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.