Imports and trade measures
This chapter outlines current international conditions and how these
have affected the Australian steel industry, manifesting most obviously in a
surge of imports in recent years sold at less than their normal value into the
Australian steel market.
The chapter examines the impact of trade measures implemented by
governments of other countries to support their domestic steel industries,
particularly in Asia, and discusses the trade remedies available to Australia
to counteract these measures, including anti-dumping, countervailing and
safeguard actions. The chapter further describes issues raised by submitters in
relation to trade measures, and closes with the committee view and
Defining trade remedies
The World Trade Organisation allows its members to take measures against
imported products in particular circumstances. The Department of Foreign
Affairs and Trade defines these measures, or trade remedies, as 'trade policy
tools that allow governments to take remedial action against imports which are
causing material injury to a domestic industry'.
These include: anti-dumping actions; countervailing duty measures in response
to foreign government subsidies; and safeguards, or emergency measures that temporarily
limit imports in a particular industry.
Investigations into alleged dumping and countervailing duty are carried
out by the Anti-Dumping Commission (ADC). The Productivity Commission is
responsible for carrying out inquiries into whether a sudden surge of imports has
affected a particular industry before safeguard measures can be implemented.
Australia's understandings of what comprises dumping are based on the Marrakesh
Agreement establishing the World Trade Organization (WTO Agreement):
...a product is to be considered as being dumped, i.e.
introduced into the commerce of another country at less than its normal value,
if the export price of the product exported from one country to another is less
than the comparable price, in the ordinary course of trade, for the like
product when destined for consumption in the exporting country.
Drawing on the WTO Agreement definition, the ADC outlines dumping as
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.
Subsidies and countervailing
The WTO Agreement states that a subsidy exists if a government or any
public body within the territory of a member country provides a financial
- a government practice involves a direct transfer of funds
(e.g. grants, loans, and equity infusion), potential direct transfers of funds
or liabilities (e.g. loan guarantees);
- government revenue that is otherwise due is foregone or
not collected (e.g. fiscal incentives such as tax credits);
- a government provides goods or services other than
general infrastructure, or purchases goods;
- a government makes payments to a funding mechanism, or
entrusts or directs a private body to carry out one or more of the type of
functions illustrated in (i) to (iii) above which would normally be vested in
the government and the practice, in no real sense, differs from practices
normally followed by governments...
The ADC outlines that subsidisation occurs when 'imported goods benefit
from government assistance in the country of export'. The common forms that
subsidies can take include preferential loans, tax incentives, grants and the
provision of goods and services.
Countervailing duties are measures imposed to counteract the amount of a
subsidy if the subsidy is limited to a specific company or group of companies
Where an inquiry determines that a large number of imports cause or
threaten to cause serious material injury to a particular domestic industry,
the government may take safeguard action in accordance with its international
agreements. This action may include, for example, temporarily restricting
imports of a product until the domestic industry can adjust. Forms of
safeguards include tariffs, tariff rate quotas or import quotas.
How Australia's anti-dumping and countervailing framework works
Australia's anti-dumping and countervailing system provides some
Australian industries with additional protection from cheaper imported goods to
that provided through the tariff system, where these have caused or threaten to
cause material injury to an industry.
Besides the WTO rules outlined above, a number of legislative
instruments also set out Australia's response to dumping and subsidies. These
include the Customs Act 1921, the Customs Tariff (Anti-Dumping) Act
1975, the Customs Administration Act 1985, Customs Regulations
1926 and the Customs Tariff (Anti-Dumping) Regulation 2013.
An investigation into dumping begins with an application from a local
industry to the ADC. These applications must meet particular criteria, such as
whether a sufficient proportion of the respective industry supports the
application, and whether there is a plausible basis for the alleged existence
of dumping or subsidisation.
The ADC usually determines whether a product is dumped or not by
subjecting it to the 'like goods' test – that is, by determining the price of
the product or a very similar product in its country of origin and, if this is
more than the export price to Australia, whether it has caused or threatens
material injury to the Australian industry in question.
If a product has been found to be dumped, the responsible Minister will
level duties against it. The basis for these duties is often the degree to
which the product's import price has been reduced from its 'home' price – the
'dumping margin' – or, in the case of countervailing, the extent to which
subsidies from a foreign government have allowed the supplier to charge a lower
Anti-dumping and/or countervailing measures will usually remain in place for
five years, but can be extended for additional five year periods following
Types of duty that can be applied to products determined to have been
dumped include the ad valorem duty – that is, a proportion of the export
price, which may vary according to market conditions; fixed duties, or a flat
rate that does not vary over time and may restrict the possibility of price
manipulation or circumvention; and combination duties.
The Productivity Commission in a 2016 report was of the opinion that
Australia's anti-dumping and countervailing system, compared to systems in
other countries, sits 'in the middle of the range in terms of the "checks
and balances" it [contains] on protections conferred to Australian industry'.
