House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

OUTLINE

The substantive amendments proposed in this Bill were introduced into Parliament in June 1997 as the Customs Legislation (Anti-Dumping) Amendment Bill 1997.

The purpose of this Bill is to amend the Customs Act 1901 :

(i)

to provide a special approach for determining normal value of allegedly dumped goods from countries that are in the process of transition to a market economy when it is established that the selling price of those goods is subject to government control as announced by the Government on 12 March 1997;

(ii)

to provide a new methodology for determining the normal value of allegedly dumped goods where the goods are exported from a country in the process of transition to a market economy and a raw material input into the goods which accounts for more than 10% of the costs of producing or manufacturing the goods is supplied by a State owned enterprise;

(iii)

in combination with the amendments to the Customs Tariff (Anti-Dumping) Act 1975 proposed in the Customs Tariff (Anti-Dumping) Amendment Bill (No. 2) 1998, to clarify provisions of these Acts which relate to the manner in which interim dumping and countervailing duties are collected; and

(iv)

to ensure consistency with amendments implemented by the Customs Legislation (Anti-dumping Amendments) Act 1998 .

Items (i), (ii) and (iii) were the subject of the Customs Legislation (Anti-Dumping) Amendment Bill 1997 (the 1997 Bill) which lapsed when the Parliament was prorogued on 31 August 1998.

Economies in transition - assessment of normal value of goods when domestic selling prices are subject to government control The amendments to the normal value provisions in section 269TAC of the Customs Act 1901 (the Customs Act) provide for a case by case approach to be taken by the Minister in inquiries into the alleged dumping of products from such economies. If the Minister is satisfied that the exporters domestic selling prices of the product under investigation are subject to government control, normal values may be ascertained by reference to other relevant information which may include the selling prices of like goods in a surrogate country.

To ensure that Australia is not in breach of its obligations as a member of the World Trade Organization (WTO), the amendment provides for regulations to be made which will provide that the new methodology for calculating normal values will not apply in respect of specified countries.

Economies in transition - consideration of raw material inputs

In September 1997, the Senate referred the 1997 Bill then before the Parliament to the Economics Legislation Committee for consideration. Although the majority report from the Committee recommended passage of the 1997 Bill it commented consideration should be given to the cost of raw material inputs where investigators conclude that it exceeds 10% of the production process.

In light of views expressed by Industry and the Economics Legislation Committee the Government amended the 1997 Bill to confer flexibility in determining normal values by allowing the examination of significant raw material inputs used in the production of the goods exported to Australia when those inputs are supplied by a state owned enterprise.

In the absence of a price control situation for the whole goods in the domestic economy, the proposed amendments will allow the Minister to proceed to examine the cost of production of the goods exported to Australia. If the Minister is satisfied that a raw material accounts for more than 10% of the costs of producing or manufacturing the exported goods and that the raw material is supplied by an enterprise which is wholly owned by the national government, or a provincial government, of the exporting country the cost of the particular item could be ignored and, for normal value purposes, its cost could be estimated by the Minister by reference to other relevant information which could, but need not necessarily, include the cost of that item in a surrogate country.

Interim dumping duties

The Bill also contains amendments which, in combination with those in the Customs Tariff (Anti-Dumping) Amendment Bill (No. 2) 1998, clarify the operation of the provisions of the Customs Act and the Customs Tariff (Anti-Dumping) Amendment Act 1975 which relate to the manner in which interim dumping and countervailing duties are collected. The amendments make it clear that such interim duties can be imposed, pending final assessment of any dumping or countervailing duties, notwithstanding that the actual export price and normal value, or the fact that a countervailable subsidy has been received, have not yet been ascertained.

Although these amendments are to be taken to have commenced on 1 January 1993, the date on which the interim dumping and countervailing duties were introduced, they will not require importers to pay an amount of dumping duty beyond that which has previously been demanded. The amendments merely seek to ensure that approximately $12 million in interim duties collected since 1 January 1993 is not subject to legal challenge.

Consistency with amendments implemented by the Customs Legislation (Anti-dumping Amendments) Act 1998

The purpose of these amendments is to replace the terms preliminary finding and Anti-Dumping Act with the terms preliminary affirmative determination and Dumping Duty Act (respectively) to ensure consistency with amendments to the Customs Act 1901 implemented by the Customs Legislation (Anti-dumping Amendments) Act 1998 .

The Bill also contains a minor technical amendment to correct a cross reference in the Anti-Dumping Authority Act 1988.

FINANCIAL IMPACT STATEMENT

The amendments in the Bill in relation to the assessment of the normal value of goods in countries in transition to market economies have no financial impact.

The proposed amendments to clarify the operation of the interim dumping and countervailing duties provisions, in combination with those proposed in the Customs Tariff (Anti-Dumping) Amendment Bill (No. 2) 1998, is designed to ensure that approximately $12 million in interim duties collected since 1 January 1993 is not subject to legal challenge.

NOTES ON CLAUSES

Clause 1 - Short Title

This clause provides for this Act to be cited as the Customs (Anti-dumping Amendments) Act 1998.

Clause 2 - Commencement

This clause provides for the commencement provisions of the various amendments contained in this Act as set out below.

Subclause 2(1) provides that, subject to subsections (2), (3), (4) and (5), the provisions of this Act commence on the day on which this Act receives the Royal Assent. The provisions to commence upon Royal Assent are:

•

the formal commencement and enabling clauses; and

•

the application provisions in item 20 of Schedule 1.

Subclause 2(2) provides that, subject to subsection (5), items 1, 2 and 3 of Schedule 1 commence on a day to be fixed by Proclamation. These items all relate to the new method for calculating the normal value of goods exported from countries in transition to a market economy. Proclamation commencement is proposed to enable complementary regulations to be made with a commencement on the same day as the amendments to the Customs Act 1901 (the Customs Act).

The Proclamation commencement is subject to the standard provision providing for automatic commencement 6 months after Royal Assent if the relevant provisions have not been proclaimed to commence within that time (subclause 2(5) refers).

Subclause 2(3) provides that items 4, 6, 8, 10, 12, 14, 16 and 18 are taken to have commenced on 1 January 1993. These items all relate to the amendments clarifying collection of interim dumping and countervailing duties. The interim duty regime was introduced by the Customs Legislation (Anti-Dumping Amendments) Act 1992 , which commenced on 1 January 1993. Interim duties have been collected since that date in accordance with the intention of the regime and these amendments will ensure that approximately $12 million in interim duties collected since 1 January 1993 is not subject to legal challenge.

Subclause 2(4) provides that items 5, 7, 9, 11, 13, 15, 17 and 19 are taken to have commenced on 24 July 1998, immediately after the commencement of the items (other than item 39) of Schedule 1 to the Customs Legislation (Anti-dumping Amendments) Act 1998 . These items will ensure that the new terms preliminary affirmative determination and Dumping Duty Act are used consistently throughout the Customs Act as from 24 July 1998.

Clause 3 - Schedules

This clause is the formal enabling provision for the Schedule to this Act providing that each Act specified in the Schedule is amended or repealed in accordance with the applicable terms of the Schedule.

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 (item 20 of Schedule 1 refers).