House of Representatives

Second Reading Speech

Mr Clare (Minister for Home Affairs, Minister for Justice and Minister for Defence Materiel)

I move:

That this bill be now read a second time.

Introduction

Twelve months ago, the government announced Streamlining Australia's anti-dumping system-a policy document that set out the most significant reforms to Australia's anti-dumping system in over a decade.

I am pleased today to present the Customs Amendment (Anti-dumping Improvements) Bill (No. 3) 2012, which is the fourth and final tranche of legislation to implement the reforms in this policy document.

As I foreshadowed in March, when I introduced the third tranche of legislation, this fourth bill implements reforms across three broad areas.

First, it will better align Australia's anti-dumping and countervailing system with those of our WTO counterparts.

Second, it introduces provisions designed to address the circumvention of trade measures. These important amendments establish, for the first time, a mechanism for Australian industry to apply to the Australian Customs and Border Protection Service for an inquiry into business practices which are designed to avoid the payment of dumping or countervailing duties.

Third, it strengthens our system's ability to address parties' non-cooperation during the investigation process.

It also makes a number of minor corrections to Part XVB of the Customs Act 1901.

I will now step through each of these in detail. Aligning subsidies provisions with the World Trade Organization Agreement on Subsidies and Countervailing Measures

First, the bill amends the provisions dealing with countervailable subsidies to more accurately reflect the World Trade Organization Agreement on Subsidies and Countervailing Measures. In particular, this bill:

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amends the definition of subsidy to more accurately reflect the language of Article 1 of the WTO agreement, clarifying that a financial contribution or income or price support is a subsidy even if it only indirectly confers a benefit in relation to the goods exported to Australia;

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repeals the section of the Customs Act dealing with 'calculating whether a benefit has been conferred and the amount of the subsidy' and replaces it with a simplified section more in line with the approach of the WTO agreement;

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introduces a new provision which clarifies that 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;

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amends provisions relating to material injury to more effectively reflect the WTO agreement. In particular, this relates to requiring that material injury determinations be made based on facts and not allegations, conjecture or remote possibilities. It also ensures that consideration is given to the cumulative effects of those exportations in light of the competition of imported and like domestic goods; and

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amends the provision relating to the termination of an investigation where subsidisation causes negligible injury. This will clarify that a countervailing duty investigation can immediately be terminated where the authorities determine that injury is negligible without having to prove that subsidisation is received.

Anti-circumvention inquiries

Second, this bill introduces a new division in Part XVB of the Customs Act, Division 5A-Anti-circumvention inquiries. This division will allow Australian industry, or the minister, to initiate an anti-circumvention inquiry.

Circumvention is a trade strategy used by the exporters and importers of products to avoid the full payment of dumping or countervailing duties. Circumvention activities take various forms and exploit different aspects of the anti-dumping and countervailing system. For example:

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an exporter of goods subject to dumping duty may make an arrangement to export its goods through a second exporter, who is not subject to dumping duty, in order to avoid the dumping duty imposed;

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an importer of goods subject to dumping duty may import those goods in parts from the manufacturer and then assemble them in Australia in order to avoid the dumping duty imposed, because 'parts' of the goods are ordinarily not subject to dumping duty; or

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an importer of goods subject to dumping duty may import those goods via a third country, which is not subject to dumping duty, in order to have them considered as imports from that third country and avoid the dumping duty imposed.

Division 5A empowers the Chief Executive Officer of the Australian Customs and Border Protection Service to inquire into those circumvention activities and provide the minister with a report recommending whether the original notice should be altered or remain the same. As a result of these amendments, the minister will be able to extend the original notice imposing the anti-dumping measures to cover the circumvention activities of exporters or importers if the minister is satisfied that, as a result of the prescribed circumvention activity, the duties which would have otherwise been paid on imported goods have not been paid.

Stronger provisions to address non-cooperative parties

Third, this bill strengthens the provisions that deal with non-cooperation in sampling exercises in investigations, continuation inquiries or reviews under Division 5 of Part XVB of the Customs Act.

Sampling exercises are undertaken where the number of exporters who provide information is so large as to make a determination for each individual exporter impracticable. The Australian Customs and Border Protection Service will be able to limit the examination either to a reasonable number of exporters which are a statistically valid sample, or to the exporters who are responsible for the largest percentage of the volume of the exporters from the country in question which can reasonably be investigated.

Currently, an exporter of goods which are the subject of an investigation must have been either a selected exporter or a residual exporter. A residual exporter would generally receive a duty equal to the weighted average of the examined selected exporters' duty rate imposed by the measures. This would normally be more than the rate for an exporter who failed to cooperate in the investigation.

The Australian Customs and Border Protection Service's view has been that residual exporters only exist in cases where the sampling provisions were applied. In a recent Trade Measures Review Officer decision a loophole was identified which could lead to a counterproductive outcome that benefits non-cooperating exporters, that is, they may receive a more favourable rate than the rate provided under the current approach.

This amendment will prevent potential manipulation of this provision by creating three categories of exporters: cooperative, residual and uncooperative.

As a result, the minister will be able to determine:

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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;

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a single rate of duty for all residual exporters. These are the cooperative exporters which were not examined; and

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a single rate of duty for all other exporters not named in the notice. This will include non-cooperative exporters which are not covered by an individual rate, and new exporters.

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

This reform will ensure that Australia's anti-dumping system effectively deals with parties that do not cooperate with investigations. This ensures that the minister will have the power to impose tougher dumping margins for parties that refuse to provide necessary information within a reasonable period.

Conclusion

This bill completes the implementation of the legislative reforms outlined in the government's Streamlining Australia's anti-dumping system.

The 'Streamlining' reforms represent the most extensive improvements to the anti-dumping system in a decade and address long-standing systemic issues such as those identified in the Productivity Commission inquiry report No.48, Australia's anti-dumping and countervailing system.

But more can be done to ensure that the system can respond to new and emerging trends. For example, there may be more that we can do to address sales at a loss, aimed at avoiding the effect of our anti-dumping system. I am looking at this and other areas where future reform may be required, and will bring forward further legislation for the parliament's consideration if it is needed.

There is still more to do. This bill is an important step, and I commend it to the House.

Debate adjourned