According to those sitting on both sides of Federal
Parliament dumping is an abhorrent, inexcusable practice that harms
Australian manufacturing. The shared view is we need to get tougher
on dumping to protect Australian manufacturers from importers who
cheat global trade rules.
Most recently the government proposed to establish an
Anti-Dumping Commission dedicated to investigating applications by
Australian industry for the imposition of anti-dumping and
countervailing duty measures.
Legislation to establish the Commission was recently debated in
Parliament. All sides of politics united in condemning dumping and
improving the anti-dumping system to deal with dumped and
subsidised imports better.
In his second reading of the Bill to establish the Commission
the Minister for Home Affairs, the Honourable Jason Clare, opened
"Australia is a trading nation. Trade is the key to our
success. One of the things that can harm trade is dumping. Dumping
Dumping is not cheating. It is simply a form of price
discrimination. It involves selling goods into an export market at
a price less than the price at which the same good is sold in the
According to WTO rules dumping is not unlawful or illegal nor is
it described as cheating. Rather, dumping is condemned by WTO rules
only if it causes injury to a domestic industry in the export
market producing like goods. In such circumstances anti-dumping
measures equal to or less than the margin of dumping can be imposed
to offset the injury caused by the dumping.
If no injury is caused by the exports, then it is perfectly
lawful to export the goods in question at dumped prices. Indeed,
there are benefits. Not only is the exporter able to sell more of
its products into export markets but purchasers of those products
in the export markets are buying them at lower prices.
Equating dumping with 'cheating' is a dangerous
assertion for any government to make.
Governments around the world (perhaps unwittingly) assist their
producers to 'dump' in export markets through subsidies and
other incentives. Exporters that are subsidised in their home
markets can sell their exports at a lower price than if they
received no government financial support. This happens in many
markets around the world, including in Australia.
As an example car manufacturers in Australia receive subsidies
from the Federal Government under the $5.4 billion New Car Plan.
One of the recipients is Holden which last year received a reported
$275 million in subsidies. Recently Holden announced it was
exporting its new Holden VF Commodore to the USA under the
Chevrolet badge. More importantly, while the export model would
have a larger engine than the model sold in Australia, Holden
confirmed it would be sold in the USA for approximately $10,000
less than the model sold in Australia.
It's a clear case of dumping, but is Holden cheating WTO
It would seem that many of our politicians think so. The
Minister for Home Affairs said as much in his second reading speech
on the Anti-Dumping Commission Bill.
But this is categorically untrue. Holden is not a "trade
cheat". WTO rules only 'condemn' dumping if it causes
material injury to a domestic industry producing like goods.
Exporting a few thousand Commodores to the US at prices less
than that charged in Australia will not materially injure US motor
vehicle manufacturers...not even remotely.
Indeed, Holden's decision to export its Commodore to the USA
is a valid and important commercial trade strategy, and no doubt
one that is profitable, consistent with WTO trade rules. Not
Australia's manufacturing industry has considerable
problems, not the least of which is the high Australian dollar and
tough international competition. The easy response has been to
blame cheap imports from Asia, in particular, China, and try to
impose tougher anti-dumping and countervailing measures.
But this strategy makes little sense in the long run. It's
barking up the wrong tree. A better way forward is to support
Australian manufacturing to become internationally competitive
without tariff protection. We have previously written on how this
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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