House of Representatives

Explanatory Memorandum

Minister for Home Affairs, the Honourable Jason Clare MP

OUTLINE

1. The purpose of this Bill is to amend the Customs Act 1901 (the Customs Act) to finalise the implementation of the Government's reforms to Australia's anti-dumping system announced in June 2011.

2. This Bill implements several aspects of these reforms by:

2.1

amending the provisions dealing with countervailable subsidies to more accurately reflect definitions and operative provisions of the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (ASCM);

2.2

introducing provisions under which the Australian Customs and Border Protection Service (Customs and Border Protection) will, if required, conduct inquiries to address the circumvention of trade measures by exporters or importers of goods which are subject to measures; and

2.3

strengthening the provisions that deal with non-cooperation in anti-dumping investigations, reviews under Division 5 or continuation inquiries.

FINANCIAL IMPACT STATEMENT

3. The Australian Government has provided $10.4 million over the forward estimates to be absorbed by Customs and Border Protection for the implementation of the June 2011 reforms to the anti-dumping system of which this Bill forms part.

REGULATION IMPACT STATEMENT

4. The Explanatory Memorandum of the Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2011 addresses the regulatory impact of this Bill in section 4 (Regulation Impact Statement).

HUMAN RIGHTS COMPATIBILITY STATEMENT

5. This Human Rights Compatibility Statement was prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

6. This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Bill

7. This Bill's purpose is to amend Part XVB of the Customs Act, which deals with the imposition of trade measures in respect of imported goods which are dumped, or subsidised by a countervailable subsidy, the importation of which has caused, or threatens, material injury to Australian industry.

8. This Bill implements aspects of the Government's reforms to Australia's anti-dumping system announced in June 2011. This is the fourth tranche of reforms.

9. This Bill will amend the Customs Act by:

9.1.

amending provisions dealing with countervailable subsidies to more accurately reflect the ASCM;

9.2.

introducing provisions under which the Customs and Border Protection will, if required, conduct inquiries to address the circumvention of trade measures by exporters or importers of goods which are subject to measures; and

9.3.

strengthening the sampling provisions that deal with non-cooperation in anti-dumping investigations, reviews under Division 5 or continuation inquiries; and

9.4.

providing a number of minor amendments to the Customs Act.

Human Rights implications

10. This legislative instrument does not engage, impact on, or limit in any way, the human rights and freedoms recognised or declared in the international instruments listed in the definition of human rights at section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Conclusion

11. This legislation does not raise any human rights issues.

Minister for Home Affairs

CUSTOMS AMENDMENT (ANTI-DUMPING IMPROVEMENTS) BILL (No. 3) 2012

NOTES ON CLAUSES

Clause 1 - Short title

1. This clause provides for the Bill, when enacted, to be cited as the Customs Amendment (Anti-dumping Improvements) Act (No. 3) 2012.

Clause 2 - Commencement

2. Subclause (1) provides that each provision of this Act specified in column 1 of the table in that subclause commences, or is taken to have commenced, on the day or at the time specified in column 2 of the table. This subclause also provides that any other statement in column 2 of the table has effect according to its terms.

3. Item 1 in column 1 of the table provides that sections 1 to 3 and anything in this Act not elsewhere covered by the table will commence on the day on which the Act receives the Royal Assent.

4. Item 2 in column 1 of the table provides that Schedules 1 to 3 commence on a day to be fixed by Proclamation, and if any of the provisions do not commence within 6 months beginning on the day the Act receives the Royal Assent, they commence on the day after the end of that period.

5. Item 3 in column 1 of the table provides that items 1 to 7 in Schedule 4 will commence the day after this Act receives the Royal Assent.

6. Item 4 in column 1 of the table provides that item 8 in Schedule 4 will commence the later of:

(a)

the start of the day this Act receives the Royal Assent; and

(b)

immediately after the commencement of Schedule 1 to the Customs Amendment (Anti-dumping Improvements) Act (No. 1) 2012.

However, the provision(s) do not commence at all if the event mentioned in paragraph (b) does not occur.

7. Item 5 in column 1 of the table provides that item 9 in Schedule 4 will commence the day after this Act receives the Royal Assent.

Clause 3 - Schedule

8. This clause is the formal enabling provision for the Schedule to the Bill, providing that each Act specified in a Schedule is amended in accordance with the applicable items of the Schedule. In this Bill, the Customs Act is the only Act being amended.

9. The clause also provides that the other items of the Schedules have effect according to their terms. This is a standard enabling clause for transitional, savings and application items in amending legislation.

SCHEDULE 1 - AMENDMENTS OF THE CUSTOMS ACT 1901

A. Better align the countervailable subsidy provisions of the Customs Act with the WTO Agreement on Subsidies and Countervailing Measures

10. Schedule 1 of the Bill will amend provisions dealing with countervailable subsidies to more accurately reflect the ASCM. This Bill:

10.1.

amends the definition of subsidy in subsection 269T(1), to more accurately reflect the language of Article 1 of the ASCM, and clarify that a subsidy is a financial contribution or income or price support that confers a benefit, whether directly or indirectly, in relation to the goods exported to Australia;

10.2.

repeals section 269TACC and replaces it with a simplified section which deals with whether a financial contribution or income or price support confers a benefit;

10.3.

introduces a new section 269TACD to provide that, where a countervailable subsidy has been received in respect of goods, the amount of the countervailable subsidy is an amount determined by the Minister in writing and that the amount of countervailable subsidy should be worked out by reference to the units of those goods;

10.4.

amends section 269TAE to more effectively reflect the ASCM, in particular, amending subsections 269TAE(2A) and (2C) to reflect Articles 15.7 and 15.3 respectively; and

10.5.

amends subsection 269TDA(14) to allow for the immediate termination of a countervailing duty investigation where the authorities determine that injury is negligible.

