Chapter 1

Chapter 1

Introduction and background

1.1        On 26 February 2015 the Customs Amendment (Anti-Dumping Measures) Bill (No. 1) 2015 and the Customs Tariff (Anti-Dumping) Amendment Bill 2015 (the bills) were introduced into the House of Representatives.[1] On 18 March 2015 the bills were introduced into the Senate and were referred to the Senate Economics Legislation Committee (the committee) for inquiry and report by 5 May 2015.[2]

Conduct of the inquiry

1.2        The committee advertised its inquiry on its website. The committee also wrote directly to the Commonwealth, state and territory governments and other stakeholders, drawing attention to the inquiry and inviting them to make written submissions.

1.3        The committee received 11 submissions, which are listed at Appendix 1. The committee held one public hearing in Canberra on 4 May 2015. The committee thanks all those who assisted with the inquiry, especially those who made written submissions and attended the hearing.

Structure of this report

1.4        This report comprises two chapters:

Background on Australia's anti-dumping system

1.5        This section provides background on Australia's anti-dumping system, and discusses previous reviews and reforms to the system.

1.6        Australia's anti-dumping system has been set up to manage circumstances in which Australian businesses may suffer injury as a result of goods from overseas being dumped into markets within Australia. The Anti-Dumping Commission has described dumping and anti-dumping as follows:

Dumping occurs when an exporter sells goods to Australia at a price that is below the ‘normal value’ of the goods. The normal value will usually be the domestic price of the goods in the country of export. The margin of dumping is the amount by which that normal value exceeds the ‘export price’ of the goods.

Dumping is not prohibited under international trade agreements and it is not illegal.[3]

Anti-dumping is the imposition of a measure by the Australian government, in the form of an additional duty on imports and/or a minimum export price, to remedy material injury to Australian manufacturers caused by dumping.[4]

1.7        The Productivity Commission has described Australia’s anti-dumping system as a system that seeks to remedy the injurious effects on Australian industry caused by imports deemed to be unfairly priced:

It allows local industry to apply for anti-dumping duties on goods ‘dumped’ in Australian markets at prices below those prevailing in the exporter’s domestic market or to apply for countervailing duties on goods that have been subsidised by the government of the country of export. Where the dumping or subsidisation results in material injury to local industry, anti-dumping or countervailing duties can be applied.[5]

1.8        Countervailing duties are duties imposed on goods by an importing country which finds that an exporting country has directly or indirectly subsidised[6] those exports, thus resulting in a (threatened) material injury to a domestic firm or industry.[7]

1.9        As a member of the World Trade Organisation (WTO), Australia's anti-dumping system is based on WTO agreements that:

1.10      The WTO agreements are an important part of the international trade system and signify that dumping and subsidisation can constitute unfair trade practices and that, where they do, nations are entitled to respond. The WTO agreements on anti-dumping and countervailing are intended to achieve a level playing field. However, interpretation of the agreements differs between countries.[9]

Previous reviews and reform of Australia's anti-dumping system

1.11      This section provides a brief summary of previous reviews and reforms of Australia's anti-dumping system. The Productivity Commission has summarised the usage and previous reviews of the anti-dumping system, noting that usage increased in the early 1980's following the earlier global recession:

Though Australia’s anti-dumping system has been in place for over 100 years, it was not until the early 1980s that usage of the system became significant.

This was triggered by global recession, falling commodity prices and the Government’s reluctance to raise tariff levels.

Usage of the system peaked in the mid-1980s, which led to a backlash against the system from some users of the products subject to measures.

Since the mid-1980s (aside from a brief upsurge in the early 1990s) usage of the system has steadily declined.

[A] major review of the anti-dumping system was carried out in 1986 (the Gruen Review). Subsequent reviews — including the Willett Review in 1996 and the Joint Study in 2006 — have focussed largely on the administration of the system.[10]

1.12      In 1988, following the Gruen Review in 1986, legislation was passed to establish the Anti-Dumping Authority (ADA) to create a two-tier administrative system. The system included Australian Customs Service (Customs)[11] conducting investigations up to a preliminary findings stage, and the ADA reviewing the preliminary findings and making final findings.[12]

1.13      The 1996 Willett Review initiated by the then Government led to a new legislative framework and new administrative arrangements, including a rationalisation of the two-stage investigation system. The ADA was abolished in 1998 and Customs assumed sole responsibility for investigating and reporting on dumping matters.[13]

1.14      In 2006 a joint study by relevant federal government departments was initiated to assess whether Australia's anti-dumping administration reflected best practice and to respond to concerns of Australian manufacturers about the effectiveness of the system.

