House of Representatives

Explanatory Memorandum

Minister for Home Affairs, the Honourable Jason Clare MP

SCHEDULE 1 - AMENDMENTS OF THE CUSTOMS ACT 1901

A. Better align the countervailable subsidy provisions of the Customs Act with the WTO Agreement on Subsidies and Countervailing Measures

10. Schedule 1 of the Bill will amend provisions dealing with countervailable subsidies to more accurately reflect the ASCM. This Bill:

10.1.

amends the definition of subsidy in subsection 269T(1), to more accurately reflect the language of Article 1 of the ASCM, and clarify that a subsidy is a financial contribution or income or price support that confers a benefit, whether directly or indirectly, in relation to the goods exported to Australia;

10.2.

repeals section 269TACC and replaces it with a simplified section which deals with whether a financial contribution or income or price support confers a benefit;

10.3.

introduces a new section 269TACD to provide that, where a countervailable subsidy has been received in respect of goods, the amount of the countervailable subsidy is an amount determined by the Minister in writing and that the amount of countervailable subsidy should be worked out by reference to the units of those goods;

10.4.

amends section 269TAE to more effectively reflect the ASCM, in particular, amending subsections 269TAE(2A) and (2C) to reflect Articles 15.7 and 15.3 respectively; and

10.5.

amends subsection 269TDA(14) to allow for the immediate termination of a countervailing duty investigation where the authorities determine that injury is negligible.

B. Anti-circumvention inquiries

11. Schedule 2 of the Bill amends the Customs Act to address prescribed circumvention activities by importers and exporters.

12. Circumvention is a trade strategy used by the exporters and importers of products to avoid the full payment of dumping and countervailing duties. Circumvention behaviours take various forms and exploit different aspects of the anti-dumping and countervailing system, but they all aim to ensure that the relevant goods do not attract the intended dumping or countervailing duty.

13. This Bill will allow the Minister to amend the original notice imposing the dumping or countervailing duty, including by extending the notice so that it applies to different goods, exporters and countries which were not specified in the original notice. The Minister will exercise these powers after considering a report by the Chief Executive Officer of Customs (the CEO) regarding alleged circumvention activity that provides reasons as to why the original notice should be altered or remain the same.

C. Stronger provisions to address non-cooperative parties

14. Schedule 3 of the Bill strengthens the provisions that deal with non-cooperation in relation to dumping investigations, reviews under Division 5 or continuation inquiries. Schedule 3 also consolidates and clarifies the provisions that deal with sampling in relation to dumping and countervailable subsidy inquiries into one provision.

15. Sampling is undertaken where the number of exporters who provide information is so large as to make a determination for each individual exporter impracticable. The Minister may limit his or her examination to a selected number of exporters who are a statistically valid sample or are responsible for the largest percentage of the volume of the exports from the country in question that can reasonably be investigated.

16. Sampling is currently undertaken for dumping and subsidy investigations under subsections 269TACB(8) and 269TACC(8) respectively.

17. Currently, the Customs Act, in section 269T, categorised an exporter of goods to Australia as a 'selected exporter', 'residual exporter' or 'new exporter'. A new exporter was only relevant for the purposes of an accelerated review under Division 6. Therefore a current exporter of goods the subject of an anti-dumping investigation must have been either a selected exporter or a residual exporter.

18. Customs and Border Protection considers that residual exporters should only exist in cases where the Minister has applied subsection 269TACB(8), known as the sampling provision. This provision reflects Article 6.10 of the WTO Anti-Dumping Agreement (ADA), as stated in the Explanatory Memorandum for the 1994 amendments. This Article describes a process where, if the number of exporters from a particular country is too large for an investigating authority to examine each exporter individually, the investigating authority may choose, or 'select', which exporters to examine as part of the investigation. Article 9.4 of the ADA outlines the method for calculating the dumping margin for residual exporters. This Article is reflected in subsections 269TG(3B) and (3C).

19. In a recent review, an alternative interpretation has arisen which would mean that non-cooperating exporters are provided with the weighted average dumping margin of fully cooperative exporters and therefore avoid the application of subsections 269TAB(3) and 269TAC(6), which are the provisions intended to deal with non-cooperation in accordance with Article 6.8 of the ADA.

20. The amendments in this Bill will prevent the possible manipulation of the level of cooperation (which can occur when only the two rates are implemented) by introducing three categories of exporters: cooperative, residual and uncooperative. This will mean that the Minister will be able to determine:

20.1.

individual rates of duty for all cooperative exporters and any uncooperative exporters for whom an individual export price and normal value were calculated (these exporters will be named in the notice);

20.2.

a single rate of duty for all residual exporters (these exporters will be named in the notice); and

20.3.

a single rate of duty for all other exporters not named in the notice -this will include non-cooperating exporters not covered by an individual rate and new exporters.

21. This approach is consistent with the approach taken in a number of other jurisdictions.

D. Minor amendments

22. Schedule 4 of the Bill amends the Customs Act to correct a number of errors and make clarifications. The amendments:

22.1.

clarify the operation of paragraphs 269TAE(2C)(c) and (d) to make it clear that these provisions only operate in relation to determinations made in connection with dumping duties;

22.2.

amend subsection 269TDA(13) to provide consistency for both dumping and subsidy investigations as to how the CEO terminates investigations, where the CEO finds that there is negligible injury;

22.3.

amend the definition of interested party in subsection 269T(1) to correct an existing error; and

22.4.

correct minor errors in section referencing in section 269ZJ and provide a clarifying amendment to paragraph 269ZZK(6)(c).