B. Anti-circumvention inquiries

11. Schedule 2 of the Bill amends the Customs Act to address prescribed circumvention activities by importers and exporters.

12. Circumvention is a trade strategy used by the exporters and importers of products to avoid the full payment of dumping and countervailing duties. Circumvention behaviours take various forms and exploit different aspects of the anti-dumping and countervailing system, but they all aim to ensure that the relevant goods do not attract the intended dumping or countervailing duty.

13. This Bill will allow the Minister to amend the original notice imposing the dumping or countervailing duty, including by extending the notice so that it applies to different goods, exporters and countries which were not specified in the original notice. The Minister will exercise these powers after considering a report by the Chief Executive Officer of Customs (the CEO) regarding alleged circumvention activity that provides reasons as to why the original notice should be altered or remain the same.

C. Stronger provisions to address non-cooperative parties

14. Schedule 3 of the Bill strengthens the provisions that deal with non-cooperation in relation to dumping investigations, reviews under Division 5 or continuation inquiries. Schedule 3 also consolidates and clarifies the provisions that deal with sampling in relation to dumping and countervailable subsidy inquiries into one provision.

15. Sampling is undertaken where the number of exporters who provide information is so large as to make a determination for each individual exporter impracticable. The Minister may limit his or her examination to a selected number of exporters who are a statistically valid sample or are responsible for the largest percentage of the volume of the exports from the country in question that can reasonably be investigated.

16. Sampling is currently undertaken for dumping and subsidy investigations under subsections 269TACB(8) and 269TACC(8) respectively.

17. Currently, the Customs Act, in section 269T, categorised an exporter of goods to Australia as a 'selected exporter', 'residual exporter' or 'new exporter'. A new exporter was only relevant for the purposes of an accelerated review under Division 6. Therefore a current exporter of goods the subject of an anti-dumping investigation must have been either a selected exporter or a residual exporter.

18. Customs and Border Protection considers that residual exporters should only exist in cases where the Minister has applied subsection 269TACB(8), known as the sampling provision. This provision reflects Article 6.10 of the WTO Anti-Dumping Agreement (ADA), as stated in the Explanatory Memorandum for the 1994 amendments. This Article describes a process where, if the number of exporters from a particular country is too large for an investigating authority to examine each exporter individually, the investigating authority may choose, or 'select', which exporters to examine as part of the investigation. Article 9.4 of the ADA outlines the method for calculating the dumping margin for residual exporters. This Article is reflected in subsections 269TG(3B) and (3C).

19. In a recent review, an alternative interpretation has arisen which would mean that non-cooperating exporters are provided with the weighted average dumping margin of fully cooperative exporters and therefore avoid the application of subsections 269TAB(3) and 269TAC(6), which are the provisions intended to deal with non-cooperation in accordance with Article 6.8 of the ADA.

20. The amendments in this Bill will prevent the possible manipulation of the level of cooperation (which can occur when only the two rates are implemented) by introducing three categories of exporters: cooperative, residual and uncooperative. This will mean that the Minister will be able to determine:

20.1.

individual rates of duty for all cooperative exporters and any uncooperative exporters for whom an individual export price and normal value were calculated (these exporters will be named in the notice);

20.2.

a single rate of duty for all residual exporters (these exporters will be named in the notice); and

20.3.

a single rate of duty for all other exporters not named in the notice -this will include non-cooperating exporters not covered by an individual rate and new exporters.

21. This approach is consistent with the approach taken in a number of other jurisdictions.

D. Minor amendments

22. Schedule 4 of the Bill amends the Customs Act to correct a number of errors and make clarifications. The amendments:

22.1.

clarify the operation of paragraphs 269TAE(2C)(c) and (d) to make it clear that these provisions only operate in relation to determinations made in connection with dumping duties;

22.2.

amend subsection 269TDA(13) to provide consistency for both dumping and subsidy investigations as to how the CEO terminates investigations, where the CEO finds that there is negligible injury;

22.3.

amend the definition of interested party in subsection 269T(1) to correct an existing error; and

22.4.

correct minor errors in section referencing in section 269ZJ and provide a clarifying amendment to paragraph 269ZZK(6)(c).

A. Schedule 1-Subsidies

Item 1 - Subsection 269T(1) (definition of subsidy)

23. This item amends repeals and replaces the definition of subsidy in subsection 269T(1). The new definition clarifies that a subsidy encompasses a financial contribution and any form of income or price support, whether received directly or indirectly in relation to goods exported to Australia that confers a benefit.

24. The new definition closely follows the language of, and is in accordance with Article 1 of the ASCM which in defining subsidy does not differentiate between direct and indirectly received subsidies. Further Footnote 36 to Article 10 of the ASCM defines countervailing duty as "a special duty levied for the purpose of offsetting any subsidy bestowed directly or indirectly upon the manufacture, production or export of any merchandise, as provided for in paragraph 3 of Article VI of GATT 1994".

25. This amendment clarifies that subsidies conferring a benefit indirectly may be included in any benefit calculation under section 269TACC.

Items 2 - Subsections 269T(2AA), (2AB) and (2AC)

26. This item repeals current subsections 269T(2AA), (2AB) and (2AC) and substitutes a single new subsection 269T(2AA).

27. Current subsections 269T(2AA), (2AB) and (2AC) are redundant due to the new definition of subsidy and other amendments proposed in the Bill.

