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A!~T~LTR
ROBINSON & HEDDERWICKS
LU3i~Jd~LY
1997
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
CUSTOMS LEGISLATION (ANTI-DUMPING) AMENDMENT BILL 1997
REPLACEMENT EXPLANATORY MEMORANDUM
THIS MEMORANDUM TAKES ACCOUNT OF AMENDMENTS MADE BY THE
HOUSE OF REPRESENTATIVES TO THE BILL AS INTRODUCED
(Circulated by authority of the Minister for Customs and Consumer Affairs,
the Hon Warren Truss MP)
11389 Cat. No. 97 1782 X ISBN 0644 495162
CUSTOMS LEGISLATION (ANTI-DUMPING) AMENDMENT BILL 1997
OUTLINE
The purpose of this Bill is to amend the Customs Act 1901:
(i) to provide a special approach for determining normal value of allegedly dumped
goods from countries that are in the process of transition to a market economy
when it is established that the selling price of those goods is subject to
government control as announced by the Government on 12 March 1997;
(ii) to provide a new methodology for determining the normal value of allegedly
dumped goods where the goods are exported from a country in the process of
transition to a market economy and a raw material input into the goods which
accounts for more than 10% of the costs of producing or manufacturing the
goods is supplied by a State owned enterprise; and
(iii) in combination with the amendments to the Customs Tariff (Anti-Dumping) Act
1975 proposed in the Customs Tariff (Anti-Dumping) Amendment Bill 1996, to
clarify provisions of these Acts which relate to the manner in which interim
dumping and countervailing duties are collected.
Economies in transition assessment of normal value ofgoods when domestic selling
-
prices are subject to government control
The amendments to the normal value provisions in section 269TAC of the Customs
Act 1901 (the Customs Act) provide for a case by case approach to be taken by the
Minister in inquiries into the alleged dumping of products from such economies. If the
Minister is satisfied that the exporter's domestic selling prices of the product under
investigation are subject to government control, normal values may be ascertained by
reference to other relevant information which may include the selling prices of like
goods in a "surrogate" country.
To ensure that Australia is not in breach of its obligations as a member of the World
Trade Organization (WTO), the amendment provides for regulations to be made to
disapply the new methodology for calculating normal values in respect of specified
countries.
Economies in transition consideration of raw material inputs
-
Following the introduction of the Bill, officials from Customs, the Anti-Dumping
authority, the Department of Foreign Affairs and Trade and the Department of
Industry Science and Tourism conducted seminars with industry representatives to
explain and discuss the Bill. Industry expressed concern that the Bill did not address
the issue of government control over the price of significant raw material inputs used
in the production of the goods under investigation.
In September, the Senate referred the Bill to the Economics Legislation Committee for
consideration. Although the majority report from the Committee recommended
passage of the Bill it commented "consideration should be given to the cost of raw
Page 2 Customs Legislation (Anti-Dumping) Amendment Bill 1997
material inputs where investigators conclude that it exceeds 10% of the production
process".
In light ofthese views, the Government proposed amendments to the Bill, which were
passed by the House of Representatives on 27 November 1997, to confer flexibility in
determining normal values by allowing the examination of significant raw material
inputs used in the production of the goods exported to Australia when those inputs are
supplied by a state owned enterprise.
In the absence of a price control situation for the whole goods in the domestic
economy, the proposed amendments will allow the Minister to proceed to examine the
cost of production of the goods exported to Australia. If the Minister is satisfied that a
raw material accounts for more than 10% of the costs of producing or manufacturing
the exported goods and that the raw material is supplied by an enterprise which is
wholly owned by the national government, or a provincial government, of the
exporting country the cost of the particular item could be ignored and, for normal
value purposes, its cost could be estimated by the Minister by reference to other
relevant information which could, but need not necessarily, include the cost of that
item in a surrogate country.
Interim dumping duties
The Bill also contains amendments which, in combination with those in the Customs
Tariff (Anti-Dumping) Amendment Bill 1997, clarify the operation of the provisions of
the Customs Act and the Customs Tariff (Anti-Dumping) Amendment Act 1975 which
relate to the manner in which interim dumping and countervailing duties are collected.
The amendments make it clear that such interim duties can be imposed, pending final
assessment of any dumping or countervailing duties, notwithstanding that the actual
export price and normal value, or the fact that a countervailable subsidy has been
received, have not yet been ascertained.
