, or substantially controlled, by a government of that country; or
  • the exporter does not sell the goods in the country of export but there are other sellers in that country of like goods and the domestic selling price of those goods is controlled, or substantially controlled.

The effect of items 5 and 6 of Schedule 1 is to ensure that interim dumping and countervailing duties can be imposed in respect of goods and like goods exported to Australia prior to a final assessment of duties payable on those goods.

Note: The amendments relating to interim dumping and countervailing duties are taken to have commenced on 1 January 1993. The reason for that date is to ensure that duties collected since the commencement of the provisions, which was 1 January 1993, are not subject to legal challenge.

Endnotes

  1. Lawrie Willett , Review of Australia's Anti-Dumping and Countervailing Administration, ISBN 0642258996, September 1996, p. 23.
  2. Ibid., p. 60.
  3. Ibid., p. 61.

Contact Officer and Copyright Details

Ian Ireland and Tas Luttrell
30 September 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 7 October 1997

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