28. The new subsection 269T(2AA) provides the circumstances in which a benefit may be conferred and is intended to emphasise that a benefit may be conferred indirectly in relation to goods exported to Australia.

Items 3 - Subsection 269TAAC(3)

29. This item repeals and replaces subsection 269TAAC(3) to ensure that it more closely follows the requirements and language of Article 2.1(b) and Footnote 2 of the ASCM.

30. Subsection 269TAAC(1) relevantly provides that a subsidy is a countervailable subsidy "if it is specific ...". Subsection 269TAAC(2) sets out circumstances in which a subsidy is specific. The new subsection 269TAAC(3) sets out circumstances where a subsidy is not specific, and therefore cannot be regarded as a countervailable subsidy.

Items 4 - Subsection 269TAAC(4)

31. This item amends subsection 269TAAC(4) by deleting the words "Despite the fact that access to a subsidy is established by objective criteria, the" and substitutes the words "The".

32. Article 2.1(c) enables a determination that a subsidy is specific by reference to other factors, despite the appearance of non-specificity from the application of the principles laid down in the earlier subparagraphs of Article 2.1. Those principles include, but are not limited to, "objective criteria".

33. The new subsection 269TAAC(4) provides that the Minister may, having regard to the matters set out in paragraphs (a) to (d) of this subsection, determine that a subsidy is specific. This amendment ensures that subsection 269TAAC(4) more accurately reflects the ASCM.

Item 5 - Section 269TACC

34. This item repeals and replaces section 269TACC, and inserts a new section 269TACD.

35. New section 269TACC is simpler and clearer than the current section 269TACC, and is limited to determining whether a benefit has been conferred by a financial contribution or income or price support. This section is intended to reflect Article 14 of the ASCM which provides guidance in determining whether a benefit is conferred.

36. New subsection 269TACC(1) provides that, subject to subsections 269TACC(2) and (3), the question of whether a financial contribution or income or price support confers a benefit is a matter to be determined by the Minister having regard to all relevant information.

37. New subsection 269TACC(2) provides that a benefit is conferred where a direct financial payment is received from any of the following:

37.1.

a government of a country;

37.2.

a public body of a country;

37.3.

a public body of which a government of a country is a member;

37.4.

a private body entrusted or directed by a government of a country or by such a public body to carry out a governmental function.

38. This provision mirrors the effect of the current subsection 269TACC(2) that prescribes that a benefit is taken to be conferred if a financial contribution in respect of goods is a direct financial payment.

Guidelines for financial contributions

39. New subsection 269TACC(3) sets out guidelines to which the Minister must have regard when determining whether a financial contribution confers a benefit. These guidelines:

39.1.

reflect Article 14(a) of the ASCM in determining whether provision of equity capital by a government or body confers a benefit (paragraph 269TACC(3)(a));

39.2.

reflect Article 14(b) in determining when a loan by a government or body confers a benefit (paragraph 269TACC(3)(b));

39.3.

reflect Article 14(c) in determining when a guarantee of a loan by a government or body confers a benefit (paragraph 269TACC(3)(c)); and

39.4.

reflect Article 14(d) in determining when the provision of goods or services for less than adequate remuneration, or the purchase of goods or services for more than adequate remuneration, by a government or body confers a benefit (paragraphs 269TACC(3)(d) and (e)).

40. New subsection 269TACC(4) provides that the Minister, for the purposes of paragraphs 269TACC(3)(d) and (e), is to have regard to the prevailing market conditions for like goods or services in the country where those goods or services are provided or purchased when determining the adequacy of remuneration in relation to those goods or services. The provision reflects the last sentence of Article 14(d) of the ASCM.

Section 269TACD Amount of countervailable subsidy

41. New section 269TACD deals with the amount of countervailable subsidy. Subsection 269TACD(1) provides that where the Minister is satisfied that a countervailable subsidy has been received in respect of goods, the amount of the countervailable subsidy is an amount determined by the Minister in writing. This reflects the broad approach taken in Footnote 36 of Article 10 of the ASCM as quoted in paragraph 24 of this Explanatory Memorandum.

42. Subsection 269TACD(2) provides that where the amount of countervailable subsidy received in respect of goods has not been quantified by reference to units of those goods the Minister must do so. The amount of countervailable subsidy per unit of goods is used in determining the duty payable under a countervailing duty notice, if the Minister decides to impose measures.

Item 6 - Subsections 269TAE(1) and (2)

43. This item makes a minor consequential amendment to subsections 269TAE(1) and (2) which is necessary due to Item 7.

Item 7 - After subsection 269TAE(2A)

44. This item inserts a new subsection 269TAE(2AA) requiring that when making a material injury determination under subsections 269TAE(1) or (2) that the determination must be based on facts and not merely on allegations, conjecture or remote possibilities. This reflects the wording of Article 15.7 of the ASCM.

Item 8 - After paragraph 269TAE(2C)(d)

45. This item inserts a new paragraph 269TAE(2C)(da) into section 269TAE to ensure that section 269TAE more closely reflects Article 15.3 of the ASCM regarding when the cumulative effects of exportations from different countries may be considered.

Item 9 - At the end of section 269TC

46. This item inserts a new subsection 269TC(10) that ensures that the CEO is able to include any new subsidies discovered during the course of an investigation, particularly where this subsidy was not identified in the original application. This is in accordance with the Article 10 and footnote 36 of the ASCM.