Australian manufacturers and producers, unions, government agencies and
importers are able to advise the government on its anti-dumping system through
the International Trade Remedies Forum, administered by the Australian
Exceptions and Free Trade Agreements
A number of Australia's Free Trade Agreements (FTAs) restrict the actions
that Australia can take against imported products from particular countries
that are suspected to be dumped. For example, the Australia-New Zealand Closer
Economic Relations Trade Agreement does not allow either country to engage anti-dumping
measures against the other's exports.
While the China-Australia Free Trade Agreement does not limit either
country's existing rights under the WTO to engage in anti-dumping measures,
Australia recognises China as a market economy, meaning that unlike most other
countries, it does not consider that the Chinese government subsidises its
domestic industries. Because of this, Australia is required to consider 'the
Chinese domestic price to be the normal value of the goods concerned' in its
anti-dumping investigations, which has led to different approaches in the way
Australia gathered and assessed data on Chinese products compared to many other
countries, such as the United States.
As outlined in chapter 2 of this report, there is an oversupply of steel
in the world. Two decades ago, most steel production took place in Europe,
Japan and the United States. By 2005, global steel production had increased by
52 per cent, and by 2015, production had increased by 122 per cent, with the
overwhelming majority of increased production taking place in China.
Although China was a net importer of crude steel before 2006, its crude
steel production grew at an average annual rate of 12 per cent between 2004 and
2014. In 2015, China was the world's largest producer of crude steel, with its
steel comprising 50 per cent of global steel production.
Global steel prices have declined since 2010. Margins, or the
'difference between costs of production and revenue', have declined recently,
as have utilisation rates at the same time as steel stockpiles have grown.
A global slowdown in economic activity following the Global Financial Crisis
combined with China's rapid economic transition and excess steel capacity have
led to depressed prices and margins dropping beneath 'normal' long-term levels.
Other governments have intervened to support their own industries in
response to the global glut in steel and subsequent increase in imports. Market
interventions appear to have amplified recently, and may have artificially
extended the global downturn in steel.
Government interventions identified by the OECD as being particularly
problematic for global trade include increased import duties, export
incentives, government subsidies, trade financing, import quotas, investment
measures, surveillance mechanisms and minimum import prices.
In August 2016, the ADC released a report (the ADC report) with an
economic analysis of Asian steel and aluminium markets and implications for
Australia's anti-dumping system. The ADC report found that while:
...the cash cost (excluding depreciation) of producing a tonne
of crude steel in Australia is estimated to be 12 per cent lower than in Japan
and 21 per cent lower than in the United States...steel is estimated to
be 4 and 16 per cent cheaper to produce in China and Russia, respectively, than
These estimates do not take into account government interventions in
domestic steel industries.
The ADC report found that a significant contributing factor to the
global crisis has been measures implemented by governments of a number of Asian
...the nature and extent of Asian government interventions, and
the relative magnitude of Chinese production, has meant that these
interventions have been major contributing factors—but not the only
contributors—to sustained global overcapacity, ongoing excess production, and
depressed world prices.
The report argued that many of these interventions adopted by Asian
governments, particularly in China, 'would meet the OECD's definition of being
The ADC report stated that globally, most new investments in expanding
state-owned crude steel production are financed by Asian state-owned
enterprises. In particular, the Chinese Government has provided subsidies for
raw inputs, tax deductions, preferential tax policies and special support funds
for non-state-owned enterprises.
Between 2015 and 2016, the biggest increase in the imbalance between
steelmaking capacity and steel demand occurred in Asia (Figure 6.1).
Figure 6.1: Steelmaking capacity and steel consumption
changes by region in 2015 and 2016 (total volume change in mmt)
Source: OECD calculations, Steel
Market Developments, Q4 2015
Arrium argued that the global steel overcapacity has led to a rise in
exports as countries:
...seek to offload steel into export markets, more often at
marginal pricing. Their target markets are those with the least trade
protection against such activities...One of the most common ways to deal with
surplus supply is to export product that cannot be sold domestically or into
traditional export markets. Typically, these new export markets are penetrated
by marginally pricing the exported goods. Such marginal pricing or sales at
marginal cost (that is, at a cost less than the full absorbed cost to make and
sell the goods in their domestic market) is, in effect, dumping.
Arrium noted in its submission that globally, anti-dumping duties are
among the most common forms of trade measures in response to slowed global
economic growth and excess supply, and the number of anti-dumping cases is at
an 'all-time high':
Around the world, there have been 20 new trade measures
implemented each year in recent years, most of which are anti-dumping measures.
Since 2008, China has been the main target of implemented
trade steel measures introduced by many countries. Of the 135 measures implemented
by countries other than Australia, 74 are related to Chinese products and 31
target China exclusively.
The problems facing Australia's domestic steel industry because of
global conditions are not unlike the problems facing domestic steel industries
in a number of other countries, including, for example, the United States,
which initiated a review in April 2017 to determine whether steel imports
constituted a national security risk.
Arrium argued that dumping and marginal pricing would not necessarily
resolve by themselves when global economic conditions improve:
This is because of disparity between regional economic
conditions: so long as the export economy has surplus supply and capacity, then
the strategy of 'marginal pricing' will continue. The spiral of 'marginal
pricing' and dumping will only end when the domestic (and traditional export)
markets of the export source have restored demand and supply equilibrium, and
the exporter is again motivated to return to a strategy of full cost-absorption
and profit. Only then will markets previously subjected to 'marginally priced'
or dumped goods be abandoned.
