As someone once observed, "we live in interesting times". This is especially so at the moment in the context of measures being taken to assist industries here and overseas seeking Trade Remedies whether that be by way of the imposition of anti-dumping or countervailing duties.
Readers would recall from our earlier update that in July 2011, the Australian Minister for Home Affairs and Justice ("Minister") announced that the Government would be adopting 29 "improvements" to the Australian Trade Remedies regime including the adoption of many of the recommendations of the Productivity Commission. At that time, the Minister referred to the adoption of a "First Tranche" of legislative amendments which have now been introduced into Federal Parliament and received approval.
Of recent days, the Minister has now announced a further series of improvements including the "Second Tranche" of legislation.
The "improvements" were also reported to take into account the Report by the Senate Economics Committee into a Bill initiated by Senator Xenophon which sought more far-reaching amendments to Australia's Trade Remedies regime. I appeared before that Committee and made submissions to the effect that the majority of the amendments were not contrary to WTO practice.
The Minister's announcements referred to the following.
- The establishment of the International Trade Remedies Forum ("ITRF"). The ITRF is comprised of unions, industry associations and a range of companies both producers and importers with experience of the Trade Remedies legislation. Although the ITRF met for the first time in August, its formal establishment is covered by the Second Tranche of legislation being introduced to Parliament.
- Dealing with the "difficult" issue of Government intervention in markets overseas allowing the sale of goods for an artificially low price. According to the Minister, the fact Australia and New Zealand treat China as a "market economy" (unlike the US, Canada, the European Union and India) means that it is more difficult to move to prices in "surrogate" countries when determining values of goods. In doing so, the Minister appeared to criticise the former Howard Government's agreement to treat China as a "market economy" as part of the commencement of free trade negotiations. This part of the announcement may have overlooked that there is the other option of moving to a "constructed" price and disregarding local prices if there is a particular "market position" in an export country. The announcement may also have overlooked the tensions between wanting an FTA with the PRC, yet not believing it is a "market economy". Apparently, the ITRF is considering how best to address the practical difficulties associated with Australia's dealing with China as a "market economy".
- Improving the access to import data for those seeking Trade Remedies.
- One of the working groups established under the ITRF will make recommendations to Government about the treatment of agricultural goods and how primary producers can access the Trade Remedies regime which may only impose duties on "processed" goods which it does not produce. This reflects the problem that producers of raw materials (affected by dumping or countervailing action but having no direct recourse) cannot convince the ulimate processors of the product to initiate action.
- Improving the speed of the investigation by the allocation of additional staff to Customs.
- The introduction of the Second Tranche of legislation to create a new appeals mechanism, allow for more flexibility in extending investigations and to establish the ITRF.
- The appointment of a new "SME Support Officer" to assist SMEs to have access to the Trade Remedies regime.
- Clarifying the approach to be taken by Customs to determine whether an exporter is "co-operating in an investigation". This is important as if an exporter is deemed not to co-operate, then Customs can make determinations based on all relevant information including information provided by the domestic industry and information from surrogate countries. In practice, levels of dumping and countervailing duties imposed on "non-co-operating exporters" tend to be higher than that imposed on cooperating exporters.
- Clarifying the approach to be taken when imposing a level of duty sufficient to eliminate injury from dumping.
- The commencement of "Operation BLUENET" being a compliance operation to ensure that proper levels of duties are being paid on goods subject to Trade Remedies. Initially the investigation will include aluminium extrusions, clear float glass, hollow steel sections and structural timber. According to the Minister, since the commencement of the operation earlier in November, assessments had resulted in dumping and countervailing duties being imposed on two aluminium extrusion importers and post-transaction assessments have commenced on a further four companies.
- Assisting Customs in measures to strengthen compliance where an importer or exporter is trying to evade duties through "circumvention". Such circumventions could occur by modifying a product to make it fall outside a description of the goods subject to duties, importing through a different country or re-organising export sales through exporters with the lowest duty rates.
The recent announcements also included a variety of observations by the Minister in relation to the Trade Remedies changes proposed by the Federal Opposition. Unsurprisingly, the Minister found the proposed measures to be less than compelling.
These announcements are interesting in the context of the global tensions in trade. On the one hand, many countries are espousing the virtues of increasing "free trade" yet, at the same time are seeking to insist that such trade is "fair" by strengthening Trade Remedies measures against "unfair" imports. The difficult balancing act for many countries is to ensure that the Trade Remedies which they impose are not seen as, in fact, mere protection for local industries and contrary to the WTO Agreements.
As always, we will keep you informed of developments.
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