47. Article 10 of the ASCM provides that:

"Members shall take all necessary steps to ensure that the imposition of a countervailing duty on any product of the territory of any Member imported into the territory of another Member is in accordance with the provisions of Article VI of GATT 1994 and the terms of the Agreement".

48. The term 'countervailing duty' in Article 10 is defined in Footnote 36 of the ASCM as "a special duty levied for the purpose of offsetting any subsidy bestowed directly or indirectly upon the manufacture, production or export of any merchandise, as provided for in paragraph 3 of Article VI of GATT 1994".

49. It is generally understood that Footnote 36 to Article 10 of the ASCM allows the investigating authority to include any subsidy discovered in the course of an investigation into the scope of the investigation regardless of whether that subsidy was specified in the application for countervailing duty.

Item 10 - Subparagraph 269TDA(2)(b)(ii)

50. This item amends subparagraph 269TDA(2)(b)(ii) by omitting the words "after the start of" and substituting "during". This corrects a drafting error in the current provision. Under the amended provision the CEO would have to terminate an investigation if the amount of countervailable subsidy never exceeds the negligible level of countervailable subsidy (as defined in subsection 269TDA(6)) during the investigation period, rather than the open-ended period from the start of the investigation period.

51. As the investigation period is required to be published in the initiation notice as required by paragraph 269TC(4)(bf) the period which has to considered is transparent and fair to all parties.

Item 11 & 12 - Subsection 269TDA(14) (heading) & Paragraph 269TDA(14)(b)

52. This item amends subsection 269TDA(14) to clarify that the CEO must terminate an investigation if the CEO is satisfied that the injury if any, to an Australian industry that has been, or may be, caused by the export of goods is negligible, without having to find that a countervailable subsidy has been received.

53. On one literal interpretation of the current subsection 269TDA(14), there must be a determination that a countervailable subsidy has been received before the CEO may terminate an investigation because injury to Australian industry is negligible.

54. The amendment reflects Article 11.9 of the ASCM which requires immediate termination of an investigation where the authorities determine that injury is negligible. That requirement is not dependent on a determination that a countervailable subsidy has been received.

Item 13 - Application provisions

55. This item applies the amendments made by items 1 to 8 (eg the amendments to the definition of subsidies, the calculating benefit and the determination of material injury), to investigations that are initiated, or to reviews or inquiries that begin, on or after the commencement of those items.

56. This item applies the amendments made by item 9, to allow for subsidies found during investigations to be examined in said investigation, applies in relation to investigations that:

56.1.

are initiated on or after the commencement of that item; and

56.2.

were initiated before that commencement but that were not completed immediately before that commencement.

57. The amendments made by items 10 to 12 to the termination provisions in section 269TAE apply in relation to investigations that are initiated on or after the commencement of those items.

B. Schedule 2-Circumvention Activity

Item 1 - After subsection 269SM(5)

58. This item inserts new subsection 269SM(5A) which provides an overview of the new Division 5A, anti-circumvention inquiries. Subsection 269SM(5A) deals specifically with the rights of persons to ask the CEO to conduct an anti-circumvention inquiry to address the potential evasion of certain dumping duty notices or countervailing duty notices.

Item 2 - Subsection 269T(1)

59. This item defines circumvention activity as having the same meaning as that given in the new section 269ZDBB, as inserted by item 6.

Item 3 - Subsection 269T(1) - (after paragraph (b) of the definition of interested party)

60. In conjunction with item 1, Schedule 4, this item amends the definition of interested party so that it applies to new Division 5A in a similar way to other existing parts of the Customs Act, for example, Division 5 of the Customs Act ("Review of anti-dumping measures").

Item 4 - Subsection 269T(4E)

61. This item amends subsection 269T(4E), which defines references to variable factors relevant to a review under existing Division 5 of the Customs Act ("Review of anti-dumping measures"). The amendment ensures that the definition in this subsection will also apply to anti-circumvention inquiries under new Division 5A.

Item 5 - Subsection 269TE(1) (paragraph (a) of the definition of recommendation)

62. This item amends subsection 269TE(1) ("CEO to have regard to same considerations as Minister"), which provides that the CEO is to have regard to the same considerations as the Minister when making certain recommendations or decisions. The amendment includes a reference to new subsection 269ZDBG, as inserted by item 6, and ensures that the subsection applies to recommendations in a report made under new Division 5A.

Item 6 - After Division 5 of Part XVB

63. This item inserts the new Division 5A ("Anti-circumvention Inquiries"), consisting of sections 269ZDBA to 269ZDBE, which will provide for anti-circumvention inquiries.

Section 269ZDBA - What this Division is about

64. New section 269ZDBA provides an overview of new Division 5A including prerequisites for lodging a valid application and the roles and powers of the Minister and the CEO. It is a merely explanatory section, and is not a substantive provision.

65. New section 269ZDBA provides an overview of new Division 5A including prerequisites for lodging a valid application and the roles and powers of the Minister and the CEO of Customs and Border Protection.

66. The new Division will allow persons representing, or representing a portion of, the Australian industry producing like goods to apply for an anti-circumvention inquiry in relation to a dumping duty notice published under subsection 269TG(2) or countervailing duty notice published under subsection 269TJ(2). Additionally, the Minister can initiate an anti-circumvention inquiry. Under the new Division, the CEO will provide a report, including recommendations, to the Minister following an accepted application or request from the Minister. The CEO's report will recommend that the Minister alter the relevant notice or not. The Minister, after considering the CEO's report, is empowered to amend the notice or to leave the relevant notice unaltered.

