Whether conditions are such that safeguard measures would be
justified under the WTO Agreement
If so, what measures would be necessary to prevent or remedy
serious injury and to facilitate adjustment
Whether, having regard to the Government's requirements for
assessing the impact of regulation which affects business, those
measures should be implemented.
Because SPC Ardmona has a major share of domestic production,
and for several products it is the only domestic processor, the
focus of this inquiry was on SPC Ardmona.
Outlined below are the factors that were considered to determine
whether safeguard action was required to be implemented for
processed fruit and tomato products.
Have imports increased?
Under WTO requirements, safeguard measures can only be imposed
if there is clear evidence of an increase in imports of the
relevant goods that is 'recent enough, sudden enough, sharp
enough and significant enough' either in absolute terms or
relative to domestic production.
For the case of processed pears and peaches, the Commission found
that the ratio of imports has not increased in absolute terms, but
has increased relative to domestic production. The imports of
mixtures have increased both substantially and relatively in the
past five years. However there has been a decrease in importation
of apricots. The increases in respect of pears, peaches and
mixtures met the threshold requirement under the WTO's
Agreement on Safeguards.
In the five years to June 2008, annual imports of tomato products
increased significantly — from about 21 kilotonnes to about
41 kilotonnes. However, over the subsequent period under
investigation, the rate of import growth was significantly slower.
In the Commission's view, this does not meet the standard of a
'recent, sudden, sharp and significant' increase in
imports, as required under WTO rules.
Is the industry suffering serious injury?
The Commission concluded that based on an assessment of the
indicators, including changes in market share, sales, production,
productivity, capacity utilisation, profits and losses and
employment, the domestic industry is suffering serious
The Commission identified that there was a substantial decrease in
production volumes between 2008 and 2013 and that SPC Ardmona's
profit margins declined by over 20 percentage points for all fruit
categories between 2010 and 2013, and have been negative since
2011. The Commission also recognised that there was compelling
evidence that SPC Ardmona's tomato processing operations have
suffered serious injury as a result of a number of factors in
Has injury been caused by a recent surge of imports?
While the domestic processed fruit and tomato industry has been
suffering serious injury over several years, a key threshold for
the imposition of safeguards is whether serious injury was caused
by a recent surge in imports.
With the exception of mixtures, no fruit category was found to
exhibit an increase in absolute volume of imports. The Commission
concluded that the volume of processed fruit imports has not grown
substantially in the past five years nor has price pressure
increased as a result of imports. With regard to tomato products
the Commission determined that there has not been a surge in
absolute import volumes during the period under investigation.
However, the Commission did identify several other trends that
coincide with the period of injury.
While the Commission acknowledged that SPC Ardmona has suffered
injury in recent years to both its tomato processing and processed
fruit operations, it found that this was not caused by a surge of
imports but by other factors including:
Decreased domestic demand for processed fruit
Reduced export volumes
Rising costs of production
Supermarket private label strategies as a feature of domestic
Imports being used to improve reliability of supply
Floods reducing Australian processed tomato production.
In conclusion, the Commission determined that for the examined
product categories, safeguard measures were not warranted.
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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