Global conditions and trade
measures in Australia
Steelforce provided global figures (see Figure 6.2) demonstrating that Australia
was the most active initiator of trade cases in 2015, submitting that '[t]his
is somewhat ironic, considering the country's small share of global steel
production', equating to 0.3 per cent of global steel capacity in 2014.
Arrium highlighted a global increase since 2010 in 'anti-dumping activity which
has been reflected in an increase in Australian cases'.
Most of Australia's trade remedy measures are levied on imports from
China, followed by Korea, Taiwan and Thailand.
Figure 6.2: Initiated trade cases in 2015, by type and
Source: Steel First, in
The overwhelming majority of cases initiated with the ADC in recent
years have related to steel (86 per cent in 2014–15), and most measures imposed
(61 per cent) are also for steel (Figure 6.3). The Anti-Dumping Commissioner
gave evidence to this inquiry indicating that as of April 2016, around 75 to 80
per cent of the ADC's casework involved investigations into the steel sector.
6.38 As of 17 January 2017, 35 of the 45 (77 per cent) anti-dumping measures
in place on steel applied to products also produced by Arrium and BlueScope.
Figure 6.3: Australian anti-dumping and countervailing
initiations and measures imposed by industry, 2014-15
Source: Productivity Commission
The Productivity Commission, in its 2016 report into Australia's
anti-dumping system, argued that 'the incentive to seek relief through the
system has been greater when economic conditions have been tough'.
However, the Anti-Dumping Commissioner was of the opinion that an increase in
the number of applications for dumping or countervailing duties 'reflects the
nature of policies implemented by other governments, Asian governments in
For example, the ADC found that the Chinese government had introduced measures
such as export taxes and export quotas on key inputs in steelmaking to 'keep
input prices artificially low and create significant incentives for exporters
to redirect these products into the domestic market'. The effect of these
measures would lead to an increase in domestic supply and reduce 'domestic
prices to a level below what would have prevailed under normal competitive
A number of submitters and witnesses argued that it is relatively easy
for foreign companies exporting steel to target the Australian market. For
example, the Illawarra Business Chamber (IBC) contended that Australia's
relatively open market has impacted the Australian steel industry negatively:
Australia has been rated one of the world's freest economies:
an assessment the IBC welcomes. At the same time, the low barriers to entry
into Australian markets mean that global pressures have had a significant
impact on the domestic steel industry's competitiveness...
Arrium argued that Australia has relatively weak anti-dumping measures
compared with other countries:
Australia's anti-dumping and countervailing measures are
generally among the shortest in the world, with some of the lowest margin rates.
This makes Australia's measures less supportive of the domestic industry
relative to other countries, and places the steel industry at a
disadvantage...Australian markets are among the most open, and therefore the
most competitive in the world. There are minimal to no tariffs on imported
goods, which makes it a very attractive market for exporters.
Mr Mark Vassella, the Chief Executive of BlueScope Australia and New
Zealand, gave evidence that:
Without an effective antidumping regime...steel finds its way
to the path of least resistance....The Australian market really is an open market
in terms of steel....So companies with last tonnes, incremental tonnes, will sell
their product wherever they can—often—just [to] get cash for it.
The Australian Manufacturing Workers' Union also was of the opinion that
'dumped product is attracted to markets that have relatively weak anti-dumping
and countervailing protections, and Australia's is recognised as a relatively
weak system'. They further argued although anti-dumping duties of 'well over 30
[per cent] and up to several hundred per cent' are common in other similar
countries such as the United States, 'Australian anti-dumping duties rarely if
ever exceed the 30 [per cent] level'.
Mr Travis Wacey from the Forestry, Mining and Energy Union suggested
that given the relative weakness of Australia's anti-dumping systems compared
to other countries, companies might continue to dump in the Australian market even
after having duties levelled against them because of Australia's relatively
smaller duties compared to the United States:
You might get a reward from antidumping of duties of 10 per
cent, but the United States might have it at 500 per cent, so you might still
get that steel coming and disturbing the market anyway. You might not have a
strong anticircumvention framework in place, so you might get those duties
However, the Anti-Dumping Commissioner questioned the assumption that Australia's
anti-dumping system is perceived as weak internationally:
The answer to that question, to be honest with you, is that I
do not know, although I do speak to my counterparts in the US, China, Canada,
Korea, Taiwan and the European Commission on a very regular basis, and most of
them believe that Australia's antidumping system is a very strong and robust
one. Whether firms in those economies believe that we are a soft touch is
Impact of foreign trade measures on the Australian steel industry
The ADC report concluded that Asian government interventions in their
domestic steel industries had led to additional pressures on Australian markets
that went 'beyond the challenges expected in highly competitive markets'.