Section 269ZDBB - Circumvention activities

67. New section 269ZDBB outlines four activities which will each be considered to be circumvention activities for the purposes of new Division 5A:

67.1.

assembly of exported parts in Australia;

67.2.

assembly of exported parts in a third country;

67.3.

export of goods through one or more third countries; and

67.4.

certain arrangements between exporters.

68. Additionally, new subsection 269ZDBB(6) allows for additional circumvention activities to be prescribed by regulations.

Assembly of exported parts in Australia

69. New subsection 269ZDBB(2) provides that circumvention activity occurs:

69.1.

when goods are exported to Australia in individual parts and assembled in Australia;

69.2.

the goods are manufactured in a foreign country that is the subject of a dumping duty and they are then bought in parts to Australia;

69.3.

these parts are then assembled in Australia, with or without other parts, to create the goods that are the subject of the notice;

69.4.

the total value of the parts manufactured in the foreign country is a significant proportion of the final assembled goods; and

69.5.

section 8 or 10 of the Customs Tariff (Ant-Dumping) Act 1975 (Dumping Duty Act) which applies to like goods that are exported to Australia being subject to measures, does not apply to the export of circumvention goods to Australia.

Assembly of parts in a third country

70. New subsection 269ZDBB(3) provides that circumvention activity occurs:

70.1.

when goods are manufactured as individual parts in a foreign country that is the subject of the dumping notice;

70.2.

these parts are then assembled in a foreign country that is not the subject of the dumping notice, with or without other parts being added to create the goods;

70.3.

the parts that are assembled in the foreign country not subject to measures, then form the goods that are subject to the dumping notice;

70.4.

these goods are then exported to Australia;

70.5.

the total value of the parts manufactured in the country subject to measures must be a significant proportion of the customs value of the circumvention goods (customs value is defined in section 159 of the Customs Act); and

70.6.

section 8 or 10 of the Dumping Duty Act which applies to like goods that are exported to Australia being subject to measures, does not apply to the export of circumvention goods to Australia.

Export of goods through one or more third countries

71. New subsection 269ZDBB(4) provides that circumvention activity occurs:

71.1.

when goods that are subject to the anti-dumping measures are exported to Australia from a foreign country that isn't the subject of the notice;

71.2.

before that export, there were one or more other exports of the same goods from a foreign country to another foreign country;

71.3.

the first exporter of those exporters from which the goods were exported was the country that was subject to the measures; and

71.4.

section 8 or 10 of the Dumping Duty Act which applies to like goods that are exported to Australia being subject to measures, does not apply to the export of circumvention goods to Australia.

Arrangements between exporters

72. New subsection 269ZDBB(5) provides that circumvention activity occurs if the goods that are the subject of the anti-dumping measure are exported to Australia from the original exporter through another exporter who is subject to a lesser rate of duty or is exempt from duty.

Section 269ZDBC - Applications and requests for conduct of an anti-circumvention inquiry

Applications for anti-circumvention inquiries

73. New section 269ZDBC provides that an anti-circumvention inquiry can be initiated in one of two ways: by application by a person representing Australian industry or by request by the Minister. The section also outlines the prerequisites for an application or request from the Minister.

74. In relation to an applicant:

74.1.

an original notice imposing measures must have been published;

74.2.

the person must represent, or represent a portion of, the Australian industry producing like goods;

74.3.

the person must consider that one or more circumvention activities in relation to the notice have occurred; and

74.4.

the person must also consider that it would be appropriate to alter the notice because of the circumvention activities.

75. Similarly, in relation to requests from the Minister:

75.1.

an original notice imposing measures must have been published;

75.2.

the Minister must consider that one or more circumvention activities in relation to the notice have occurred; and

75.3.

the Minister must also consider that it would be appropriate to alter the notice because of the circumvention activities.

Section 269ZDBD - Content and lodgement of applications for conduct of an anti-circumvention inquiry

Content of application

76. New section 269ZDBD outlines the matters which should be included in an application to initiate an anti-circumvention inquiry and the ways in which the application should be submitted. Applications should:

76.1.

be in writing;

76.2.

be in an approved form;

76.3.

contain such information as the form requires; and

76.4.

be signed in the manner indicated by the form.

77. The application form should include:

77.1.

a description of the kinds of goods that are the subject to the original notice;

77.2.

a description of the original notice subject of the application;

77.3.

a description of the circumvention activities that the applicant considers has occurred; and

77.4.

a description of the alterations to the original dumping notice that the applicant considers necessary.

Lodgement of application

78. New subsection 269ZDBD(3) outlines the way in which applications should be submitted:

78.1.

leaving it at Customs House, Canberra; or

78.2.

posting it to the postal address specified in the approved form; or

78.3.

sending it via electronic facsimile.

Section 269ZDBE - Consideration of applications and requests for conduct of an anti-circumvention inquiry

Application

79. New section 269ZDBE outlines the way in which the CEO will address applications. The CEO must consider the application within 20 days of receiving it and either reject the application in writing, or publish a notice indicating that an anti-circumvention inquiry will be conducted.

80. New subsection 269ZDBE(2) requires that, when considering the application, the CEO should consider whether, among other things, there appear to be reasonable grounds for asserting that one or more circumvention activities have occurred.

Requests

81. Similarly, new subsection 269ZDBE(5) requires that when the Minister requests the CEO to conduct an anti-circumvention inquiry, the CEO must publish a notice indicating that an anti-circumvention inquiry will be conducted.

