House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Home Affairs, the Honourable Brendan O'Connor MP)

SCHEDULE 1 - AMENDMENTS OF THE CUSTOMS ACT 1901

Customs Act 1901

Background

9. These changes are in accordance with the World Trade Organization Anti-dumping Agreement (ADA) and Agreement on Subsidies and Countervailing Measures (SCM ). Specifically, these amendments fulfil obligations set out in Article 11.2 of the ADA and Article 21.2 of the SCM. Those provisions provide that where warranted authorities shall review the need for the continued imposition of the measures. According to the ADA and SCM, this may either be on the authority's own initiative, or upon request by any affected party which submits positive information substantiating the need for a review.

10. Under Division 5 of Part XVB of the Customs Act, interested parties may apply for a review of anti-dumping measures imposed by the Minister for Home Affairs after 12 months of them being imposed, and then every 12 months from the date of the notified outcome of the most recent review. Reviews may result in the measures being altered, left unchanged, or revoked.

11. The review provisions were considered by the Full Federal Court in Minister of State for Home Affairs v Siam Polyethylene Co Ltd [2010] FCAFC 86 (the Siam decision). In the absence of an express test stipulating whether measures should be revoked, the Full Federal Court imported the same test that applies before measures can be imposed following an initial investigation, i.e. that there is dumping causing material injury to the Australian industry. On the Full Federal Court's construction, in order to leave measures in place, the Minister must be satisfied that if measures had not been taken, there would now be grounds to impose them (that is that there would be dumping causing material injury to the Australian Industry). The finding is problematic because, in practice, if measures are already in place and are effective, there may not be current dumping or subsidisation causing material injury.

12. As a consequence of the Siam decision, it is more likely that a finding of no dumping or no injury during the review period would lead to revocation. This result is anomalous, as the purpose of anti-dumping measures is to remove injurious dumping. Measures will often still be warranted where they have effectively prevented injurious dumping, as an early removal of the measures can lead to a resumption of injurious dumping. As a result, it is necessary to amend the review provisions to clarify the revocation test.

13. As a corollary of clarifying the revocation test, this amendment also clarifies the process by which affected parties may apply for revocation. Consistently with the WTO Agreements, authorities will be obliged to review the measures where 'affected parties submit positive information substantiating the need for a review'.

Process for requesting revocation review

14. The amendments outline the process by which an affected party may apply for a revocation review, and how the Minister may request a revocation review on her or his own initiative.

15. In applying for revocation an affected party must provide evidence, in the approved form, that there are reasonable grounds for asserting that the measures are no longer warranted. The approved form will specify in detail what such an application should contain. This replaces the current requirement that affected parties state 'any other circumstances that in the view of the applicant would prevent the Minister, in the absence of the anti-dumping measures, from taking such measures'.

16. There are two avenues for affected parties to seek a revocation review:

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At the time of making the original application for a review, affected parties may apply for a review of the level of the measures, or a revocation review, or both; or

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Where a review concerning only the level of the measures has already been initiated, affected parties may request that that review be extended to cover the question of revocation within 40 days of that review having been initiated.

17. To be clear, if an affected party applies for revocation and the CEO publishes a notice ^[1] stating that that the review will address the question of revocation, then the review will cover the question of revocation from that point forward. Affected parties will only have an opportunity to request that a review be extended to cover the question of revocation within 40 days of initiation, where the review initiated is not already a revocation review.

18. If the CEO is satisfied that an applicant has established reasonable grounds for asserting that the measures are no longer warranted, the original public notice initiating the review will state this fact. If the CEO is satisfied that a request to extend a review to cover revocation has established reasonable grounds for asserting that the measures are no longer warranted, the CEO will be required to publish a notice stating this fact.

19. Additionally, the Minister may request that the CEO initiate a revocation review on his or her own initiative, and may also request that the CEO expand a review already on foot to examine the question of revocation within 60 days of it having been initiated, either on his or her own initiative, or as a result of the CEO recommending that the review be extended. If the CEO is requested by the Minister to either initiate a revocation review or extend a review already on foot to cover the question of revocation, the CEO will be required publish an additional notice stating this fact.