Its economic analysis suggested that if economically inefficient market
interventions and steel overcapacity were to continue indefinitely without
remedial measures, production in Australia's steel industry would shrink by an
estimated $169 million for every $400 million of dumped/subsidised
Emphasising the impact that international conditions had on the
Australian steel market, Edcon steel submitted that:
Our industry has suffered over recent
years from low margins due to import competition, and this is not fair. I am
not saying competition is not fair, I am saying it is not fair competition.
Arrium's Chief Executive of Strategy gave evidence at the Canberra
hearing about the impact of the global glut in steel on the domestic industry,
and how reactions from other countries in response had further affected
Australian steel production:
The key challenge in the current external environment is
margin. We have seen steel prices in absolute terms reduce by 60 per cent since
2012 and we have seen steel margins over scrap reduce by 80 per cent. Volume
helps—do not get me wrong, volume helps—but steel pricing globally right now is
the challenge. In response to that we are seeing other countries do a range of
things... Other countries closer to our region have put safeguard measures in place—countries
like Thailand, Indonesia, Malaysia and the Philippines.
The committee received evidence outlining the impact that dumping had on
the domestic steel industry. For example, Bisalloy asserted that dumping of
products from Finland, Japan and Sweden:
...prevented it from supplying Q&T [quenched and tempered] steel
plate on a competitive basis. The dumping also prevented Bisalloy from
maximizing its production output that would have contributed to increased
production cost efficiencies (via higher volumes) permitting further
re-investment opportunities by Bisalloy in the business.
Arrium outlined that in the medium term, reduced prices that result from
dumping as domestic producers try to remain competitive with dumped products lead
to the following impacts:
Exporters dealing in non-dumped and non-subsidised goods exit the
market in favour of other, more profitable options;
Importers of non-dumped and non-subsidised goods begin to reduce
their investment in the current market, and do not look to increase or improve
supply chains; and
Local Australian producers suffer financial injury from the
dumping, which means they lose the capacity to invest in improvements,
expansion, productivity and associated developments.
The long term impacts of dumping, Arrium suggested, would lead to
further negative outcomes in the Australian steel industry:
Exporters dealing in non-dumped and non-subsidised goods do not
enter or invest in the domestic market due to risk of damage by dumped
Importers of non-dumped, non-subsidised goods exit the market as
they lose return on their investment and the capacity for improvement or
Local Australian producers exit because of financial injury and
the inability to attract or retain capital due to low returns on investment,
resulting in significant job losses and poorer economic outcomes;
The loss of future investment in rebuilding domestic production
due to the risk of recurrent dumping; and
The loss of competition in the market, usually resulting in higher
prices and poorer outcomes for consumers.
Previous inquiries into trade remedies
Reflecting the increasing importance of Australia's trade remedies
system in recent years, a number of other inquiries have examined Australia's
anti-dumping and countervailing system. Three of the major inquiries are
outlined in brief here because of their relevance to this inquiry.
2015 House of Representatives
inquiry into circumvention
The House of Representatives Standing Committee on Agriculture and
Industry inquired into circumvention (the circumvention inquiry) of
anti-dumping measures, resulting in a report in May 2015.
Australia's anti-circumvention framework is a relatively recent
phenomenon. It was first introduced in new provisions to the Customs Act
1901 in June 2013.
Responsibility for anti-circumvention investigations and actions lies with the
The circumvention inquiry arose in response to concerns from industry
that producers subject to anti-dumping measures immediately find a way to
circumvent, or avoid, the measures by, for example:
making minor modifications to goods that do not substantially
change the essential characteristics of the goods;
exporting goods from third countries; and
reducing export prices to evade absorbing the increased cost incurred
by anti‑dumping duties (also known as duty absorption).
Submissions to the circumvention inquiry detailed the ways in which
steel producers were circumventing anti-dumping measures. For instance,
BlueScope in its submission to the inquiry provided an example of how flat
steel imports had been slightly modified by adding alloys, so as to avoid anti-dumping
measures on the original product:
It is our experience that increasing volumes of flat steel
imports are being slightly modified by the addition of an alloy, principally
boron, in minor quantities (commonly referred to as "Pixie dust") and
then reclassified under Australia's tariff system so as to avoid or circumvent
anti-dumping measures. The evidence indicates that this practice is
deliberately and sometimes blatantly aimed at avoiding dumping duties, with the
alloy goods being sold into the same end-use applications as non-alloy steel
but without dumping measures being applied.
BlueScope identified a subsequent ninety-fold increase in products imported
under the 'other alloy' tariff code between September 2013 and September 2014 to
circumvent duties applied to dumped non-alloyed products.
Arrium in its submission to the circumvention inquiry also outlined how within six
months of the imposition of dumping duties against hollow structural sections (HSS),
imports of alloyed HSS products increased by around 1,000 per cent.
Evidence provided to this inquiry also outlined these methods of
circumvention and addressed the topic of circumvention.
Because of concerns raised to the circumvention inquiry about the
ability of producers to circumvent ad valorem duties, the House of
Representatives Standing Committee on Agriculture and Industry recommended that
the default position in each anti-dumping case should be the application of a
combination of fixed and variable duties.