Content of notice

82. New subsection 269ZDBE(6) outlines the content of the inquiry notice and provides that the notice must:

82.1.

describe the types of goods to which the anti-circumvention inquiry relates;

82.2.

describe the original notice;

82.3.

state that the inquiry will examine whether circumvention activities have occurred;

82.4.

indicate that a report will be made to the Minister within 155 days after the publication of the inquiry notice (or within a longer period that the Minister allows under section 269ZHI);

82.5.

invite interested parties to lodge submissions within 40 days;

82.6.

state that within 110 days of the publication of the inquiry notice (or a longer period if the Minister allows), the CEO will place on the public record a statement of the essential facts; and

82.7.

invite interested parties to lodge submissions in response to the statement of essential facts within 20 days.

Section 269ZDBF - Statement of essential facts in relation to conduct of an anti-circumvention inquiry

83. New section 269ZDBF provides that the CEO must place on the public record a statement of essential facts on which the CEO proposes to base a recommendation to the Minister about the original notice, within 110 days of publishing the inquiry notice (or a longer period if allowed by the Minister). The CEO must have regard to the anti-circumvention inquiry application or request, and any submissions that are received within 40 days. The CEO may also take into account any other matters that the CEO considers relevant.

Late Submissions

84. New subsection 269ZDBF(3) provides that the CEO is not obliged to have regard to submissions received after the end of the 40 day period if this will prevent the timely publication of the statement of essential facts.

Section 269ZDBG - Report on anti-circumvention inquiry

CEO Recommendations

85. New section 269ZDBG provides that the CEO must provide a report to the Minister within 155 days after the publication of the inquiry notice (or such longer period that the Minister approves). This report must recommend that:

85.1.

the original notice remain unaltered; or

85.2.

the original notice be altered, and the alterations to be made.

86. In deciding on the recommendation or recommendations, the CEO must have regard to:

86.1.

the application or request for the anti-circumvention inquiry;

86.2.

any submissions which the CEO has relied on to formulate the statement of essential facts;

86.3.

the statement of essential facts;

86.4.

any submissions about the statement of essential facts received within 20 days of the statement being published; and

86.5.

any other matters the CEO considers relevant to the anti-circumvention inquiry.

Late submissions

87. The CEO is not obliged to have regard to submissions received after the end of the 20 day period if they would prevent the timely preparation of the report to the Minister.

Reasons for CEO recommendation

88. The report to the Minister must include a statement of the CEO's reasons for any recommendation in the report which:

88.1. sets out the material findings of fact on which that recommendation is based; and

88.2. provides particulars of the evidence relied on to support those findings.

Section 269ZDBH - Minister's powers in relation to anti-circumvention inquiry

Minister's decision

89. New subsection 269ZDBH(1) provides that the Minister will consider the CEO's report, and any other information the Minister considers relevant, and publish a declaration stating whether the original notice is to be altered or remain unaltered, and specify the date from which any alteration takes effect.

90. New subsection 269ZDBH(2) outlines the kinds of alterations that may be made to the original notice including:

90.1.

different goods that are to be the subject of the original notice;

90.2.

different foreign countries that are to be the subject of the original notice;

90.3.

different exporters that are to be the subject of the original notice;

90.4.

in relation to existing exporters that are the subject of the original notice-the specification of different variable factors in respect of one or more of those exporters; and

90.5.

in relation to exporters that are to be the subject of the original notice-the specification of variable factors in respect of those exporters.

Timing of decision

91. The Minister must publish the declaration within 30 days of receiving the CEO's report. Alternatively, the Minister make take a longer period to publish the declaration if the Minister considers that there are special circumstances, in which case the Minister must give public notice of the longer period.

Notification of declaration

92. The Minister must inform an effected exporter, or exporters, of the outcome of the declaration as soon as practicable.

When declaration takes effect

93. Subsection 269ZDBH(8) provides that the day which the Minister specifies under subsection 269ZDBH(1) as being the day from which the declaration takes effect, must not be earlier than the day of publication of the notice under subsections 269ZDBE(4) or (5). Therefore the Minister will be empowered to extend the measures with some limited retrospective effect, up to the day when the anti-circumvention inquiry was notified, but not any earlier. The Minister could specify any day after that day as being when the declaration takes effect, including a day in the future, in which case the declaration would not have any retrospective effect.

Item 7 - After paragraph 269ZHI(1)(e)

94. This item amends existing section 269ZHI to allow the CEO of Customs and Border Protection to request extensions in respect of:

94.1.

the 110-day period in which the CEO must publish the statement of essential facts in regard to anti-circumvention inquiries; and

94.2.

the 155-day period for providing the Minister with the CEO's report on the anti-circumvention inquiry.

Item 8, 9 & 10 - Subsection 269ZJ(1), paragraph 269ZJ(5)(a) & paragraph 269ZJ(6)(a)

95. These items amend existing section 269ZJ ("CEO to maintain public record for certain purposes") which requires the CEO to maintain and deal appropriately with public records. It ensures that the provisions apply similarly to applications or requests for an anti-circumvention inquiry as they do under other parts of the Customs Act, for example, existing Division 5 ("Review of anti-dumping measures"). In particular, paragraphs 269ZJ(5)(a) and 269ZJ(6)(a) provide that the CEO is able to disregard certain information in cases where there is a dispute as to the confidential nature of information provided.

Item 11 - Section 269ZX (after paragraph (aa) of the definition of interested party)

96. This item expands the definition of interested party in existing section 269ZX, Division 9 ("Review by Review Officer"). The expanded definition ensures that person who applied for an anti-circumvention inquiry is included in the definition of interested party for the purposes of Division 9.