20. In summary, a revocation review may only be notified as a result of:

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In the context of an original application, a party successfully applying for a revocation review;

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In the context of an existing review covering only the level of the measures, an affected party requesting that the review be extended to examine revocation;

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the Minister requesting a revocation review; or

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the Minister requesting that an existing review of the level of the measures be extended to examine revocation.

The new revocation test

21. Under the new test, the CEO can only recommend revocation where a revocation review notice has been published, either when the review is initiated or where the review has been expanded to cover revocation within 60 days of initiation. Such a notice may only be published at the Minister's request, or where the CEO is satisfied that there appear to be reasonable grounds for recommending that the anti-dumping measures are no longer warranted.

22. Once this threshold test has been met and a revocation review has been notified, the CEO must recommend that the Minister revoke measures unless satisfied that the removal of the measures would lead, or be likely to lead, to a continuation of, or recurrence of, the dumping or subsidisation and the material injury that the anti-dumping measures are intended to prevent.

Item 1 - Subsection 269T(1)

23. This item amends subsection 269T(1) by inserting a definition of 'revocation declaration' which is defined as either a declaration to revoke measures or to release a person from an undertaking and to terminate the investigation giving rise to that undertaking. This new definition is for the purposes of the new subsection 269ZDB(1A).

Item 2 - Subsection 269T(1)

24. This item amends subsection 269T(1) by inserting a definition of 'revocation recommendation', which is defined as a recommendation by the CEO in a report under new section 269ZDA to revoke measures, and/or to release a person from an undertaking and to terminate the investigation giving rise to that undertaking, as a result of a review of measures. This new definition is for the purposes of the new subsections 269ZCC(8) and 269ZDA(1A).

Item 3 - Subsection 269T(1)

25. This item amends subsection 269T(1) by inserting a definition of 'revocation review notice', which is defined as a notification of a revocation review resulting from an original application for measures by an affected party, a request by an affected party to expand a review only examining the level of measures to cover revocation, a request of the Minister to initiate a revocation review, or a request of the Minister to expand a review only examining the level of measures to cover revocation. This definition is for the purposes of subsection 269ZDA(1A).

Item 4 - Subparagraph 269ZA(1)(b)(ii)

26. This item repeals and substitutes a new subparagraph. Section 269ZA sets out how and in what circumstances an affected party may request a review of anti-dumping measures. This new subsection provides that an affected party may request a review where they consider that it may be appropriate to review anti-dumping measures as they affect a particular exporter of those goods, or as they affect exporters of those goods generally, because the anti-dumping measures are no longer warranted.

27. The purpose of this amendment is to align this provision with the new subsections 269ZC(2) and 269ZCC(2), which specify what the CEO must be satisfied of before initiating a revocation review, either as a consequence of an original application to review anti-dumping measures, or an application to expand an existing review.

28. This replaces the previous requirement that the affected party consider that 'if those measures had not been taken-the Minister would not be entitled to take any such measures'. These words have been removed, in order to make clear that the measures should not be revoked merely on the basis that the conditions to impose antidumping duties do not presently exist. This is to take into account the fact that the intended effect of measures is to remove injury caused by dumping or subsidisation. Measures should not be removed purely because measures have been effective in removing dumping, subsidisation and/or injury caused thereby. This is further clarified in the new revocation test (see new subsection 269ZDA(1A) below).

Item 5 - Subparagraph 269ZA(3)(b)(ii)

29. This item repeals and substitutes a new subparagraph. The new subparagraph provides that where the Minister considers, either as a result of a recommendation from the CEO or on his or her own initiative, that it may be appropriate to review those measures as they affect a particular exporter of those goods, or as they affect exporters of those goods generally, because the anti-dumping measures are no longer warranted, she or he may, at any time, by notice in writing, request that the CEO initiate a review under this Division. This amendment is consequent upon the amendment to subparagraph 269ZA(1)(b)(ii) above.