1.15      In December 2009 the Productivity Commission completed an inquiry into Australia's Anti-dumping and Countervailing System. The inquiry found that the Australian anti-dumping system benefits a small number of firms whose goods compete with imported goods (import-competing firms), but imposes costs on the rest of the economy. However, the net economic cost is likely to be small.

1.16      The Productivity Commission also found that there were deficiencies in the Australian anti-dumping system including that:

1.17      The Productivity Commission recommended that a public interest test should be put in place to take account of wider impacts of measures and prevent the imposition of measures that would be disproportionately costly.[14]

1.18      In 2011 this committee completed inquiries into two bills proposing changes to Australia's anti-dumping system. In its report on the Customs Amendment (Anti-dumping Measures) Bill 2011, the committee noted that the bill was introduced following the Full Federal Court's findings in Minister of State for Home Affairs v Siam Polyethylene[15] to address a lack of clarity in the review process. The amendments proposed by that bill were separate to the Government's consideration of the Productivity Commission's inquiry report and a private senator's bill which considered a broad range of issues related to Australia's anti-dumping framework.[16]

1.19      In June 2011 the then government announced a package of reforms referred to as 'Streamlining Australia's anti-dumping system'. The reforms took account of reports by the committee and set out to implement 15 of the 20 recommendations made by the Productivity Commission's inquiry.[17]

1.20      Aspects of the policy, Streamlining Australia's anti-dumping system, have been implemented through legislation including the following legislation:

1.21      In 2012, following concerns about a threefold increase in the number of anti-dumping claims in Australia in 2011–12, the then government requested the former Premier of Victoria, John Brumby, to undertake a review of anti-dumping issues (the Brumby review). The Brumby review noted that while significant reform had already been undertaken, further reform was needed:

While there is widespread support for the range of reforms put in place by the Australian Government over recent years, the reforms needs to continue and more needs to be done. Further changes to Australia’s anti-dumping arrangements are vital if Australia is to achieve an effective, highly regarded and world-class anti-dumping and countervailing system.[18]

1.22      The Brumby review drew attention to the performance and resourcing of the anti-dumping system over two decades and the impact of contemporary pressures:

For almost two decades the Australian anti-dumping system has been administered with limited resources and a low organisational profile. The inability to meet key performance indicators as well as extensions of time sought demonstrate pressure on our system. The workload of the administration has near tripled in the last 12 months and a number of relevant drivers indicate a high likelihood that more anti-dumping applications are on the way. The low profile and limited resources at a time of intense international competition has undermined public confidence in the system, especially from a manufacturer perspective.[19]

1.23      The primary recommendation of the Brumby review was that a new International Trade Remedies Authority, Agency or Commission be established under legislation and that the agency be separately and adequately resourced, and headed by a legislated CEO or Commissioner who reports directly to the Minister for Home Affairs and Justice. The Brumby review also made a number of other recommendations associated with the implementation and operation of the new body.[20]

The Anti-Dumping Commission and Review Panel

1.24      Following the recommendations of the Brumby review, legislation to establish the Anti-Dumping Commission was passed in March 2013 and the Commission was established in July 2013.[21] The Anti-Dumping Commission:

...administers Australia’s anti-dumping and countervailing (anti-subsidy) system. Upon application by the Australian industry setting out prima facie evidence of the dumping or subsidy and the injury the Commission commences an investigation and reports to the Minister whether anti-dumping or countervailing duties should be imposed on goods from the countries named in the application.[22]

1.25      The Anti-Dumping Review Panel (Review Panel) conducts independent reviews, upon application, of certain decisions made by the Minister for Industry and Science (or the Parliamentary Secretary) or by the Commissioner of the Anti-Dumping Commission in relation to anti-dumping and countervailing investigations.[23] The Review Panel was established on 10 June 2013. Three panel Members are appointed by the Minister for Industry and Science under the Customs Act 1901 for a term of up to three years.[24]

Australia's anti-circumvention framework

1.26      Circumvention practices take various forms and exploit different aspects of the anti-dumping and countervailing system. The outcome of these practices is that they ensure that the relevant goods do not attract the intended dumping or countervailing duty, or the relevant goods attract the duty, which is paid, but the payment of the duty does not have the intended price effect in the market.