Although these amendments are to be taken to have commenced on 1 January 1993,
the date on which the interim dumping and countervailing duties were introduced, they
will not require importers to pay an amount of dumping duty beyond that which has
previously been demanded. The amendments merely seek to ensure that approximately
$12 million in interim duties collected since 1 January 1993 is not subject to legal
challenge.
The Bill also contains a minor technical amendment to correct a cross reference in the
) Anti-Dumping Authority Act 1988.
Customs Legislation (Anti-Dumping) Amendment Bill 1997 Page 3
FINANCIAL IMPACT STATEMENT
The amendments in the Bill in relation to the assessment of the normal value of goods
in countries in transition to market economies have no financial impact.
The proposed amendments to clarify the operation of the interim dumping and
countervailing duties provisions, in combination with those proposed in the Customs
Legislation (Anti-Dumping) Amendment Bill 1996, will ensure that approximately $12
million in interim duties collected since 1 January 1993 is not subject to legal
challenge.
4
Page 4 Customs Legislation (Anti-Dumping) Amendment Bill 1997
CUSTOMS LEGISLATION (ANTI-DUMPING) AMENDMENT BILL 1997
NOTES ON CLAUSES
Clause I Short Title
-
This clause provides for this Act to be cited as the Customs Legislation (Anti-
Dumping) Amendment Act 1997.
Clause 2 - Commencement
P This clause provides for the commencement provisions of the various amendments
contained in this Act as set out below.
Subclause 2(1) provides that, subject to subsections (2), (3) and (4), the provisions of
this Act commence on the day on which this Act receives the Royal Assent. The
provisions to commence upon Royal Assent are:
· the formal commencement and enabling clauses;
· the minor technical amendment to the Anti-Dumping Authority Act 1988 (the
ADA Act) in item I of the Schedule 1; and
· the application provisions in item 13 of Schedule 1.
Subclause 2(2) provides that, subject to subsection (4), items 2, 3 and 4 of Schedule I
commence on a day to be fixed by Proclamation. These items all relate to the new
method for calculating the normal value of goods exported from countries in transition
to a market economy. Proclamation commencement is proposed to enable
complementary regulations to be made with a commencement on the same day as the
amendments to the Customs Act 1901 (the Customs Act).
The Proclamation commencement is subject to the standard provision providing for
automatic commencement 6 months after Royal Assent if the relevant provisions have
not been proclaimed to commence within that time (subclause 2(4) refers).
Subclause 2(3) provides that items 5 to 12 are taken to have commenced on
1 January 1993. These items all relate to the amendments clarifying collection of
interim dumping and countervailing duties. The interim duty regime was introduced by
the Customs Legislation (Anti-Dumping Amendments) Act 1992, which commenced
on 1 January 1993. Interim duties have been collected since that date in accordance
with the intention ofthe regime and these amendments will ensure that approximately
$12 million in interim duties collected since 1 January 1993 is not subject to legal
challenge.
Clause 3 - Schedules
. This clause is the formal enabling provision for the Schedule to this Act providingthat
each Act specified in the Schedule is amended or repealed in accordance with the
applicable terms of the Schedule.
Customs Legislation (Anti-Dumping) Amendment Bill 1997 Page 5
The clause also provides that the other items ofthe Schedules have effect according to
their terms. This is a standard enabling clause for transitional, savings and application
items in amending legislation (item 13 of Schedule I refers).
SCHEDULE!- AMENDMENT OF ACTS
Anti-Dumping Authority Act 1988
Item 1 - Subsection 7(3)
This item amends subsection 7(3) of the Anti-Dumping Authority Act 1988 by omitting
"11(5)" and substituting it with "11(4)" to correct an inaccurate cross reference to the
Customs Tariff (Anti-Dumping) Act 1975 ("the Anti-Dumping Act"). This is a minor
technical amendment only.
Customs Act 1901
Items 2 to 4
These items contain the proposed amendments to the normal value provisions in
section 269TAC ofthe Customs Act 1901 (the Customs Act). The new subsections
269TAC(5D), (5E), (SF), (5G), (5H) and (5J) set out the special approach Customs
and the Anti-Dumping Authority (the Authority) may use in determining normal values
for allegedly dumped goods from cu~tries that are in the process of transition to a
market economy.