Item 12 - After paragraph 269ZZA(1)(c)

97. This item amends existing section 269ZZA ("Reviewable decisions") to include the Minister's decision to publish a declaration, under new section 269ZDBH, as a decision reviewable by the 'Review Panel'. The Review Panel will be introduced by Customs Amendment (Anti-dumping Improvements) Act (No. 1) 2012 (Currently called the Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2011). Currently, the Customs Act provides that review functions are to be undertaken by a "Review Officer".

Item 13 - After paragraph 269ZZD(b)

98. This item amends section 269ZZD ("When must an application be made?") to provide that an application for a review of an anti-circumvention inquiry must be made within 30 days after the relevant declaration is published under new subsection 269ZDBH(1). This item amends section 269ZZD as outlined in Customs Amendment (Anti-dumping Improvements) Act (No. 1) 2012.

Item 14 - Subsection 269ZZK(6) (after paragraph (c) of the definition of relevant information)

99. This item amends section 269ZZK ("The review"). It provides that, where a reviewable decision was made because of an anti-circumvention inquiry, then the relevant information to be used in the review was the information which the CEO had regard to under new subsection 269ZDBG(2) when making the findings set out in the report. This item amends section 269ZZK as outlined in Customs Amendment (Anti-dumping Improvements) Act (No. 1) 2012.

Item 15 - Application provisions

100. This item determines the original notices to which the anti-circumvention provisions in this Bill apply, and the period which can be investigated under an anti-circumvention inquiry.

101. In effect, this item provides that the Minister may make a declaration, under new section 269ZDBH, as a result of an anti-circumvention inquiry, affecting an original notice whether that notice was published before, on or after the date on which the anti-circumvention provisions in this Bill come into effect.

102. Additionally, the effect of this item is that an anti-circumvention inquiry can take into account circumvention activity which has occurred before, on or after the date on which the anti-circumvention provisions in this Bill come into effect.

C. Schedule 3-Sampling

Item 1 - Subsection 269T(1)

103. This item introduces a new definition of "cooperative exporter" into subsection 269T(1). A cooperative exporter is an exporter of goods that are the subject of an investigation, a review under Division 5 or a continuation inquiry in relation to a dumping duty notice where those goods were examined as part of that process and the exporter was not "an uncooperative exporter". An "uncooperative exporter" is defined in a definition inserted into subsection 269T(1) by item 4 of Schedule 3. The new definitions of "cooperative exporter" and "uncooperative exporter" apply regardless of whether sampling has been undertaken under the sampling provisions in the new section 269TACAA.

Item 2 - Subsection 269T(1) (definition of residual exporter)

104. This item repeals the current definition of "residual exporter" and substitutes a new definition. A residual exporter under the new definition is an exporter of goods that are the subject of an investigation, a review under Division 5 or a continuation inquiry in relation to a dumping duty notice, where:

104.1.

the exporter's exports were not examined as part of the investigation, review or inquiry; and

104.2.

the exporter was not an uncooperative exporter in relation to the investigation, review or inquiry.

105. This would typically mean when sampling has been undertaken and the exporter was willing to cooperate in the investigation but was not chosen to be examined.

Item 3 - Subsection 296T(1) (definition of selected exporter)

106. This item repeals the definition of "selected exporter", which is redundant due to other amendments made by this bill.

Item 4 - Subsection 269T(1)

107. This item introduces a definition of "uncooperative exporter". An uncooperative exporter is an exporter of:

107.1.

goods, that are the subject of an investigation, a review under Division 5 or a continuation inquiry in relation to a dumping duty notice (the relevant process), or

107.2.

like goods to those subject to the relevant process,

where the exporter has not cooperated within that process such that the CEO was satisfied that the exporter:

107.3.

did not give the CEO information the CEO considered to be relevant to the process within a period the CEO considered to be reasonable; or

107.4.

significantly impeded the relevant process.

Item 5 - After section 269TAC

Section 269TACAA Sampling

108. This item inserts a new sampling provision, section 269TACAA to consolidate and clarify the operation of the sampling provisions of the Customs Act. Currently, sampling provisions are located for dumping in subsections 269TACB(7) to 269TACB(9) and for subsidies in subsections 269TACC(8) to 269TACB(9). Those subsections will be repealed by other items, and new section 269TACAA will be the only sampling provision. New section 269TACAA provides for sampling in relation to both dumping and countervailing notices, in relation to original investigations, reviews under Division 5 and continuation inquiries.

109. Article 6.10 of the ADA provides for sampling in relation to dumping inquiries. There is no similar provision supporting sampling under the ASCM but it is accepted practice internationally for sampling exercises to be undertaken in relation to subsidies investigations.

110. This sampling provision also reflects Article 6.10 such that the findings of the relevant investigations, review under Division 5 or continuation inquiry can be made based on the information obtained from an examination of a select number of exporters where the number of exporters who provide information to the relevant process is so large as to make a determination for each individual exporter impracticable.

111. The Minister may limit his or her examination to a number of select exporters, under this sampling provision, to:

111.1.

a reasonable number of exporters which are statistically valid sample, or

111.2.

exporters who are responsible for the largest percentage of the volume of the exports from the country in question which can be reasonably be investigated.

112. The subsection 269TACAA(2) allows for an exporter not initially selected under subsection 269TACAA(1) to submit information and be included in the examination where it is decided doing so would not impede the investigation.

Section 269TACAB Dumping duty notice-export prices and normal values for different categories of exporters

113. This item inserts a new section 269TACAB which provides for the Minister in publishing a dumping duty notice to set export prices and normal values for different categories of exporters, namely uncooperative exporters and residual exporters.

