Bills Digest no. 31 2013–14
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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.
Eugenia Karanikolas
Economics Section
11 December 2013
Contents
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Statement of Compatibility with Human Rights
Policy position of non-government parties/independents
Financial implications
Key issues
Key Provisions
Concluding comments
Date introduced: 14 November 2013
House: House of Representatives
Portfolio: Industry
Commencement: Sections 1-3 commence on Royal Assent. Schedule 1 commences on the earlier of a day to be fixed by Proclamation or six months after Royal Assent.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.
The primary purpose of Customs Amendment (Anti-Dumping Commission Transfer) Bill 2013 (the Bill) is to amend the Customs Act 1901 (the Customs Act)[1] to separate the Anti-Dumping Commission (the Commission) from the Australian Customs and Border Protection Service (Customs) to allow the Commission to be transferred to the Department of Industry. This reflects a pre-election commitment made by the Government.[2]
The Bill is comprised of three parts:
- Part 1 of the Bill amends the Customs Act to effect the transfer of the Commission to the Department of Industry. The amendments to the Customs Administration Act 1985[3] in Part 1 remove references to the Commissioner
- Part 2 of the Bill makes consequential amendments to the Criminal Code Act 1995[4] and the Law Enforcement Integrity Commission Act 2006[5] to remove references to the Commissioner of the Anti-Dumping Commission and
- Part 3 of the Bill contains relevant application, saving and transitional provisions.
Dumping is said to occur when an overseas supplier exports a good to Australia at a price below its ‘normal value’ in the supplier’s home market. If dumping causes, or threatens to cause, ‘material injury’ to local producers of ‘like goods’, then remedial action—mainly the imposition of special customs duties—can be taken against the imported goods concerned.[6]
Predatory dumping occurs when an overseas supplier’s main aim is to obtain market power by driving the local suppliers out of the market and subsequently raise the price of a product. This type of dumping is not common in Australia.[7]
The Productivity Commission Inquiry into anti-dumping in 2009 noted:
There is no evidence that in recent years dumping has been motivated by the sort of predatory intent that would, in a domestic market context, risk breaching the Trade Practices Act (TPA).[8]
The other form of dumping is episodic in nature and occurs when an overseas supplier sells surplus stock at heavily reduced prices. This may put pressure on local suppliers to reduce prices or reduce production. According to the Productivity Commission, ‘in industries such as chemical or steel products, that are dominated by capital intensive, large scale manufacturing facilities, and where demand fluctuates considerably across the economic cycle, price discounting in export markets can occur quite regularly’.[9] It is this sort of ‘dumping’ that Australian businesses may face.
Whilst the engagement of episodic dumping is considered to be an undesirable business practice as it can lead to a misuse of market power, the same cannot be said for other pricing strategies often referred to as ‘dumping’ but which are more akin to price discrimination. In effect, price discrimination in international trade means that suppliers can charge different prices for a good in the domestic market than they do in the international market.[10]
Such a pricing strategy is not uncommon. Governments around the world, including the Australian government, advise their exporters to price differentiate. In 2006, Austrade issued the following advice to domestic exporters:
Marginal (or ‘differential’) costing is a technique commonly employed in export and produces a more competitive price to assist market entry … It is particularly useful where a company has excess production capacity and needs to reduce its export prices to be competitive.[11]
The World Trade Organization (WTO) is responsible for determining and administering internationally agreed principles and rules for managing dumping issues, as well as for providing a dispute settlement mechanism. Under the WTO rules, an importing country may apply an anti‑dumping duty when an overseas supplier is ‘dumping’ goods that cause or threaten to cause, ‘material injury’ to local suppliers.[12]
Two WTO agreements provide the basis for Australia’s anti-dumping system:
- the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the Anti‑Dumping Agreement)[13] prescribes rules for the conduct of anti-dumping investigations and the application of measures to address dumping, including how member countries may: initiate cases, calculate dumping margins, determine injury, enforce remedial measures and review past determinations[14] and
- the Agreement on Subsidies and Countervailing Measures (the Countervailing Measures Agreement),[15] regulates measures designed to remedy material injury caused by subsidised imports, along similar lines to the Anti-Dumping Agreement.[16]
The Customs Act and the Customs Tariff (Anti-Dumping) Act 1975[17] are the principal Acts implementing the international agreements and domestic policy on anti-dumping.[18]
On 4 July 2012, the Gillard Government responded to industry concerns and asked the former Premier of Victoria, John Brumby, to:
- examine the effectiveness of the current arrangements when assessing and investigating anti-dumping matters and
- assess the viability of setting up a dedicated anti-dumping authority.[19]
On 27 November 2012, the Government announced the release of the report of the review (the Brumby review).[20] The report made 13 recommendations, including that:
- a new anti-dumping agency be established
- the new agency be primarily located in a major city where there is a high concentration of industry and
- an increased amount of resources be made available to ensure the establishment of the agency and its ability to perform its duties.[21]
In response to the recommendations of the Brumby review, the Anti-Dumping Commission was established on 1 July 2013. While the Commission is incorporated into the organisational structure of the Australian Customs and Border Protection Service, and shares its resources, it reports directly to the Minister.[22] With the establishment of the Commission, the powers of the CEO of Customs with respect to anti-dumping arrangements were transferred to the new Commissioner.