A number of submitters to the current inquiry referenced the circumvention
inquiry and explicitly endorsed this recommendation.
2016 Productivity Commission
The Productivity Commission published a research paper in February 2016
outlining recent developments in anti-dumping arrangements.
The Productivity Commission concluded that the anti-dumping system
resulted in costs to downstream user industries, consumers and the wider
economy, and questioned whether any anti-dumping system was in Australia's best
interests. It recommended 'a fundamental rethink of the system' that would
involve the choice between either a drastically revised system to reduce its
costs, or erasure of the system altogether.
The Productivity Commission also recommended a proposal, similar to its
previously proposed 'public interest test', that the anti-dumping system include
provision to suspend measures that would be unreasonably costly for the broader
community or ineffective at remediating injury.
The Productivity Commission's recommendations differed considerably from
the recommendations of the circumvention inquiry and, as discussed below, the
2016 ADC analysis of Asian steel
and aluminium markets
In February 2016, the Government asked the Anti-Dumping Commissioner to
provide an economic analysis of global steel and aluminium markets and how
distortions within these markets had affected dumping of Asian steel and
aluminium in Australia.
The findings of the ADC report have been referenced elsewhere in the
body of this chapter and, as such, are not outlined here.
The ADC report recommended that trade remedies be implemented to offset
the effects of Asian government market interventions that have led to an
increase in dumping and subsidised imports entering Australia.
Recent changes to Australia's anti-dumping and countervailing system
A number of legislative changes and reforms have been made in recent
years to Australia's anti-dumping regulatory framework. Some of the evidence
provided to this inquiry in the 44th Parliament raised issues that have
now been addressed by these changes. Relevant changes in this respect include:
Amendments to the Customs Amendment (Anti-Dumping
Improvements) Regulation 2015, commencing 1 April 2015, which expanded
circumvention activity to include slight modification of goods.
The requirement that the Anti-Dumping Commissioner should,
wherever possible, impose provisional measures at day 60 of an investigation.
Where not possible, the Commissioner should produce a report outlining why a
preliminary affirmative determination was not made at that time.
A revised deadline of 37, rather than 40, days for submission of
information at the start of investigations.
The closure of a circumvention loophole, with galvanised steel
and HSS products with dumping duties against them no longer being able
circumvent duties by slight modification.
Passage of the Customs Amendment (Anti-Dumping Measures) Bill
2017 which closed loopholes that allowed foreign exporters to exploit the duty
rate review process and then recommence injurious dumping for up to 18 months
without any remedial duties in place.
The Department of Industry, Innovation and Science (the Department of
Industry) stated on its website that as part of its efforts to enable better
access and assistance for Australian businesses using the anti-dumping system,
the government had established 'an Anti-Dumping Information Service, the
expansion of the International Trade Remedies Advisory service and a hotline as
a central point of contact for enquiries about Australia's anti-dumping system'.
The government highlighted a newly established market research function to
provide economic analysis of trends and trending behaviours across different
markets to assist anti‑dumping investigations.
The Anti-Dumping Commissioner provided the committee in April 2016 with
an overview of reforms to the anti-dumping system at that time:
The reforms addressed areas such as placing a greater onus on
business to cooperate with investigations; introducing more stringent deadlines
for submissions; improving the merits review process; and directing me as the
commissioner to make a preliminary affirmative determination on day 60 of an
investigation, meaning provisional measures can be imposed, or issue a status
report providing reasons why a preliminary affirmative determination was not made...
The government has provided additional funds to the
commission to employ additional investigators and strengthen its market
intelligence unit...The recently established Anti-Dumping Information Service
provides targeted economic analysis of trends and trading behaviours across
markets to provide better information earlier in the process...
In addition to the additional resources, we are currently
implementing the recommendations of an external review of the commission to
ensure our processes are timely and effective and continue to deliver quality
outcomes. One of the key changes will be the implementation of a new
investigations model...This will also allow me to make a preliminary
affirmative determination earlier in the investigation process...when I believe
it is necessary to prevent injury to the Australian industry.
In its submission to the 45th Parliament, the Department of
Industry also gave an update on recent changes aimed to strengthen the
On 9 September 2016, the Government announced a range of
operational improvements to the anti-dumping system. As part of these, the
[Anti‑Dumping] Commission has put in place a new investigations model to
create efficiencies and improve the quality and timeliness of anti-dumping
investigations. The Commission has adopted a more active, risk-based approach
to address proven circumvention activities...The Commission is working with the
Department of Immigration and Border Protection to take a stronger
whole-of-government approach to ensuring overseas exporters and Australian
importers comply with Australian anti-dumping and countervailing (anti-subsidy)
The Department of Industry informed the committee that in late 2016, it
had consulted with a range of stakeholders, including steel manufacturers,
steel importers and steel fabricators, on the effectiveness and efficiency of
the anti-dumping system, and provided assurances that the feedback it had received
'will inform the Government whether additional opportunities for improvement
Issues raised by submitters
As noted above, there have been some amendments to Australia's anti‑dumping
and countervailing system during the period of this inquiry. This section of
the report focuses only on those issues raised by submitters not directly covered
by the legislative changes discussed above.
