Many of you would have seen my recent article entitled "Dumped and Confused" on the significant (and rapid) changes to the anti-dumping and countervailing regime here and overseas. Hopefully, the title did not deter you from its content and some of you may even have read the article.
Subsequently there continues to be important developments which are discussed below. In addition to the commentary below, these issues are also the subject of my presentations to the CBFCA Regional CPD events in Sydney, Brisbane and Melbourne through May and June 2015.
More circumvention action
The first of the developments relates to the introduction of a new type of "circumvention" activity being "slight modification" of goods with the effect that measures would not apply to the goods even though the goods carry out the same purpose as those subject to the measures. The modification could take the goods outside of the description of the goods subject to the measures or take them to a different tariff classification to that prescribed by the measures. These types of actions have been the source of much frustration and those supporting the measures believe that the intent of the modification is merely to defeat the proper imposition of measures on goods causing material injury to the Australian industry.
Of course there is a counter argument that measures should only apply to goods the subject of an application, investigation and proper procedure with a finding that measures should be imposed and that this new "circumvention" action undermines the process by allowing the application of measures to goods not subject to the same process. There is also the concern that there was no broad consultation on the introduction of the new activity (which seems to have only been supported by some selective consultation) and that it was introduced even though the current Senate Inquiry into the effectiveness of our circumvention regime has yet to be completed and issue its findings. This could give the impression that the circumvention regime is being administered and adjusted based on political representations to Government by some sectors of industry alone.
However, for the time being, the new circumvention activity has been in place with effect form 1 April 2015 and since then, it has already been the subject of 2 new circumvention inquiries both aimed at ensuring that measures are imposed on "modified" goods not yet subject to such measures but which are an equal problem for Australian industry.
The first inquiry relates to the alleged slight modification of zinc coated (galvanised) steel from Korea and Taiwan and the second inquiry relates to the alleged slight modification of hollow structural sections form China, Korea and Malaysia. In both cases, the applicant for the inquiry has alleged that the exporters have modified goods the subject of the measures by adding certain alloys (based on boron) so that the goods fall outside of the goods subject to the measures. This was also a live issue during other earlier investigations in which applicants expressed concerns that the addition of boron to hot rolled coil steel may defeat the effect of the measures.
The process of the inquiries will be watched with real interest and concern as it may represent a precedent on what sort of chemical changes to goods will attract circumvention measures, which push the boundaries of the effect of the original measures. It will also mean that licensed customs brokers may need to start asking additional questions on the chemical composition of goods to determine if measures apply to goods being imported where circumvention duties have been imposed. It may increase the level of use of tariff or other advices to determine whether goods are subject to measures.
Passage of new AD and CV legislation
In earlier updates I provided an outline of 2 new AD and CV Bills which were introduced into Parliament on 26 February 2015. The Bills were part of a move to "level the playing field for Australian manufacturers and producers" announced late in 2014.
As also reported earlier, the Bills were referred to the Senate Economics Legislation Committee for inquiry and report on 18 March 2015. Given the scope of the impact of the Bills, the Food and Beverage Importers Association (FBIA) was invited to make a submission which I was able to develop. The FBIA expressed a number of concerns regarding the Bill including:
- The proposal to charge fees for an application for review to the Anti-Dumping Review Panel (ADRP) as well as setting a threshold to be met by an applicant before an application would be allowed. The FBIA saw this as creating an unreasonable restriction on the ability to seek review, especially when there are no fees to seek the imposition of measures – and in fact where the Government funds assistance to seek the imposition of measures.
- The absence of details on how the fees for a review would be levied and how the ADRP would review applications for review in the first place.
- The real need for continued and urgent reform of the anti-dumping (AD) and countervailing (CV) regime in light of significant recent reform of the law and practice
- The proposed abolition of the International Trade Remedies Forum (ITRF) which had been established by the former Government as a body to consult with industry on the law and practice of the regime and the need for reform. Indeed, its role had been enshrined in legislation. The FBIA had been appointed to the ITRF but it had never been able to attend a meeting as the ITRF had not been convened for some time. Again, the FBIA was concerned that the abolition of the ITRF was contrary to the proper, comprehensive and transparent regulation of the AD and CV regime and sought the retention of the ITRF.
These AD and CV Bills are often the subject of some tense debate in the Senate and this was no exception. While the Government Senators endorsed the Bills without amendment, the opposition Senators and independent Senator Xenophon delivered strong dissents and negotiated amendments to the Bills including retention of the ITRF which would hopefully encourage the ADC and the Government to actually allow the ITRF to operate as intended and as legislated. While the Bills have now been passed by both Houses of Parliament and await Royal Assent, an important part of the implementation of the Bills will be the fees to be levied when seeking review before the ADRP. Those fees will be the subject of Regulation and Senators have reserved their rights to oppose the Regulations if they believe the fees are being levied and imposed in an unreasonable manner.