Uncooperative exporters

114. The new subsection 269TACAB(1) directs the Minister to work out the export price and the normal value of the uncooperative exporter in an investigation, review under Division 5 and continuation inquiry under subsections 269TAB(3) and 269TAC(6) respectively.

Residual exporters

115. The new subsection 269TACAB(2) reflecting Article 9.4 of the ADA by requiring that, in ascertaining a normal value and export price for goods of a residual exporter in an investigation, review under Division 5 or continuation inquiry that:

115.1.

the export price must not be less than the weighted average of export prices for like goods of cooperative exporters from the same country of export; and

115.2.

the normal value must not exceed the weighted average of normal values for like goods of cooperative exporters from the same country of export.

116. The new subsection 269TACAB(3) requires for the purposes of the new subsection 269TACAB(2) that the weighted average of export prices and normal values of the cooperative exporters must not include any export price or normal value where the Minister has determined:

116.1.

that there is no dumping; or

116.2.

that the dumping margin, when expressed as a percentage of the export price or weighted average of export prices used to establish that dumping margin, is less than 2%.

117. Note that the new section 269TACAB only deals with dumping duty notices. The proposed new section 269TAACA introduced by the Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2012 deals with the determination of countervailable subsidy if there is a lack of cooperation in a relevant investigation, review or continuation inquiry.

Item 6 - Subsections 269TACB(7), (8) and (9)

118. This item deletes these subsections, and is a consequential amendment to the consolidation of the sampling provision by item 5 of Schedule 3.

Item 7 - Subsections 269TG(3B) and (3C)

119. This item deletes these subsections, and is a consequential amendment to the insertion of new subsection 269TACAB(3) by item 5 of Schedule 3 which replaces these repealed provisions.

Item 8 - Subsections 269TH(5) and (6)

120. This item deletes these subsections, and is a consequential amendment to the insertion new subsection 269TACAB(3) by item 5 of Schedule 3 which replaces these repealed provisions.

Item 9 - Paragraphs 269ZE(2)(b) and (3)(b)

121. This item sets out a consequential amendment to the repeal of the definition of selected exporter in item 3 of Schedule 3 and the creation of new sampling provision in item 5 of Schedule 3. The amendment means that in furtherance to the right to reject an application for an accelerated review or terminate an accelerated review under paragraphs 269ZE(2)(a) and (3)(a), the CEO may so reject or terminate if satisfied that the relevant exporter is related to an exporter whose exports have been examined in relation to the application for publication of the original notice.

Item 10 - Subsection 269ZE(4)

122. This item is a consequential amendment to the repeal of the definition of selected exporter in item 3 of Schedule 3 and the creation of new sampling provision in item 5 of Schedule 3.

Item 11 - Application provision

123. This item applies the amendments made in Schedule 3 such that the new sampling provisions apply in relation to investigations that are initiated, or to reviews under Division 5 or continuation inquiries that begin, on or after the commencement of this Schedule.

D. Schedule 4-Other amendments

Item 1 - Subsection 269T(1) (definition of interested party)

124. This item repeals and amends the definition of interested party in subsection 269T(1). Currently this definition only applies in relation to applications made to the CEO under section 269TB, that is, to original investigations. The definition is amended so that it is also applicable to applications and requests made in relation to a review of anti-dumping measures (Division 5) and continuation inquiries (Division 6A).

Item 2 & 3 - Paragraphs 269TAE(2C)(c) & 269TAE(2C)(d)

125. This item amends paragraphs 269TAE(2C)(c) and (d) to clarify that these provisions only operate in relation to determinations made in connection with dumping duties and not countervailing duties.

Item 4 & 5 - Subsection 269TDA(13) (heading) & Paragraph 269TDA(13)(b)

126. These items amend subsection 269TDA(13) to ensure that there is a consistent approach to termination where there is negligible injury. This amendment reflects the amendments made in item 11 and 12 of Schedule 1 to subsection 269TDA(14) (CEO must terminate investigation if subsidisation causes negligible injury) but applies it in the instance of a dumping investigation.

127. Item 5 amends subsection 269TDA(13) to ensure that the CEO can terminate an investigation where it is found that the injury if any, to an Australian industry or an industry in a third country has been, or may be, caused by the dumping is negligible without having to find that dumping has taken place.

128. A literal interpretation of the current subsection 269TDA(13) requires a determination that there has been dumping before the CEO may terminate an investigation because injury to Australian industry is negligible. This is inconsistent to the requirements of Article 5.8 of the ADA to terminate where 'there is not sufficient evidence of either dumping or injury'.

Item 6 & 7- Paragraph 269ZJ(5)(a) & Paragraph 269ZJ(6)(a)

129. This item amends the Customs Act to correct a minor errors in referencing in paragraphs 269ZJ(5)(a) and (6)(a). These amendments ensures that the CEO may disregard information supplied to the CEO, as per the current conditions in subsections 269ZJ(5) and (6), in relation to applications for continuation inquiries.

Item 8 - Subsection 269ZZK(6) (paragraph (c) of the definition of relevant information)

130. This item amends the Customs Act to amend an error in paragraph 269ZZK(6)(c) to ensure that the definition of 'relevant information' takes into account a request by the Minister to the CEO to initiate a review under Division 5.

Item 9 - Application provisions

131. This item applies the amendments made by items 4 and 5, to allow for the termination of investigation where there is no injury to investigations that are initiated on or after the commencement of those items.

132. This item applies those amendments made by items 6 and 7, which correct errors in paragraphs 269ZJ(5)(a) and (6)(a), to applications for continuation inquiries made on or after the commencement of those items.