House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Home Affairs, the Honourable Jason Clare MP)

CUSTOMS AMENDMENT (ANTI-DUMPING IMPROVEMENTS) BILL (No. 2) 2012

OUTLINE

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

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

2.1 inserting new provisions which will partially implement the proposal to amend the subsidies provisions in the Customs Act to better reflect definitions and operative provisions of the World Trade Organization Agreement on Subsidies and Countervailing Measures (ASCM);

2.2 amending Division 6A (Continuation of anti-dumping measures) to enable measures to be amended, including by altering the level of applicable duties, if the Minister decides to continue them. Currently the only means of amending measures that are to be continued is to conduct a separate review of the measures in close proximity to the continuation inquiry; and

2.3 repealing subsection 269TAC(13) of the Customs Act to remove the limitations to determining profit when constructing a normal value because of subsection 269TAAD of the Customs Act. This deletion implements the Government's response to Recommendation 3.4 of the International Trade Remedies Forum's report on the effectiveness of the market situation provisions in the Customs Act.

FINANCIAL IMPACT STATEMENT

3. The Australian Government has provided $10.4 million over the forward estimates to be absorbed by the Australian Customs and Border Protection Service (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. 1) 2011 addresses the regulatory impact of this Bill in section 4 (Regulation Impact Statement).

HUMAN RIGHTS COMPATIBILITY STATEMENT

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

4. 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

5. The purpose of this Bill is to amend Part XVB of the Customs Act. Part XVB deals with the taking of anti-dumping measures in respect of goods whose importation into Australia involves a dumping or countervailable subsidisation of those goods that injures, or threatens to injure, Australian industry.

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

7. This Bill will amend the Customs Act by:

7.1. Ensuring that the account all fact available to determine whether a countervailable subsidy has been received in respect of particular goods, or in determining the amount of a countervailing subsidy in respect of those goods when relevant parties has failed to provide the relevant information.

7.2. Repealing subsection 269TAC(13) would provide more discretion in determining an appropriate amount of profit in the construction of normal value based on relevant information obtained during the course of each particular investigation.

7.3. Removing the need for a separate review of anti-dumping measures and a continuation inquiry occurring in close proximity to one another.

Human Rights implications

8. 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

9. This legislative instrument does not raise any human rights issues.

Minister for Home Affairs

NOTES ON CLAUSES

Clause 1 - Short title

10. This clause provides for the Bill, when enacted, to be cited as the Customs Amendment (Anti-dumping Improvements) Act (No. 2) 2012.

Clause 2 - Commencement

11. 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.

12. 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.

13. Item 2 in column 1 of the table provides that Schedule 1 commences 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.

Clause 3 - Schedule

14. 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.

15. 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. Using all facts available to determine receipt of countervailable subsidy

16. The Bill will clarify that the Chief Executive Officer of the Customs and Border Protection Service (the CEO) or the Minister has the express power to act on the basis of all the facts available when determining whether a countervailable subsidy has been received in respect of particular goods, or in determining the amount of a countervailing subsidy in respect of those goods where a relevant entity has not provided relevant information to the CEO within a reasonable period of time. The relevant entities are exporters and importers of the relevant goods, and the Government of the country of export or origin of the relevant goods.

17. This 'all facts available' provision will apply to determinations in regard to countervailing duty notices where there is an investigation into whether measures should be imposed under Part XVB of the Customs Act, a review of existing measures under Division 5 of Part XVB, and/or an inquiry into whether measures should be continued beyond their expiry under Division 6A of Part XVB.

18. It is important to note that the power to act on all facts available will have separate application in relation to the CEO and the Minister. For example, the CEO is able to act on all facts available to the CEO and the Minister is also able to act on all facts available to the Minister. In the case of the Minister this, in practice, will include at least the same facts available to the CEO, since the Minister receives the report from the CEO. In an investigation the CEO may act on the basis of all the facts available by making a preliminary affirmative determination, and by reporting to the Minister. The Minister may then act on the facts available in deciding whether to impose measures.

19. This will partially implement the proposal to amend the subsidies provisions in the Customs Act to better reflect definitions and operative provisions of the ASCM.

20. This amendment is based on Article 12.7 of the ASCM which provides:

"In cases in which any interested Member or interested party refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final determinations, affirmative or negative, may be made on the basis of the facts available."