Several submitters wrote or spoke in support of recent changes to the
anti‑dumping system. Bisalloy Steel, for example, suggested the changes
'have enhanced the operation of the system'.
Similarly, BlueScope Steel submitted:
These legislative changes, together with the establishment
and resourcing of the Anti-Dumping Commission, have led to significant
improvements in the effectiveness of Australia's anti-dumping system. However,
further changes are needed to ensure Australia's anti-dumping system is
effective in redressing the injury caused by dumping.
Free Trade Agreements
Several submitters raised concerns about FTAs and their impact on the
Australian steel industry. The Australian Steel Association asserted that:
With FTAs being agreed with Australia's major regional
partners, imposing (dumping) duties on the inputs to Australia's downstream
steel intensive manufacturers simply has the effect of transferring competitive
strain to the sector of the Australian steel industry most under pressure.
BlueScope Steel outlined that its key areas of concern in negotiating
bilateral and plurilateral trade agreements included trade measures, as follows:
Maintenance of anti-dumping rights; staged tariff reductions
for sensitive steel products; rules of origin; mechanisms to address subsidies
and non‑tariff barriers; product standards; and harmonisation of
intellectual property arrangements.
Costs to lodge an application with
Some evidence that the committee received concerned the costs involved
in running an anti-dumping case. The General Manager of Bisalloy Steel stated
that the costs can be 'anywhere from a half-a-million dollars to a million
Mr John Doyle, who appeared on behalf of 63 businesses, outlined that
the costs and time involved in running an anti-dumping case can be a deterrent
to smaller businesses:
[T]o run an anti-dumping case costs in excess of half a
million dollars or more—between half a million and a million dollars.
Obviously, that comes out of any company's bottom line, whether it is
BlueScope, Arrium, Bisalloy...It is just crazy.
Involvement of small and
medium-sized enterprises (SMEs) in anti-dumping cases
The committee heard that the anti-dumping system as it stands caters to
large businesses producing raw product. Mr Ian Waters, who also gave evidence
on behalf of 63 businesses, stated that most of these businesses down the
supply chain did not engage in the anti-dumping process, although dumping was a
matter of concern for them if they purchased raw product from companies:
...like Bisalloy, BlueScope and Arrium. It is important to know
also that the dumping only applies to raw product. With those thousands of
tonnes of steel that we are talking about, a lot of that is fabricated steel,
so it is not covered by dumping.
The Australian Steel Institute highlighted that more fabricated steel is
imported into Australia than raw product, but anti-dumping cases have not
investigated fabricated steel:
We would like to bring to the Senate's and the Government's
attention that there is more structural steel fabrication being brought into
the country than there is 'mill gate' steel. The 'mill gate' steel has been
very successful in proving dumping, however none of the fabricated steel has
even put a case together...None of these products have ever lodged a dumping
case, as the system is not 'user-friendly' to these products or this sector.
The Australian Steel Institute stated that evidence suggests that many
manufactured/fabricated steel products are being dumped. However, it submitted,
'due to the nature of the anti-dumping system and the laws, it has been very
difficult for manufactured products or SMEs to take advantage of the system'.
The Institute's National Manager, Industry Development and Government
Relations, gave further evidence outlining the difficulties inherent in the
current system for manufactured steel products:
The dumping legislation does not lend itself to manufactured
product. It is not good for bespoke product, and that is essentially what a lot
of the imported fabricated products are. Every building, every iron ore plant,
every conveyor belt is different. The antidumping legislation struggles with
As a solution to the issue of few SMEs using the current system, the
Australian Steel Institute argued that the ADC and the government 'need to
assist the many SMEs within the downstream steel channel (i.e. BlueScope and
Arrium's customers) [to] access the anti-dumping system'.
It should be noted that SMEs currently have access to the International
Trade Remedies Advisory Service, provided by the Australian Government, to help
them prepare applications and provide information about Australia's
anti-dumping and countervailing system.
Lack of information made publically
The Australian Steel Institute argued that because the ADC has full
access to import data from the Australian Bureau of Statistics, the ADC should
have the power to self-initiate an investigation, particularly in
anti-circumvention inquiries, instead of relying on industry, which only has
access to 'redacted data'.
BlueScope also made the same proposal on the same grounds.
However, the Anti-Dumping Commissioner gave evidence that the ADC currently has
this power, 'and the ability to do so is based on information that we would
consider meets the standard', although as of April 2016 the ADC had never
self-initiated an investigation.
The Australian Steel Institute further proposed that a review is needed
to establish what data the ABS can release:
so that businesses can do more than only follow the flow of
international trade so informed decisions can be made to determine whether, in
a particular case, products from a particular country have been 'dumped' into
The Anti-Dumping Commissioner advised that the ADC has a new anti‑dumping
information service. However, the function of this service appears to be to
provide the ADC with statistical analyses of trends across markets, rather than
providing Australian businesses with data relevant to anti-dumping allegations.
