A feasibility study into a stand-alone Commonwealth anti-dumping agency is underway, but is splitting a one-stop shop into two a good idea?

The Federal Government has established a feasibility study into:

  • the current arrangements for assessing and investigating anti-dumping matters; and
  • the establishment of a Commonwealth Anti-Dumping Agency.

The study is headed by former Victorian Premier John Brumby, and his report is to be presented to the Government by 30 November, 2012.

Dumping occurs where goods are exported to Australia at a price below the price charged for them in its home market or below cost. If that dumping materially injures an Australian business producing similar goods, Australian industry can apply to have additional Customs duties imposed. If goods are subsidised by foreign governments, countervailing duties may also be imposed on imports that cause material injury to an Australian manufacturer of "like goods".

Currently, anti-dumping investigations are undertaken by the Australian Customs and Border Protection Service. The Minister for Home Affairs and Justice, Jason Clare, says that there may be real benefits in establishing a specialist agency to deal with dumping.

Objectives of the Brumby Review

According to the Anti-Dumping Review's Terms of Reference, the study's objectives are to consider:

  • current arrangements for considering anti-dumping cases and policy;
  • the benefits and costs of retaining this function within the Australian Customs and Border Protection Service;
  • the benefits and costs of establishing an agency to conduct anti-dumping assessments and investigations;
  • the functions, including assessments, investigations and compliance, and powers that would be necessary for an agency to conduct effective anti-dumping assessments and investigations;
  • the relationship between such an agency and existing appeals processes; and
  • the organisational structure that would be required for such an agency.

Submissions to the Brumby Review closed on 14 September 2012. However, a discussion paper has now been released and comments are invited by 28 September 2012.

What else has been proposed to reform the anti-dumping regime?

Anti-dumping has been topical at the Federal political level during the last few years and subject to various reviews, the two most recent being the Joint Study and the Productivity Commission Report.

The Joint Study focused on a number of administrative issues, and in particular, the appropriate standards for initiating a case and the difficulties facing small to medium sized enterprises in accessing the system.

More recently the Productivity Commission Report made significant recommendations, the majority of which were accepted. These proposed measures were welcomed in Australia. Australian Industry Group chief, Heather Ridout, said they were a “positive step”, while Australian Workers' Union secretary, Paul Howes, said they were a “crucial first step in giving local industry the chance to compete on a level playing field”.

The major recommendation not accepted was the creation of a bounded public interest test which it is thought would have the effect of precluding more claims. The Productivity Commission proposed the test to make sure that competitive conduct was not affected.

The bounded public interest test involves a presumption that measures should be imposed where there is injury caused by dumped or subsidised imports unless it would be contrary to the public interest. This would be measured against five factors, including that imposition of dumping duties would effectively preclude choice and competition, and the price of imported goods, even after the imposition of measures, would remain significantly below Australian industry's costs to make and sell the like product.

An increase in staffing levels of 45% over the following 12 months was one of the measures promised at the time of the Productivity Commission Report. As part of that staff increase, a dedicated support officer was to be appointed to assist Australian small business obtain access to help in anti-dumping investigations.

Current arrangements for assessing and investigating anti-dumping matters

As is to be expected, a diverse range of submissions are being made as part of the review.

We understand that some exporters are critical of the current arrangements and argue that:

  • The time periods for investigations are too quick. Australia has the fastest investigation system in the world. This is not considered necessary and creates imbalances and errors. The problem of imbalance is amplified in the present economic environment.
  • The test of "other factors" (ie causes of injury to an Australian industry not occasioned by the alleged dumping) are not adequately considered, and materiality thresholds are too low.

Is a new anti-dumping agency really necessary?

While Mr Clare states that the Brumby Review is the next step in the Gillard Government's reform of Australia's anti-dumping system, and this attention and concern are welcome, the need for a stand-alone agency after such an investment in the Australian Customs and Border Protection Service is slightly unclear.

Customs is currently a one-stop shop handling both dumping and injury. This would appear to be more cost-effective and timely than having two separate agencies.

In addition, any new agency would need to address some of the problems identified by the Joint Study, in particular access, but the Brumby Review is not being asked explicitly to consider these.

Conclusion

Australian industry is entitled to an anti-dumping system which is robust enough to provide industry with protection against import competition where it's due.

Whether the Government chooses to retain the status quo or create a new agency, all stakeholders would agree that they need decisions made after a sound decision-making process. For our part we support a process which:

  • protects confidential information within applicable legal limits;
  • is transparent;
  • ensures that any decision is supported by a clear logical argument which is referenced to facts which support the conclusions made; and
  • reflects the provisions of the Customs Act, Australian case law and is consistent with WTO jurisprudence.