In the week leading to the Federal election, the Minister for Industry Science and Technology (Minister) released her decisions as to the imposition of interim dumping and countervailing duties on steel pallet racking and PVC covered electrical cabling.
Both followed lengthy investigations by the Anti-Dumping Commission (ADC) including several extensions of time for the ADC to undertake the investigations which affected significant numbers of imports.
Ultimately, the Minister generally affirmed the findings of the ADC in the Statement of Essential Facts (SEF) for both investigations which had formed the basis of Final Reports to the Minister following which the Minister made her decisions.
Details of the decision of the Minister in relation to steel pallet racking can be found here with the revised Dumping Commodities Register for the goods, identifying suppliers and rates that can be found here.
Details of the decision of the Minister in relation to PVC covered electrical cabling can be found here with the revised Dumping Commodities Register for the goods, identifying suppliers and rates, found here.
I do not propose to go through the details of the investigations at this stage, nor express my views of the findings and the measures imposed as there are still options for external review and I have represented a number of parties adversely affected by the decisions. However, there are a number of immediate issues worthy of attention
- The decisions had full force and effect from the dates that they were made, even having application to goods ‘on the water’ on their way to Australia. Subject to any review, those measures apply to all imports from the dates of the decisions
- Prior to the decisions, ‘securities’ had applied to imports of the goods the subject of the investigations extending for a period of four months. Effectively these were undertakings (promises) to pay the dumping and countervailing duties at the rates determined by the ADC at earlier stages of the investigations, generally at the time of the issue of the Preliminary Affirmative Decisions (PAD). Those rates changed during the course of the investigations even until the issue of the decisions. From the dates of the decisions, the Australian Border Force (ABF) will move to enforce those securities requiring payment of the duties payable on past imports. That process takes some time but importers should expect demands for duty from the ABF together with action if payment is not made.
- The duties as determined by the Minister are now payable on the goods, the subject of the investigations. However, as is often the case the precise nature of those goods subject to the measures is not always clear as evidenced by the current debates on what goods are subject to measures applied to ’aluminium extrusions‘, especially in the context of kits imported to make up solar panel kits to be placed on the roofs of residential and other properties. We are involved in some of those debates which are moving towards litigation. In the case of steel pallet racking there was significant disagreement during the investigation as to what items comprised the steel pallet racking. To this end, the Minister also created a new ’Exemption Instrument‘ identifying which parts are actually the subject of the measures. However a number of parties have concerns that the terms of the Exemption are, themselves ambiguous creating issues in application of the measures. Unfortunately we still do not have a process to seek an ‘advice’ from the ABF or the ADC to clarify whether measures apply to certain goods. Hopefully the process for this recommended by industry and its agencies in October 2017 will now be accepted.
- Those involved in the importing of the goods will need to exercise care in correctly determining which goods are subject to the measures and the payment of the duties. The ABF has a number of options to take if it believes that the duties are not being paid properly including holding goods at the border pending correct declarations of the goods, the issue of Infringement Notices, the issue of penalties or, instituting prosecutions of individuals or companies by the Department of Public Prosecutions. Those actions could include actions placing offenders in jail. Before the recent elections, both political parties promised ’tough action’ to ensure proper duties are paid as well as punishing those trying to avoid those duties. This approach will be seen in actions by the ABF to include many compliance assessments on imports of the goods to assess compliance. Given that suppliers and importers have been identified during the investigations, I would expect early focus by the ABF on whether duties are being properly paid.
- Freight forwarders and licensed customs brokers (in particular) will also need to take extreme care in determining that the correct declarations are made for the goods being imported and duty paid.
- There are a number of remedies available to seek review of the measures. That could include applications for review to the Federal Court or to the Anti-Dumping Review Panel, leading to different types of review and different outcomes. Those importing from suppliers subject to ’all other exporter’ or other general rates of duty could seek a ’final determination of duties‘ specific to a supplier and its Australian importer based on their own financial arrangements which could lead to a much lesser level of duties. In addition there is the option of seeking a review of the measures altogether after a period. Both cases are far from easy options requiring specific legal and accounting advice to determine the merits of the processes. For example, we are involved in Federal Court proceedings regarding final determination of duty.
- The imposition of confirmed duties will often lead to deliberate attempts to ’circumvent‘ the measures by means such as shipping them through third countries, changing packaging to suggest that they are goods of those countries including the provision of false ’origin‘ documentation, all aimed at avoiding the measures. That could lead to prosecution by the ABF. It could also lead to the initiation of ’anti- circumvention‘ investigations by the ADC leading to the imposition of additional duties on other suppliers not subject to the original investigations. A recent example arose in relation to imports of aluminium extrusions into Australia and similar inquiries took place in the US as to imports there undertaken to avoid US duties. I have written on these investigations and provided advice to clients on such investigations. Freight forwarders and licensed customs brokers should be alert to sudden changes to the origin and supplier of goods which takes them (magically) outside the measures.
- Both investigations ultimately determined that the consequences of the dumping and countervailing activities were causing material injury supporting the imposition of measures. However the consequences of the measures do not solely apply to the Australian industry as they clearly have an impact on the suppliers (overseas) and the importers and others in their supply chain (in Australia) including purchasers, distributors and end-users. Those parties are all affected by the imposition of the duties which increase their costs. That too, can cause injury which may not necessarily be the subject of assessment. In some jurisdictions, that requires an assessment of the ’national interest‘ of the imposition of measures-whether more damage is done to the nation and its economy from the imposition of measures than would be the case if measures are not imposed. Such a proposed test was recommended by the Productivity Commission and other parties but successive governments have resisted the introduction of the test, claiming that ’downstream effects’ are taken into account even if their consideration is not obvious in the reports and recommendations through the investigation. However there has been some immediate evidence of the consequence of the measures with at least one importer deciding to close its operations in Australia including making 30 employees redundant. Other importers are worried about the value of their significant investments in overseas supply countries which are now adversely affected. Still other importers are shifting their overseas operations and suppliers to third countries not subject to the measures. I remain of the view (expressed in many venues) that those further effects of measures should be comprehensively assessed and considered before decisions are made on the imposition of measures by the Minister. The position of importers, their staff, customers and others in the supply chain should be equally and carefully considered. A narrow view on the effect of the measures can overlook wider interests which are equally meritorious.
- There are other investigations where Ministerial decisions have been delayed beyond the normal 30 day period – when movement is made on those there will also be similar consequences requiring careful attention.
The imposition of dumping and countervailing duties and the associated “trade remedies” regime is a complex area involving law, economics and politics (it is fair to say that some overseas nations are far from happy with our regime). It also has an impact on all parties in the supply chain not merely to those supplying and purchasing the affected goods. We have been involved in many such matters for a number of years and we would be pleased to assist those affected in all parts of the supply chain.
As always, if pain persists, do not hesitate to consult your friendly neighbourhood trade lawyers!