Time taken to conduct anti-circumvention
BlueScope Steel expressed concern about the length of anti-circumvention
inquiries, which are currently subject to a 155 day legislative timeframe, as
are anti‑dumping inquiries. BlueScope argued that because of the nature
of an anti‑circumvention inquiry, it should require less time than the
original anti-dumping inquiry that had determined the product was dumped:
An anti-circumvention inquiry is only held after a successful
anti-dumping investigation, and only where there is prima facie evidence that
exporters or importers are circumventing measures imposed in the original
investigation. As the anti-circumvention inquiry relates to dumping and goods
already fully investigated by the ADC, it should not require a timeframe that
is as long as the original investigative timeframe. A shortened timeframe...would
more quickly ensure that the intended effect of the original dumping duties is
not undermined and the domestic industry does not suffer prolonged injury.
A number of submitters questioned the particular types of duties that
the ADC imposes on products found to have been dumped, or called for changes to
specific types of duties. For example, BlueScope proposed that 'the combination
duty method be made the default method for all cases'.
Some evidence concerned the 'lesser duty' rule, calling for it to be
removed or to only be used in exceptional circumstances.
For example, Bisalloy Steel submitted that:
...the recent policy change involving the non-mandatory
consideration of the lesser duty rule for SMEs (with effect from 1 January
2014) excluded industries where only one SME local manufacturer supplies the
Australian market. The policy change on the mandatory consideration of the
lesser duty rule does not benefit Bisalloy. It is understood that the
introduction of the policy change was intended to ensure that there would be no
exploitation of market position by a monopolistic supplier – however, Bisalloy
cannot be viewed as holding a dominant position with less than 45 [per
cent] market share.
Bisalloy Steel asked for 'the non-mandatory consideration of the lesser
duty rule' in investigations where the sole SME does not hold a dominant (that
is, greater than 50 per cent) market share position.
The Australian Manufacturing Workers' Union called for a reform of the
anti‑dumping handbook used by the ADC, to examine duties and other
issues, such as:
...how normal values are calculated; how profit margins are
allocated in construction of normal values; how 'particular market situations'
are determined; the types of duties applied (ad valorem or flat); [and]
data access and verification...
Safeguards separate to the ADC
The committee received evidence questioning why Australia's safeguards
system rests with the Productivity Commission, while the anti-dumping and
countervailing framework rests with the ADC. The Australian Manufacturing
Workers' Union in their submission highlighted the issue with the current
[S]afeguard tariffs are a legitimate and WTO sanctioned
remedy for unfair and damaging trade practises. Yet the Australian authority
charged with assessing claims for safeguard protection is the Productivity
Commission (PC). The PC has no particular expertise in assessing trade remedies
on a case by case, real world basis. They do not as a matter of course have
access to the customs data required for such assessments and their work is much
more focused on broad microeconomic policy reform rather than real world
assessments of trade practises. The recent establishment of the Anti‑dumping
Commission presents an opportunity to better align the treatment of safeguard
tariffs and other trade remedies. The Commission has routine access to relevant
customs data, has expertise using this data, has established links with
industry and has as its bread and butter work the assessment of trade remedies.
A proposal from the Chief Executive of BlueScope Australia and New
Zealand, Mr Mark Vassella, aligned with the view that there could be a more
effective system for safeguards:
One reform we think would greatly improve protection against
surges of dumped imports where there are global gluts—as we are seeing at the
moment—would be to make it faster and simpler for the government to apply
safeguard measures. The current process is onerous, requiring the Productivity
Commission to extensively investigate. A faster investigative process carried
out by, for example, the Anti-Dumping Commission or the industry department
could provide more effective relief.
Mr Vasella argued that BlueScope considered it 'a bit of an anomaly...that
[responsibility for safeguards] is not with the Anti-Dumping Commission, when
the rest of the policy and the regime is'.
The South Coast Labour Council also suggested that one agency should
cover both anti-dumping and safeguard functions, as exists in other
jurisdictions, such as the United States.
The Council submitted that:
...the ADC's work is constrained...by the demarcation of key
trade protection powers such as safeguards with other agencies, in this case
the Productivity Commission...[I]t simply makes no sense to have the
responsibilities for safeguards and anti-dumping tariffs demarcated over [two]
separate Government agencies and ministries...Putting aside the fact that these
safeguards have been rarely used (once by the Productivity Commission since its
inception), combining the [two] functions under the auspices of the ADC would
make administrative sense and ensure a more holistic Government approach to
However, the Anti-Dumping Commissioner gave evidence indicating that
Australia's system of separating safeguard functions from anti-dumping and
countervailing functions was not necessarily unusual compared to other
It varies...I am not sure if it is unusual. There are a number
of models, some of which you might call integrated models and some of which are
The evidence provided to this and other related inquiries indicates that
current global conditions and market interventions by other governments,
particularly those in Asia, have contributed to a global glut in steel and
consequent influx of dumped and subsidised steel into Australia. The
Anti-Dumping Commission has provided valuable analysis of this issue through
its 2016 analysis of the global steel and aluminium markets.