Item 6 - Subsection 269ZA(5)

30. This item replaces the word 'affect' with 'effect'. This is a technical amendment only.

Item 7 Paragraph 269ZB(2)(d)

31. This item repeals and substitutes a new paragraph. Section 269ZDB stipulates the form applications for review must take, and how they should be lodged. The new paragraph inserts a requirement that affected parties applying for a revocation review must provide evidence in accordance with the approved form of the circumstances that in the applicant's view indicate that the anti-dumping measures are no longer warranted. The approved form must be approved by the CEO in accordance with section 4A of the Customs Act.

Item 8 Subsection 269ZC(1) and (2)

32. This item repeals and substitutes new subsections. Section 269ZC stipulates what the CEO must do when she or he receives an application for review. These subsections stipulate that the CEO must reject the application and inform the applicant by notice in writing within 20 days of receiving that application, if not satisfied that:

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the application is in accordance with the approved form; or

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the application otherwise complies with section 269ZB; or

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there are reasonable grounds for asserting either that the variable factors relevant to the taking of anti-dumping measures have changed, or that the anti-dumping measures are no longer warranted.

Item 9 Paragraph 269ZC(4)(b)

33. This item repeals and substitutes a new paragraph. The new paragraph provides that the CEO may recommend that the Minister extend the review applied for to include any additional matter. Such additional matters would include extending the review to examine the measures as they relate to other particular exporters, exporters generally, or exporters from other countries subject to the anti-dumping measures. It may also include expanding a review that would otherwise only examine the level of the measures to include an examination of whether the measures should be revoked.

Item 10 After paragraph 269ZC(7)(b)

34. This item inserts a requirement that the public notice must state the scope of the review. That is, the notice must state whether the review will examine whether the variable factors have changed, and/or whether measures are no longer warranted.

Item 11 After section 269ZC

35. This item inserts new section 269ZCA into the Customs Act. New section 269ZCA outlines the process by which an affected party that considers that it can provide evidence that may satisfy the CEO that there are reasonable grounds for determining that the anti-dumping measures described in the notice are no longer warranted may apply to have a review that only examines the level of the measures extended to also examine whether the measures should be revoked.

36. This item also inserts the new section 269ZCB. This new section sets out the process for lodging an application under new section 269ZCA, and requires such applications be in the approved form. The application must contain such information as the form requires, including, but not limited to, evidence of the circumstances that in the applicant's view indicate that the anti-dumping measures are no longer warranted. Such applications must be lodged within 40 days of the relevant review having been initiated by public notice.

37. This item also inserts new section 269ZCC. This new section stipulates that the CEO must consider whether or not the application complies with section 269ZCB and is in the approved form, and whether she or he is satisfied that there appear to be reasonable grounds for recommending that the anti dumping measures are no longer warranted. If the CEO is not satisfied of these preconditions, she or he must inform the applicant that their application has been rejected, and provide reasons for doing so.

38. Section 269ZCC also provides that the CEO may recommend, within 40 days of a review being initiated, that the Minister extend a review already initiated to include any additional matter. Where the Minister considers (either as a result of a recommendation from the CEO or on the Minister's own initiative) that there appear to be reasonable grounds to extend the review applied for to include any additional matter, the Minister may, within 60 days of the review being initiated, request that the CEO extend the review applied for accordingly. Such additional matters would include extending the review to examine the measures as they relate to other particular exporters, exporters generally, or exporters from other countries subject to the anti-dumping measures. It may also include expanding a review that would otherwise only examine the level of the measures to include an examination of whether the measures should be revoked.

39. Where the CEO does not reject an affected party's application to extend a review to examine revocation, or where the CEO is requested by the Minister to extend a review to examine revocation, she or he must give public notice that the review will also consider whether the anti-dumping measures should be revoked. Section 269ZCC also details what this public notice must contain.

