Australia: Anti-Dumping: Proposed measures could expose Australia to claims of increased trade protectionism

Australia's anti-dumping system is ever evolving in the battle to sustain an even playing field for Australia's producers. However, the latest set of proposed amendments potentially tip the scales too far and risks Australia contravening its WTO commitments.

Contained in the recently circulated Customs Amendment (Anti-Dumping Improvements) Bill, the amendments of concern seek to introduce anti-circumvention provisions to Australia's anti-dumping system.

On the surface it seems reasonable for the government to put in place measures to stop exporters from other countries circumventing Australia's anti-dumping laws. However, the issue is whether the proposed anti-circumvention provisions are consistent with the international anti-dumping and subsidies rules under GATT.

The Government's Bill proposes to introduce new provisions into the Customs Act which will set out the rights of certain persons to request Customs to conduct an anti-circumvention inquiry.

According to the proposed amendments, a number of activities would be considered as 'circumvention'.

For example, a circumvention activity would occur if, instead of exporting aluminium extrusions and clear float glass from China, which are both separately subject to anti-dumping measures, a fully fabricated window was exported from China and the value of the fully fabricated window was only marginally greater than parts used to produce it. It would be regarded as a circumvention activity because it circumvents the anti-dumping measures on aluminium extrusions and clear float glass as fully fabricated windows from China are not subject to anti-dumping measures.

Similarly, if the clear float glass and aluminium extrusions were exported to the Philippines, assembled into fully fabricated windows and then exported to Australia, this also could constitute a circumvention activity if the value of the fully fabricated window was only marginally greater than parts used to produce it. Again, it would regarded as circumventing the measures on aluminium extrusions and clear float glass from China because there are no measures on those products or fully fabricated windows from the Philippines.

Under the proposed provisions, if a person representing the Australian industry producing like goods to those the subject of anti-dumping and/or countervailing measures considers that one or more circumvention activities is taking place, that person may apply for a circumvention inquiry.

If an inquiry is undertaken and it is found that one or more circumvention activities has occurred, then the Minister can take action to impose measures on the goods that are the subject of the inquiry. In the examples above, it would be on the fully fabricated windows from China or the Philippines.

But a key question is whether the Minister can impose anti-circumvention measures in a way that is consistent with the WTO Anti-Dumping Agreement and Subsidies Agreement?

Current WTO rules require two conditions to be met before imposing anti-dumping and/or countervailing measures:

• there must be an investigation into whether the product in question is being exported to Australia at dumped and/or subsidised prices; and
• if so, the export of those goods at those dumped and/or subsidised prices is causing material injury to an Australian industry producing like goods.

Accordingly, in order to impose measures on the example of fully fabricated windows from China or the Philippines given earlier, there would need to be an investigation into whether fully fabricated windows from China or the Philippines were being exported at dumped prices and/or subsidised prices and, if so, whether this was causing material injury to an Australian industry producing like goods, that is, fully fabricated windows.

That, however, is not what will occur in a circumvention inquiry. Rather, a circumvention inquiry will focus on and determine whether one or more circumvention activities have occurred.

If the circumvention inquiry determines that circumvention activities have occurred and the notice imposing measures is varied accordingly, it will:

• impose measures on goods that have not been found to be exported at dumped or subsidised prices;
• impose measures on goods that have not been found to have caused material injury to an Australian industry producing like goods; and
• impose measures on exports from a country whose exports have not been found to have been at dumped or subsidised prices causing material injury to an Australian industry producing like goods.

The danger in embarking upon a potentially non-WTO compliant path is that it exposes Australian exports and exporters to retaliatory action in other jurisdictions.

The adoption of such a path is also contrary to Australia's pledge in December last year not to implement WTO-inconsistent measures.

Finally, while anti-circumvention was raised in negotiations that led to the Anti-Dumping Agreement, agreement could not be reached and the issue was referred to the WTO Committee on Anti-Dumping Practices for resolution. It does not appear to have been resolved and is still the subject of discussion in the Doha round of negotiations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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