In many ways Australia can rightfully claim to be leader in the fight against protectionist trade policies. Most goods can be imported without a license, general tariffs are normally low or non-existent and compared to other countries in the region, Australia's Customs authority is trade facilitative. However, recent proposed legislative amendments demonstrate that our anti-dumping system is an area that is an exception to Australia's free trade agenda.
The right to impose dumping duties are an exception to the WTO requirement to treat goods from all WTO members equally. Broadly, dumping duties can be imposed where it is shown that the export price of goods sold to Australia is lower than the price of those goods in the home market of the exporter and that this difference is causing material harm to an Australian industry.
Dumping duties are most often applied in respect of commodes such as metals, plastics, chemicals and foods.
If dumping duties are imposed, after 12 months the exporter can seek a review of those measures. A review will generally be sought where either the domestic price has fallen or the export price has increased. Either, or a combination of, these factors can result in a lower dumping margin. The proposed legislative amendments change how the Anti-Dumping Commission (ADC) can calculate the dumping margin in a review context.
Specifically, where during the review period (usually the previous 12 months) there has been no, or a low level of exports, the ADC can determine the export price on information completely unrelated to the current exporter's exports to Australia. For instance, the ADC will be able to base the export price on any of the following:
exports by the exporter from a previous period (such as the original investigation period);
exports by a unrelated company to Australia;
exports by the exporter to a country other than Australia; or
any other method the ADC considers relevant.
The concern with this approach is that the export price used to calculate the newly assessed dumping margin could have no connection with the exporter's actual sale price. Dumping measures are legal when based on a genuine comparison of domestic selling prices and export prices to Australia. However, it should be of concern when legislation is being proposed under which actual export prices can be disregarded and replaced with a substitute third party sale price.
The proposed amendment highlights the mindset of the Government to perceived dumping and importers/exporters should keep in mind the following:
if passed, the new regime will apply to reviews already on foot, but not completed;
ultimately, the new regime will mean that if dumping duties are imposed, to realistically achieve a lower dumping margin on review, the exporter will have to continue to export goods to Australia, even though those goods will attract dumping duties. Without those continued sales, the ADC is likely to find a low level of exports and use a substitute export price in any subsequent review;
importers should not commit to purchases from an exporter currently subject to dumping duties on a claim the dumping duties will be reduced following a foreshadowed review of measures;
trade compliance regarding dumping duties needs to be a priority. With dumping duties being so high, a compliance error can bring a crippling dumping duty bill and penalties;
it is crucial for exporters to be involved in the original dumping duty investigation. It can no longer be the strategy to be passive in the initial investigation and hope to obtain a low dumping margin in a subsequent review of measures.
Hunt & Hunt's Customs and Global Team helps exporters, importers, customs brokers and forwarders with issues associated with dumping and countervailing duties. More so than most areas, outcomes relating to dumping can be significantly improved by proactive management.
Please contact Russell Wiese (03 8602 9231, rwiese@huntvic.com.au) or Lynne Grant (03 8602 9246, lgrant@huntvic.com.au if you would like to discuss.