Item 12 At the end of paragraph 269ZD(2)(a)

40. This item inserts new subparagraph 269ZD(2)(a)(iii). Section 269ZD stipulates that the CEO must publish a statement of essential facts upon which the CEO proposes to base a recommendation to the Minister. The new subparagraph 269ZD(2)(a)(iii) provides that in formulating the statement of essential facts, the CEO must have regard to any submissions relating generally to the review if, in the CEO's opinion, having regard to it would not prevent the timely placement of the statement of essential facts on the public record.

41. The purpose of this provision is to give the CEO flexibility to consider submissions received after 40 days of the review having been initiated, but also to allow the CEO to disregard such submissions if there is not adequate time and resources to consider such submissions while still ensuring that the statement of essential facts is published in accordance with statutory timeframes.

Item 13 After Subsection 269ZDA(1)

42. This item inserts new subsection 269ZDA(1A). Section 269ZDA stipulates how and when the CEO must give the Minister a report at the conclusion of the review, recommending one or more of a range of outcomes. The new subsection inserts the express revocation test. Under the new test, the CEO can only recommend revocation where a revocation review notice has been published, either when the review is initiated or where the review has been expanded to cover revocation within 60 days of the review's initiation. Such a notice may only be published at the Minister's request, or where the CEO is satisfied that there appear to be reasonable grounds for asserting that the anti-dumping measures are no longer warranted.

43. Provided that such a notice has been published, the CEO must recommend that the Minister revoke measures unless satisfied that the removal of the measures would lead, or be likely to lead, to a continuation of, or recurrence of, the dumping or subsidisation and the material injury that the anti-dumping measures are intended to prevent.

44. The purpose of this new test is to make it clear that the revocation test is prospective and hypothetical. That is, anti-dumping measures should not be revoked merely because there is an absence of injurious dumping in the review period. Measures will often still be warranted where they have effectively prevented injurious dumping, as an early removal of the measures can lead to a resumption of injurious dumping. The question will be whether, if as a result of the review anti-dumping measures are revoked, dumping or subsidisation causing injury to the Australian industry will likely continue or recur.

Item 14 After subparagraph 269ZDA(3)(a)(i)

45. This item inserts two new subparagraphs into subsection 269ZDA(3). These new subparagraphs provide that in deciding on the recommendations to be made to the Minister in the report, the CEO must also consider any application by an affected party to extend the review that was not rejected, and any request by the Minister to extend the review.

Item 15 After subsection 269ZDB(1)

46. This item inserts new subsection 269ZDB(1A). New subsection 269ZDB(1A) provides that the Minister must not revoke the measures unless a revocation review notice has been published, either when the review was first initiated, or where an affected party has applied for, or the Minister has requested, that the review be expanded to cover revocation.

47. The purpose of new subsections 269ZDA(1A) and 269ZDB(1A) is to make it clear that in order for the CEO to recommend revocation, and for the Minister to subsequently make a revocation declaration: either:

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an applicant must have applied for a revocation review, or have requested that a review of the level of measures already on foot be expanded to cover revocation, and the CEO must have accepted such an application or request and publicly notified that the review will cover revocation; or

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the Minister must have requested that the CEO initiate a revocation review or expand a review already on foot to cover revocation, and the CEO must have publicly notified that the review will cover revocation.

48. The purpose of these restrictions is to afford procedural fairness to all parties, so that the Minister will not be able to revoke measures unless a revocation review has been conducted and affected parties have had an opportunity to make submissions on the question of whether the anti-dumping measures concerned should be revoked. Additionally, this amendment will ensure that if revocation is to be considered, it must be raised early in the investigation to ensure ample time to examine whether revocation of the measures is warranted.

Item 16 Application

49. This item provides that the amendments made by Schedule 1 apply in relation to applications for review lodged, and reviews initiated, on or after the day on which the Act commences. These amendments will not affect applications have already been initiated and are still being processed at the time the amendments commence.