Section 269TAC ofthe Customs Act 1901 provides for the assessment of the `normal
value' of imported goods, for the purpose of determining whether the goods have been
exported to Australia at less than that value (thereby dumped).
The structure of the section has been described as establishing a hierarchy of
methodologies by which normal values are determined. Investigating authorities must
progressively work through each of the prescribed methodologies until a point is
reached at which a normal value can be determined.
Until the latter part of last year subsection 269TAC(4) was utilised by investigating
authorities to ascertain normal values for goods exported from economies in transition,
for example China, by reference to information obtained in a "surrogate" country. In
November of last year legal advice was obtained as to the scope of subsection
269TAC(4). That advice confirmed that the section was severely limited in its
application. Its stringent tests require that the Government of the country of export
has at least a substantial monopoly of all of the trade ofthe country not just in terms
-
ofthe goods under investigation, AND must also substantially influence the domestic
price of all goods in that country.
Therefore, although the governments of economies which are in a state of transition
from a command economy to a market economy may still maintain controls over the
domestic selling prices of a significant number of sensitive products, it cannot be said
that the extent ofthe control falls within the ambit of subsection 269TAC(4). Clearly,
Page 6 Customs Legislation (Anti-Dumping) Amendment Bill 1997
in such economies the government has moved from a position in which it maintained a
substantial monopoly over all of the trade ofthe country.
As subsection 269TAC(4) can have no further application to economies which are
) considered to be in transition from a command economy to a market economy, the
determination of the normal values for exports from such economies, as a matter of
law, must be made in accordance with the remaining provisions of section 269TAC.
These provisions do not distinguish between "market economies" and those which are
considered to be "in transition Therefore, normal values for exports from economies
".
which are considered to be in transition from a command economy to a market
) economy 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.
Investigating authorities require the flexibility to proceed to a methodology similar to
that provided in s. 269TAC(6) (ie have regard to all relevant information) as soon as
they are satisfied that the domestic selling prices ofthe goods under consideration are
subject to government control. The proposed amendments therefore aim to confer
such flexibility upon Customs and the Authority.
The proposed amendments also set out the new methodology for determining the
normal value of allegedly dumped goods where the goods are exported from a country
in the process of transition to a market economy and where a raw material input into
the goods that accounts for more than 10% of the costs of producing or manufacturing
the goods is supplied by a State owned enterprise. These provisions were inserted into
the Bill by Government amendment in the House of Representatives.
Item 2 - After subsection 269TAC(SC)
This item introduces new subsections 269TAC(5D), (SE), (SF), (5G), (5H) and (5J).
New subsection (SD) provides an alternative "all relevant information" provision to
subsection 269TAC(6) to cover the situation where goods are exported to Australia
and the Minister is satisfied that:
(a) in the past the Government of that country of export had a monopoly, or a
substantial monopoly, of the trade of that country and determined, or
substantially influenced, the domestic price of goods in that country (ie that the
country previously would have met the terms of subsection 269TAC(4)); and
(b) the circumstances described in paragraph (a) no longer applies in relation to the
country of export; and
(c) a `price control situation' applies, within the meaning of subsection (SE), in
relation to like goods to the goods exportedto Australia.
Customs Legislation (Anti-Dumping) Amendment Bill 1997 Page 7
In the above situation, the normal value ofthe first-mentioned goods may be
determined by the Minister having regard to all relevant information.
New subsection (SE) describes the two different circumstances where a price control
situation would apply to the domestic selling price of like goods to the goods first
mentioned in subsection (SD) (ie the goods exported to Australia).
The circumstances are as follows:
(a) where the exporter of those first-mentioned goods sells like goods in the country
of export and the domestic selling price of those like goods is controlled, or
substantially controlled, by a government (at whatever level) of that country; or
(b) if the exporter does not sell like goods in the country of export, then where there
are other sellers in that country of like goods and the domestic selling price of
like goods sold by some or all of those other sellers is so controlled or
substantially so controlled.
These are the only two circumstances where the new approach for ascertaining normal
values can be used. Therefore the new approach may only be adopted where the
Minister is satisfied that the domestic selling price of relevant goods sold by the
exporter, or where applicable another seller, is subject to substantial government
control.