Reflecting these global conditions, most of the Anti-Dumping
Commission's work—as much as 80 per cent—is concerned with steel. The committee
is of the view that the Anti-Dumping Commission plays a vital role in
protecting the Australian steel industry from dumped steel or steel products
unfairly subsidised by foreign governments. Australia's anti-dumping regime
must be continually strengthened so that it can effectively defend Australian
industry against unfair and anti-competitive trade practices. To guarantee the
future of the Australian steel industry, the government must adequately
resource the Anti-Dumping Commission so that it can operate in a timely and
effective manner, and give consideration to employing experts from the private
sector with industry experience.
The committee recommends the Australian Government ensure that the
Anti-Dumping Commission is adequately resourced so that it can operate in a
timely and effective manner and defend Australian industry against unfair and
anti-competitive trade practices.
The committee notes that in adequately resourcing the Anti-Dumping
Commission, it would be preferential for officials to have private sector experience
prior to gaining employment within the Commission.
The committee heard evidence from multiple stakeholders indicating that
the current division of Australia's trade remedies system between the
Anti-Dumping Commission, which deals with dumping and countervailing, and the
Productivity Commission, which deals with safeguards investigations, is ineffective
and onerous. So long as the safeguards function rests with the Productivity
Commission, it remains inaccessible to industry and removed from Australia's
broader trade remedies framework. To facilitate industry's access to future
trade remedy actions and reduce administrative constraints, these functions
should be incorporated into one agency.
The committee notes that during Senate Estimates hearings, the Anti‑Dumping
Commissioner acknowledged that safeguards investigations in other international
jurisdictions (such as the European Union, the United States, Canada and South
Africa) are often conducted by the same body undertaking the anti-dumping and
The Department of Foreign Affairs and Trade has also confirmed that
similar arrangements exist in Korea and China.
It is the committee's view that Australia should align its anti-dumping
processes with international best practice/norms to ensure that Australian
industry is afforded the same protection as foreign industries and can access
safeguards measures when appropriate. The recent United States investigation
into whether steel imports pose a threat to national security could lead to American
import tariffs on steel, resulting in excess Chinese steel being dumped in
Australia. This possibility points to the need to ensure that all trade
remedies are made available to protect Australian industry.
The committee recommends that responsibility for safeguards inquiries
should be transferred from the Productivity Commission to the Anti-Dumping
Commission, in line with international best practice.
The committee understands that recent reforms have improved Australia's
anti-dumping system, but remains of the view that there are significant
problems still to be addressed. A number of submitters and witnesses to this
inquiry emphasised their concerns about the level and type of particular duties
imposed by the Anti‑Dumping Commission. To address this issue, applicants
should be able to nominate the form of duty to be applied in anti-dumping
applications. A working group should also be established in the International
Trade Remedies Forum to reform the Anti‑Dumping Commission's handbook,
particularly with regards to duties.
The committee recommends that the Australian Government introduce a mechanism
for applicants involved in anti-dumping investigations to nominate the form of
duty to be applied, which can be recommended to the Minister by the
The committee recommends the establishment of a working group of the
International Trade Remedies Forum to reform the anti-dumping handbook.
The committee is concerned that the cost and structure of the current
anti‑dumping system inhibits SMEs from utilising Australia's anti-dumping
framework, despite evidence suggesting that they are significantly affected by
dumping and subsidies of imported steel, particularly manufactured/imported
steel. Although the International Trade Remedies Advisory Service helps SMEs to
prepare applications, case costs of half a million to a million dollars
dissuade many SMEs from considering lodging anti-dumping action. In addition,
the system is not 'user friendly' to the fabricated steel sector, much of which
is comprised of SMEs.
The committee recommends that the Australian Government consider establishing
a legal aid system to expand access to the Australian anti-dumping system by
affected industry stakeholders, particularly small and medium-sized enterprises.
The committee recommends that the working group proposed in
Recommendation 23 within the International Trade Remedies Forum also consider
ways in which the anti-dumping system can be reformed to be more user-friendly for
small and medium-sized enterprises and the fabricated steel sector.
The committee also heard that a further inhibiting factor for businesses
wishing to lodge anti-dumping cases is that in some cases they cannot access the
trade and import data held by the Bureau of Statistics that informs the
Anti-Dumping Commission's work. The committee considers that the Australian Government
should investigate how this and other relevant data can be made publicly
accessible, where appropriate.
The committee recommends that the Australian Government look at ways to
better facilitate access to data held by the government to assist companies
seeking to access the anti-dumping system.
Previously, the Australian Government rejected a recommendation from the
Productivity Commission to establish a 'public interest test' in which
anti-dumping measures considered to be unreasonably costly to the broader
community could be suspended. The committee notes that the Minister still has
the ability to consider whether duties are in the public interest. The committee
further notes that there has been widespread bipartisan opposition to the
implementation of a public interest test in the levying of duties, and considers
that the government should continue to oppose any push for this or similar
recommendations to be implemented.
The committee recommends that the Australian Government should continue
to oppose the introduction of a 'public interest test' in the levying of
Senator Chris Ketter Senator
the Hon Kim Carr
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