B. Repeal subsection 269TAC(13)

21. This Bill will repeal subsection 269TAC(13) of the Customs Act to remove the limitations to determining profit when constructing a normal value because of subsection 269TAAD of the Customs Act. This deletion is the Government's response to Recommendation 3.4 of the International Trade Remedies Forum's report on the effectiveness of the market situation provisions in the Customs Act.

22. Repealing subsection 269TAC(13) would provide more discretion to the CEO and the Minister in determining an appropriate amount of profit in the construction of normal value based on relevant information obtained during the course of each particular investigation. However the Minister will continue to be able to make a determination in regard to the amount of the profit on sale of the goods under Regulation 181A of the Customs Regulations 1926.

C. Continuation inquiries and reviewing level of measures

23. This Bill will remove the need for a separate review of anti-dumping measures and continuation inquiry occurring in close proximity to each other. This will be achieved by providing that:

23.1 when reporting to the Minister on a continuation inquiry the CEO will, in addition to recommending whether the measures be continued or not, be able to recommend to the Minister the range of options (such as the recalculation of the level of duties or changing the method of calculating the duty) that the CEO is able to recommend in a review of measures under Division 5; and

23.2 when the Minister is deciding whether or not to continue the anti-dumping measures the Minister will also be able to exercise the range of options (such as the recalculation of the level of duties or changing the method of calculating the duty) as is currently available to the Minister in a review of measures under Division 5.

Item 1 - Subsection 9(4)

24. This item amends the Customs Act to remove an erroneous reference to subsection 10(5) of the Customs Tariff (Anti-Dumping) Act 1975 (Dumping Duty Act) which was repealed in 1993.

Items 2 & 3 - Subsection 269T(1) (definition of interim countervailing duty)

25. These items amend the definitions of interim countervailing duty and interim dumping duty reflecting amendments to the Dumping Duty Act in the Customs Tariff (Anti-Dumping) Amendment Bill (No. 1) 2012.

Items 4 - After section 269TAAC

26. This item inserts a new provision that provides an express power for the CEO and the Minister to act on the basis of the facts available when determining whether a countervailable subsidy has been received in respect of particular goods, or in determining the amount of a countervailing subsidy in respect of those goods where the relevant entities have not provided relevant information to the CEO within a reasonable period of time, or have otherwise significantly impeded an investigation, review or continuation inquiry.

27. This power may be used, for example, where an interested party, such as an exporter of goods subject to an investigation does not give information to the CEO that the CEO considers relevant to the investigation within a reasonable period. For further information see paragraphs 12-16 above.

Item 5 - Subparagraph 269TAC(2)(c)(ii)

28. This item amends subparagraph 269TAC(2)(c)(ii) as a consequence to the repeal of subsection 269TAC(13) by item 6.

Item 6 - Subsection 269TAC(13)

29. This section repeals subsection 269TAC(13) of the Customs Act to remove the limitations to determining profit when constructing a normal value because of subsection 269TAAD. For further information see paragraphs 18-19 above.

Item 7 - Paragraphs 269ZHF(1)(a) and (b)

30. This item ensures the CEO is able to recommend to the Minister the range of options (such as the recalculation of the level of duties) that the CEO is able to recommend in a review (see subsection 269ZDB(1)).

Item 8 - Subsection 269ZHG(1)

31. This item repeals and substitutes the subsection to clarify the subsection's effect. The amendment does not alter the effect of this subsection which requires that Minister, after receiving a report from the CEO, to publish a notice declaring either that the Minister has decided to secure the continuation of the anti-dumping measures, or not.

Item 9 - Paragraphs 269ZHG(4)(a), (b) and (c)

32. This item ensures the Minister has the same range of options (such as the recalculation of the level of duties) available in securing the continuation of measures as is available to the Minister when determining a review (see subsection 269ZDB(1)).

Item 10 - Application provisions

33. This item provides direction on how the various amendments made by Schedule 1 of the Bill will come into effect such that:

33.1 The 'all facts available' provision introduced by item 4 only applies to investigations that are initiated, or to reviews or inquiries that begin, on or after the commencement of that item.

33.2 The repeal of subsection 269TAC(13) by item 6 and the consequent change to subsection 269TAC(2)(c)(ii) by item 5 only applies in relation to working out the normal value of goods on or after the commencement of these items.

33.3 The broadening of the powers of the CEO and the Minister in a continuation inquiry to include those powers of the CEO and the Minister available in a Division 5 review of measures as implemented in items 7 to 9 applies in relation to notices published under subsection 269ZHB(1) of the Customs Act (a notice of the expiry of measures) on or after the commencement of those items.

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