Australia’s anti-dumping system has undergone a significant number of reforms since 2008 as a result of the enactment of the following statutes:
- Customs Amendment (Anti-dumping Improvements) Act 2011[23]
- Customs Amendment (Anti-dumping Improvements) Act (No. 1) 2012[24]
- Customs Amendment (Anti-dumping Improvements) Act (No. 2) 2012[25]
- Customs Tariff (Anti-dumping) Amendment Act (No. 1) 2012[26]
- Customs Amendment (Anti-dumping Improvements) Act (No. 3) 2012 [27]and
- Customs Amendment (Anti-Dumping Commission) Act 2013.[28]
The Government’s intention to transfer the Commission and the Commissioner from Customs to the Department of Industry was first announced in a Joint Press Release by the then Leader of the Opposition, Tony Abbott and Shadow Minister for Innovation, Industry and Science, Sophie Mirabella.[29] The rationale for the change is that the Department of Industry is better suited to provide Australian industry with access to appropriate expertise and is therefore better able to ensure that the interests of industry are protected.
The Senate Standing Committee for the Selection of Bills recommended that the Bill not be referred to committee for inquiry and report.[30]
The Senate Standing Committee for the Scrutiny of Bills had no comment on the Bill.[31]
At the time of writing this Bills Digest, the Parliamentary Joint Committee on Human Rights had not published any comments in relation to the Bill.
As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.[32] The Government considers that the Bill is compatible.
The Government’s proposed amendments to transfer the Commission to the Department of Industry are supported by the Opposition.[33]
Whilst not directly commenting on this Bill, industry has made submissions to both the Productivity Commission for input to its 2009 report and to the Brumby review in relation to Australia’s anti-dumping regime. It appears that industry is less concerned about which department has responsibility for anti-dumping than it is about how the relevant functions are performed.[34]
According to the Explanatory Memorandum, the proposed amendments will have no financial impact.[35]
The majority of the members who spoke about this Bill in the House of Representatives were in favour of stopping dumping from occurring in Australia. However, there were a couple of members from both the Government and the Opposition who, whilst supporting the Bill, highlighted that this issue is more complicated than merely whether a government should provide protection to industry against unfair dumping. For instance, Liberal Member for Hughes, Craig Kelly, chose to highlight the fact that no amount of anti-dumping legislation will help an industry that is unable to compete internationally on its own accord and stressed the importance of policies, including the abolition of the carbon tax, that would help to create a more competitive landscape for businesses.[36]
Similarly, but on the opposite side of the political sphere, the Labor Member for Oxley, Bernie Ripoll, supported the Bill, but also highlighted that anti-dumping legislation is not a ‘panacea’ to the issues faced by Australian industry. Mr Ripoll stressed the importance of an industry policy that supports businesses through investment in innovation and clean technologies and provides support for industries in which Australia has a competitive advantage, including financial services.[37]
At first blush it makes sense that the Commission is part of the Department of Industry rather than being under the umbrella of Customs. However, on a more practical level the move appears to ignore the expertise acquired by Customs in this area since 1975, when it was first given responsibility for conducting investigations into alleged anti-dumping activity.[38]
In fact, in its 2009 inquiry into Australia’s anti-dumping and countervailing system, the Productivity Commission pointed out that it was ‘unconvinced that there would be a net benefit from shifting responsibility’ for anti‑dumping from Customs to another department. The Commission argued that it would take time and resources for the new body to acquire the knowledge that Customs has in relation to WTO rules and dumping and also to ‘replicate the linkages that Customs has established with overseas investigation bodies and the WTO’.[39]
Items 1–93 of Part 1 of the Bill amend the Customs Act. As the amendments ‘provide for the transfer of anti‑dumping administration from [Customs] to the Department of Industry’ they are mechanical in nature.[40]
Part XVB of the Customs Act contains special provisions relating to anti-dumping duties. Within Part XVB, sections 269SMB–269SME establish the Commission and set out its functions. In addition, sections 269SMF–269SMP establish the office of the Commissioner and set out his or her various powers.