1.27      In June 2013, new legislative provisions for conducting anti-circumvention inquiries commenced. These provisions are based on 'prescribed' circumvention practices commenced. This formed a central component of the previous Government’s Streamlining Australia’s anti-dumping system reforms package.[25]

1.28      On 15 September 2014 the Minister for Industry, the Hon Ian Macfarlane MP, asked the House of Representatives Standing Committee on Agriculture and Industry to conduct an inquiry into Australia’s anti-circumvention framework in relation to anti-dumping measures. The terms of reference provide for that committee to inquire into and report on the following matters:

Current and previous packages of reforms

1.29      On 15 December 2015, the Minister for Industry the Hon Ian Macfarlane MP and Parliamentary Secretary Bob Baldwin MP announced a package of reforms called 'Levelling the playing field for Australian Manufacturers and producers':[27]

The measures deliver the Government's remaining anti-dumping election commitments and make further improvements, including addressing behaviours of firms trying to avoid payment of duties. The package also improves access to the system through greater assistance to businesses. All of the reforms comply with Australia’s World Trade Organization and other international trade obligations.[28]

1.30      An earlier package of reforms set out in ‘The Coalition Policy to Boost the Competitiveness of Australian Manufacturing’, released in August 2013, also proposed measures to strengthen Australia’s anti-dumping system by introducing more stringent deadlines for the submission of information to dumping and subsidisation investigations.[29]

Overview of the bills

1.31      This section provides a brief overview of the purpose of the bills and the changes that the bills propose.

Customs Amendment (Anti-dumping Measures) Bill (No. 1) 2015

1.32      The Customs Amendment (Anti-dumping Measures) Bill (No. 1) 2015 is the primary bill. The explanatory memorandum sets out the purpose of the primary bill:

The purpose of the Bill is to amend the Customs Act 1901 (Customs Act) to strengthen Australia’s provisions dealing with the submission of information in anti-dumping and countervailing duty investigations, simplify and modernise publication provisions for anti-dumping notices, consolidate lodgement provisions for anti‑dumping applications and submissions, clarify the length of the investigation period in anti-dumping matters, clarify the cumulative assessment of injury, clarify normal value provisions, clarify the calculation of the dumping margin, clarify material injury determinations, clarify effective notice periods, clarify the definition of a subsidy, amend provisions dealing with new exporters, clarify provisions regarding consideration of the lesser duty rule, streamline the processes and implement a higher procedural and legal threshold for review to be undertaken by the Anti-Dumping Review Panel (Review Panel) and allow the Government to replace the statutory International Trade Remedies Forum (the Forum) with administrative business consultative arrangements.[30]

1.33      The primary bill contains one schedule with 15 Parts, each of which proposes a different change to the Customs Act 1901. Part 15 of the schedule proposes to abolish the International Trade Remedies Forum, which was established to provide strategic advice to government on the operation of Australia's anti-dumping system.[31] Parts 12 to 14 of the primary bill propose changes to the operation of the Anti-Dumping Review Panel, including:

1.34      Parts 1 to 11 of the primary bill contain a series of technical amendments which propose changes to submission timeframes, lodgement and processes (Parts 1 and 2), investigation timeframes (Parts 3 and 6), criteria for decisions (Parts 4, 5, 7, 10 and 11) and alignment with WTO agreements (Parts 9 and 10):

Customs Tariff (Anti-Dumping) Amendment Bill 2015

1.35      The purpose of the Customs Tariff (Anti-Dumping) Amendment Bill 2015 (tariff bill) is to amend the Customs Tariff (Anti-Dumping) Act 1975 (Dumping Act) to simplify and modernise publication provisions for anti-dumping notices, clarify provisions regarding consideration of the lesser duty rule and clarify the operation of exemption provisions.[46]

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