New subsection (5F) makes it clear that although subsection 269TAC(4) does not
apply, the use of the "surrogate country" methodology for ascertaining normal values
in paragraphs 269TAC(4)(c), (d), (e) or (f) may be used under the "all relevant
information" methodology in new subsection (SD).
New subsection (SG) gives effect to the Government's decision to provide an
additional methodology for determining the normal value of allegedly dumped goods
from countries that are in the process of transition to a market economy where a raw
material input into the goods that accounts for more than 10% ofthe costs of
producing or manufacturing the goods is supplied by a State owned enterprise.
This new provision can operate in respect ofgoods exported to Australia when the
Minister is satisfied that:
(a) in the past the Government of the country of export had a monopoly, or a
substantial monopoly, of the trade of that country and determined, or
substantially influenced, the domestic price ofgoods in that country (ie that the
country previously would have met the terms of subsection 269TAC(4)); and
(b) the circumstances described in paragraph (a) no longer applies in relation to the
country of export; and
(c) proposed subsection 269TAC(SD) does not apply (ie a price control situation
does not apply in respect of the whole goods); and
Page 8 Customs Legislation (Anti-Dumping) Amendment Bill 1997
(d) a raw material used in producing or manufacturing the exported goods is directly
supplied by an enterprise that is wholly owned by a government (whether national
or provincial) ofthe country of export; and
(e) the cost ofthat raw material to the producer or manufacturer of the exported
goods exceeds 10% ofthe total costs actually incurred in the production or
manufacturing ofthe exported goods.
If these preconditions are met, the normal value of the exported goods is to be
calculated as the sum of:
· an amount the Minister determines, having regard to all relevant information, to
be the `value' (as opposed to the actual `cost') of the state supplied raw materials
that exceed the 10% threshold) (new paragraph 269TAC(5G)(f) refers);
- This paragraph allows the Minister to substitute a replacement value for the
cost of the state suppled raw material, which the Minister can determine
having regard to all relevant information. This substituted value may be
determined by reference to, amongst other things, the cost of like raw
materials supplied by non state owned enterprises within the country of
export or the cost oflike raw materials in a surrogate country (see proposed
subsection (5H)).
· the amount ofthe production and manufacturing costs actually incurred by the
producer or manufacturer (excluding the costs of the state supplied raw material
covered by paragraph (f)) (new paragraph 269TAC(5G)(g) refers); and
· an amount determined by the Minister to be the administrative, selling and general
costs plus the profit on a sale ofthe goods if, instead of being exported, the
goods were sold in the domestic economy of the country of export (new
paragraph 269TAC(SG)(h) refers). (This element is modelled on current
subparagraph 269TAC(2)(c)(ii) of the Act).
New subsection (SH) provides for range of "surrogate country" methodologies
(modelled on paragraphs 269TAC(4)(c), (d), (e) and (f) of the Act for establishing the
normal value ofwhole goods) that the Minister can, but is not required to, use when
having regard to "all relevant information" for the purposes of determining the
substitute value for the cost ofthe state supplied raw materials that exceed the 10%
threshold under paragraph 269TAC(5G)(f).
New subsection (SJ) provides for the power to make regulations to disapply subsection
(SD) or (SG) to a country for the purpose offulfilling Australia's international
obligations under an international agreement. This provision is intended to ensure that
Australia is not in breach of its obligations as a member of the World Trade
Organization (WTO).
` It is proposed to make regulations to disapply subsection (SD) to all current WTO
members which will commence at the same time as these amendments. As additional
Customs Legislation (Anti-Dumping) Amendment Bill 1997 Page 9
countries join the WTO, subject to the terms oftheir accession protocol, fi.irther
regulations will be made to disapply subsections (5D) and (5G).
Item 3 Subsection 269TAC(6)
-
This item effects a consequential amendment to subsection 269TAC(6), the existing C
"all relevant information" provision to exclude its application when new subsection
(SD) applies.
Item 4 After subsection 269TAC(7)
-
This item introduces new subsection 269TAC(7A) which allows the Minister to
continue to use other provisions in section 269TAC [other than subsections (4) and
f
(5)] in relation to other goods exported to Australia from a particular country where
the new subsection (SD) or (SG) applies to certain goods exported from that country.