Item 8 of Part 1 of the Bill repeals and replaces section 269SMB of the Customs Act. The amendment operates so that the Commission will continue its existence ‘within the Department’ with effect from the transfer day.[41] The identity of the relevant Department is not specified but the transfer of responsibility to the Department of Industry is consistent with allocation to that Department of responsibility for the administration of the Customs Tariff (Anti‑Dumping) Act 1975 under the Administrative Arrangements Order made on 18 September 2013.[42] Similarly, Item 10 of Part 1 repeals and replaces subsection 269SMQ(1) to reflect the transfer of the Commission and its staff to the Department.
Item 12 of Part 1 of the Bill inserts proposed Subdivisions E–G into Division 1A of Part XVB of the Customs Act. Proposed Subdivision E is about delegation. Proposed section 269SMR provides that the Commissioner may delegate his or her functions or powers as they relate to Part XVB to Commission staff.
Proposed section 269SMT (the only provision in proposed Subdivision G) provides for the disclosure of information, including personal information,[43] by the Commission or a Commission staff member to the CEO or an officer of Customs in circumstances where the information was obtained for the purposes of Part XVB of the Customs Act or the Customs Tariff (Anti-Dumping) Act 1975 (the Dumping Duty Act).[44] Item 93 of Part 1 of the Bill inserts proposed section 269ZZYH into Part XVC of the Customs Act in equivalent terms to those contained in proposed section 269SMT. Part XVC of the Customs Act contains the provisions relating to the International Trade Remedies Forum.
Items 13, 15-72, 74-77, 79-86 of Part 1 of the Bill remove various references to Customs, the CEO (of Customs) and an Officer of Customs in the Customs Act and replace those terms with the references to, the Commissioner and a Commission staff member, as appropriate.
Lodgement of application for accelerated reviews
Items 73 and 78 of Part 1 of the Bill amend paragraphs 269ZF(2)(a) and 269ZHC(2)(a) respectively to revise the current arrangements for the lodgement of accelerated review applications and applications for the continuation of anti-dumping measures.
Items 87–91 of Part 1 of the Bill replace all references to the CEO of Customs with Commissioner to reflect the transfer of the Commission from Customs.
Items 94–97 of Part 1 of the Bill make consequential amendments to the Customs Administration Act 1985 to remove references to the Commissioner.
This Bill gives effect to a pre-election promise made by the Government to transfer the anti-dumping functions from Customs to the Department of Industry to take advantage of that department’s industry expertise.
Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.
[10]. Price discrimination also happens within a country’s borders by domestic suppliers. This practice is not prohibited under the Competition and Consumer Act 2010 (Cth). The argument is that non-predatory price discrimination may positively impact competition.
[11]. Productivity Commission, Australia’s anti-dumping and countervailing system, op. cit., p. 40.
[12]. Article VI of the General Agreement on Tariffs and Trade 1994, which deals with anti-dumping and countervailing duties, ‘explicitly authorizes the imposition of a specific anti-dumping duty on imports from a particular source, in excess of bound rates, in cases where dumping causes or threatens injury to a domestic industry, or materially retards the establishment of a domestic industry’: World Trade Organization (WTO), ‘General Agreement on Tariffs and Trade 1994’, WTO website, accessed 9 December 2013.
[13]. This Agreement entered into force generally and also for Australia on 1 January 1995.
[15]. The Countervailing Measures Agreement was entered into by Australia on the same date as the Anti-Dumping Agreement (that is, 1 January 1995).
[18]. Productivity Commission, Australia’s anti-dumping and countervailing system, op. cit., p. 8.
[30]. Senate Standing Committee for Selection of Bills, Report No. 10 of 2013, Senate, Canberra, 4 December 2013, accessed 9 December 2013.
[31]. Senate Standing Committee for the Scrutiny of Bills, Alert Digest No. 8 of 2013, Senate, Canberra, 4 December 2013, p. 12, accessed 9 December 2013.
[32]. The Statement of Compatibility with Human Rights can be found at page 4 of the Explanatory Memorandum to the Bill.
[34]. J Brumby, Review into anti-dumping arrangements, report, op. cit., p. 58.
[37]. B Ripoll, ‘Second reading speech: Customs Amendment (Anti-Dumping Commission Transfer) Bill 2013, op. cit.
[38]. Productivity Commission, Australia’s anti-dumping and countervailing system, op. cit., pp. 171-172.
[40]. Explanatory Memorandum, Customs Amendment (Anti-Dumping Commission Transfer) Bill 2013, op. cit., p. 7.
[41]. The transfer day is the day on which Schedule 1 of the Customs Amendment (Anti-Dumping Commission Transfer) Act 2013 commences.
[43]. Under the proposed amendments personal information is to have the same meaning as in the Privacy Act 1988.
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