Senate

Supplementary Explanatory Memorandum

(Circulated by authority of the Minister for Justice and Customs, Senator the Honourable Christopher Martin Ellison)

Outline and financial impact statement

Outline

The purpose of the amendments is to clarify and expand on certain matters raised by foreign governments and representatives of consumers of imported products in respect of Australia's proposed new test for government price influence in a country that is in transition from a centrally planned economy to a market economy.

Proposed new subsection 269TAC(5D) of the Customs Act 1901 (the Act) (item 3 of Part 1 of Schedule 1 to the Customs Legislation Amendment Bill (No. 2) 2002 (the Bill) refers) will replace the current test of price control with a test of price influence in respect of the circumstance where the normal value of goods in the country of export is distorted because of the role of the government in the economy.

Proposed new subsection 269TAC(5D) provides that the normal value of goods will be the amount determined by the Minister, having regard to all relevant information, if the Minister is satisfied that the goods have been exported from a country that has an economy in transition and at least one of four different situations apply. Two of these situations are:

(i)

the exporter of the exported goods sells like goods in the country of export and the domestic selling price of those like goods is significantly affected by a government at any level of that country; or

(ii)

the exporter of the exported goods does not sell like goods in the country of export but others do and the domestic selling price of those like goods is significantly affected by a government at any level of that country; (emphasis added).

The Chinese Government has requested that the phrase "the domestic selling price of those like goods is significantly affected by a government at any level of that country" be replaced with language that reflects the language of Article 15 of China's Protocol of Accession to membership of the World Trade Organization. It is possible to achieve this without disturbing the essential thrust of the provisions and in the interests of assuring China that the Bill is intended only to provide legal certainty and clarity to Australia's existing anti-dumping provisions. It is therefore proposed to replace this phrase with the requirement that "market conditions do not prevail in that country in respect of the domestic selling price of those like goods". While ensuring that these words reflect the language of Article 15, the new words will be interpreted by reference to the criteria to be set out in proposed regulations and the change will not affect Australia's ability to determine if there is government influence over domestic selling prices in an economy in transition.

Two other amendments are proposed to the Bill to address matters raised by foreign governments, Australian industry and consumer representatives.

Proposed new subsection 269TAC(5E) provides that in order to be satisfied that the conditions in paragraph 269TAC(5D)(a) or (b) exist, the Minister must have regard to the matters prescribed in the regulations but that this does not limit the matters to which the Minister may have regard for that purpose. It is proposed to remove this qualification and limit the matters to which the Minister may have regard to those prescribed in the regulations only. This has been sought by a number of parties to give greater assurance of certainty in the application of the regulations, once made.

Under proposed new subsection 269TAC(5D), the two other situations that can apply are:

(i)

the exporter does not answer questions in a questionnaire sent to the exporter by the CEO under proposed new subsection 269TAC(8) within the period described in that subsection for answering questions; or

(ii)

the answers given by the exporter in the questionnaire within that period do not enable the Minister to determine whether the domestic selling price of the goods has been significantly affected by government.

The Government has noted requests to include a clear power within the Bill for the CEO to extend the time period described in proposed new subsection 269TAC(8) for an exporter to answer the questions in the questionnaire issued under that subsection. It is proposed to insert proposed new subsection 269TAC(9) which will enable the CEO to formally consider requests for extensions and allow a further period to answer the questions.

Financial impact statement

The amendments have no financial impact.

Notes on amendments

Amendment (1)

This amendment amends proposed new subparagraph 269TAC(5D)(a)(ii) by omitting the words "the domestic selling price of those like goods is significantly affected by a government at any level of that country" and substituting "market conditions do not prevail in that country in respect of the domestic selling price of those like goods". This amendment will address the request of the Chinese Government that the wording reflect the language of Article 15 of China's Protocol of Accession to membership of the World Trade Organization.

Amendment (2)

This amendment amends proposed new subparagraph 269TAC(5D)(b)(ii) by omitting the words "the domestic selling price of those like goods is significantly affected by a government at any level of that country" and substituting "market conditions do not prevail in that country in respect of the domestic selling price of those like goods" for the same reason as Amendment (1).

Amendment (3)

This amendment inserts a cross-reference to proposed new subsection 269TAC(9) into proposed new paragraph 269TAC(5D)(c). Paragraph (c) sets out one of the situations that must exist before the Minister can determine the normal value of goods under proposed new subsection 269TAC(5D), being that the exporter does not answer questions in a questionnaire sent to the exporter by the CEO under proposed new subsection 269TAC(8) within the period described in that subsection for answering questions.

Subsection 269TAC(9) will give the CEO the power to allow a further period to answer questions in a questionnaire issued under subsection 269TAC(8). A reference to this further period is to be included in paragraph 269TAC(5D)(c).

Amendment 4

This amendment inserts a reference to the further period mentioned in proposed new subsection 269TAC(9) into proposed new paragraph 269TAC(5D)(d). Paragraph (d) sets out one of the situations that must exist before the Minister can determine the normal value of goods under subsection 269TAC(5D), being that the answers given by the exporter in the questionnaire within the period in subsection 269TAC(8) do not enable the Minister to determine whether the domestic selling price of the goods has been significantly affected by government.

A reference to the further period to answer questions allowed under subsection 269TAC(9) is to be included in paragraph 269TAC(5D)(d).

Amendment 5

This amendment is a technical amendment to clarify the reference to subsection 269TAC(8) in paragraph 269TAC(5D)(d).

Amendment 6

This amendment amends the Note to subsection 269TAC(5D) by inserting a reference to the new power of the CEO under proposed subsection 269TAC(9) to allow an exporter a further period for answering questions.

Amendment 7

This amendment amends proposed new subsection 269TAC(5E) by omitting the sentence which provides "This does not limit the matters to which the Minister may have regard for that purpose".

Subsection 269TAC(5E) provides that the Minister must have regard to the matters (if any) prescribed by the regulations in order to be satisfied that the conditions in paragraph 269TAC(5D)(a) or (b) exist, but that the Minister is not limited to only these matters. This amendment will ensure that the Minister can only have regard to such matters as are prescribed in the regulations.

Amendment 8

This amendment inserts proposed new subsection 269TAC(9) after the note to subsection 269TAC(8) to give the CEO an express power to allow a further period to answer questions in a questionnaire given under subsection 269TAC(8).

Subsection 269TAC(9) will provide that despite the fact that, under subsection (8), the CEO has informed an exporter given a questionnaire that the exporter has a particular period to answer the questions in the questionnaire, if the CEO is satisfied, by representation in writing by the exporter:

(a)

that a longer period is reasonably required for the exporter to answer the questions; and

(b)

that allowing a longer period will be practicable in the circumstances;

the CEO may notify the exporter, in writing, that a specified further period will be allowed for the exporter to answer the questions.