This provision reflects the policy that the focus of new subsections (5D) and (5G) is
not on the overall status or classification of the economy in the country of export but
on the domestic selling prices of the goods under consideration when these prices are
subject to government control or substantial control.
Item 5 and 6 Subsections 269TG(1) and (2)
-
Final dumping duty and interim dumping duty are imposed by subsections 8(2) and (3),
respectively, ofthe Customs Tariff (Anti-Dumping) Act 1975 (the Anti-Dumping Act)
on goods the subject of a notice under subsections 269TG(1) or (2) of the Customs
Act. A notice under subsection 269TG(1) is intended to apply retrospectively to the
goods that were the subject ofa dumping inquiry under Part XVB ofthe Customs Act
and to like goods exported to Australia after a preliminary finding of dumping under
section 269TD but before the publication ofthe notice. A notice under subsection
269TG(2) applies to like goods exported to Australia gfl~ publication of the
the
notice.
The present wording of subsections 269TG( I) and (2) currently provides that the
notices under these subsections apply to goods, or like goods, the amount of the
export price of which is less than the amount of their normal value. In the case of
interim dumping duties, these values have not yet been established, as their collection
is intended to be "pending final assessment ofthe dumping duty payable". It therefore
might be argued that it is not possible to impose interim dumping duty under
subsection 8(3) ofthe Anti-Dumping Act until such time as the actual amounts are
ascertained. Once actual values are ascertained, however, final dumping duties are
imposed. Therefore, to interpret subsections 269TG( 1) and (2) in this way defeats the
purpose of imposing interim duties.
Items 5 and 6 are therefore necessary to correct the above anomaly by making it clear
that interim dumping duties are imposed by section 8(3) of the Anti-Dumping Act in
respect of: .
· in the case of subsection 269TG(l) like goods that were exported to Australia
-
after the CEO made a preliminary finding under section 269TD that there were
Page 10 Customs Legislation (Anti-Dumping) Amendment Bill 1997
sufficient grounds for the publication of a notice under subsection 269TG( 1) in
respect ofthe goods referred to in paragraph 269TG( 1)(c) (ie the goods the
subject of the inquiry) but before the publication of that notice (item S refers); and
· in the case of subsection 269TG(2) like goods that are exported to Australia after
-
the date of publication of the notice or such later date as is specified in the notice
(item 6 refers).
A complementary amendment to subsection 8(2) ofthe Anti-Dumping Act is also
proposed in the Customs Tariff(Anti-Dumping) Amendment Bill 1997 to ensure that:
actual values are still required to be ascertained in order for f~i~i
dumping duties to be
imposed.
Items 7 to 12 Subsections 269TH(!), (2); 269TJ(!), (2); and 269TK(!),( 2)
-
Items 7 to 12 effect similar amendments to those in items S and 6 above to the
corresponding provisions in subsections 269TH, TJ and TK dealing with notices made
in respect of third country dumping duties, countervailing duties and third country
countervailing duties, respectively. Like subsections 269TG( 1) and (2), these
provisions can currently be interpreted to require the actual amount of export price and
normal value, or the fact that a countervailable subsidy has been received, to be
ascertained before interim duties can be collected.
Item 13 Application provisions
-
Sub-item 13(1) provides that, despite the amendments ofthe Customs Act made by
items 2, 3 and 4 ofthe Schedule, the Customs Act as in force immediately before the
day on which those items commence, continues to apply as though those amendments~
had not been made in relation to applications under subsection 269TB(I) or (2) that
were made before that day.
This provision means that all applications on hand at the time the amendment to
section 269TAC commences must be considered against the current provisions for
ascertaining normal value.
Sub-item 13(2) inserts a saving provision to ensure that any notice given by the
Minister under subsections 269TG(1) or (2), TH(1) or (2), TJ(1) or (2), or TK(1) or~
(2) of the Customs Act on or after 1 January 1993 is taken to have effect as if it had
been given under that subsection as amended by this Act. This provision means that
notices made between 1 January 1993 and the enactment ofthese amendments (and
` consequently the interim dumping and countervailing duties imposed and collected
pursuant to them) are to be treated as if they were made in accordance with the
amendments proposed above.
Customs Legislation (Anti-Dumping) Amendment Bill 1997 Page 11
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Printed by Authority by the Commonwealth Government Printer
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