House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Minister for Industry, Innovation and Science, the Honourable Craig Laundy, MP)

OUTLINE

The purpose of the Customs Amendment (Anti-Dumping Measures) Bill 2017 (the Bill) is to amend the Customs Act 1901 (the Customs Act) to provide greater certainty in the determination of export prices for exporters to Australia (Exporters), subject to anti-dumping and countervailing duties (anti-dumping duties), in reviews of anti-dumping measures under Division 5 of the Customs Act. This Bill will facilitate the use of appropriate methodologies to determine an export price during a review of measures for those Exporters who have not exported the goods, or exported low volumes of the goods such that the export price cannot be reliably determined, during the period examined for the purpose of the review. This will allow specific information to be used to determine an export price and limit Exporters' ability to subvert the anti-dumping framework and benefit from inappropriately reduced rates of duty that do not remedy the injurious effects of dumping.

The amendments accord with the intent of reviews of anti-dumping measures under Division 5 of the Customs Act, which is to ensure the rate of duty in force accurately reflects the level of duty necessary to combat the identified dumping or subsidy. Division 5 provides for periodic reviews of anti-dumping measures, upon application by interested parties or on request from the Minister. The general purpose of these reviews is to examine recent exportations and, if there have been any changes to the variable factors (i.e. the level of dumping), the Minister may make appropriate modifications to the rate of anti-dumping duty.

An unintended consequence of the current legislation allows Exporters to receive a less effective anti-dumping duty by not exporting, or exporting small volumes at a higher price, for a period of time, before applying for the duty to be reviewed. A subsequent review of measures in these circumstances can result in the export price for such Exporters being established at a level equal to, or higher than, the normal value for that Exporter. This level of duty may be ineffective in preventing future dumping particularly where market prices for the goods have increased. As a consequence, the level of duty would be ineffective in preventing the resumption of material injury caused to the Australian industry. Noting that an anti-dumping measure can only be reviewed once every 12 months, unless the Minister initiates additional reviews, the inappropriate rates of duty can allow Exporters to take advantage of movements in the market to resume or initiate injurious dumping for a period of up to 18 months until the next review of measures under Division 5.

The Bill addresses this issue by prescribing a range of methods, set out in new subsection 269TAB(2B), that can be used to determine appropriate export prices where there are no exports, or low volumes of exports, during the period examined for the purpose of the review. In these circumstances, the specific methods will enable the Minister to consider alternative information to determine the export price. This will establish an export price that is reasonably reflective of the export price that would have existed had the Exporter made exports (or made exports of a greater volume). This will ensure the calculation of updated variable factors results in a rate of anti-dumping duty that remains effective at preventing material injury to Australian industry caused by dumping.

The methods in the Bill are not hierarchical. The Minister may have regard to any method that he or she considers is most appropriate to apply to the circumstances of the case. Where the Minister considers it appropriate, he or she may choose not to determine the export price for such Exporters under the specific methods if another method is available (such as under existing subsections 269TAB(1) or (3)). In this way, the Bill makes allowance for the fact that some Exporters may have exported low volumes or made no exportations, but applying subsections 269TAB(1) or (3) will not lead to a less effective rate of duty.

For example, an Exporter who produces a speciality product that is covered by measures may consistently export in low volumes. In such a circumstance, despite the availability of the methods in new subsection 269TAB(2B), it would generally be appropriate to determine that Exporter's export price under subsection 269TAB(1) or (3). A further example is where an Exporter has never exported the goods subject to measures to Australia. In a review of measures in relation to that Exporter, if there have still been no exports, it may be appropriate to determine that Exporter's export price under subsection 269TAB(3) despite the methods in new subsection 269TAB(2B).

The specific methods described in the Bill will apply to:

•

all reviews of measures for which an application or request is made following the date of commencement of the legislation;

•

reviews for which an application has been lodged or requested by the Minister prior to the commencement of the legislation;

•

reviews that have commenced prior to the commencement of the legislation but for which a decision has not yet been made.

The purpose of retrospectively applying the specific methods to applications lodged, or reviews being undertaken, prior to commencement is to apply the methods to all reviews currently on foot, without extending to reviews already finalised. This will avoid applying a disproportionately low duty to reviews already underway. Failing to do so, could allow Exporters to subvert the intent of the anti-dumping system and produce an unfair outcome for Australian industry. Once the new legislation commences, the Minister can assess reviews to determine if the low volume or absence of exports represents insufficient or unreliable information and, if so, apply one of the specific methods in these reviews to calculate an export price.

Applying the specific methods to applications lodged, or reviews being undertaken prior to commencement of the legislation, will ensure that the Minister would not be required to initiate further reviews of measures to address a disproportionately low duty applied as a result of the unintended consequence in the review of measures. This means Australian industry will not be vulnerable to injurious dumping from Exporters that may be attempting to exploit this unintended consequence.

Procedural fairness will be afforded to affected parties. Affected parties will be notified of the intention to use the alternative methodologies to calculate their export price. Exporters and interested parties will be invited to make submissions prior to a decision being finalised.

FINANCIAL IMPACT STATEMENT

The revenue impact of the Bill is unquantifiable due to the variable frequency and nature of anti-dumping reviews. However, the revenue impact is likely to be small given the low volumes of exports affected.