Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I rise tonight to speak on the Customs Amendment (Anti-dumping Improvements) Bill 2011 and to support the comments of my coalition colleagues. I would also like to note that it is very disappointing that tonight the government has pulled all its speakers and seems not to have one single speaker to speak on this important bill.

The coalition supports in principle these modest changes to Australia's anti-dumping system. However, we have substantial concerns about the lack of public announcement and detail for this bill. Also, there is a lot of misinformation in the community about this bill. It has been publicised as an attempt by the federal government to stop foreign manufacturers dumping cheap imports in Australia. We need to be very clear about this bill: it is not about stopping cheap imports. The definition of 'dumping' is 'the act of charging a lower price for a good in a foreign market than is charged for the same good in the domestic market'. This is often referred to as selling at less than fair value. Under World Trade Organisation agreements, dumping is condemned but not prohibited if it causes or threatens to cause material injury to a domestic industry in the importing country.

These definitions are, unfortunately, both arbitrary and obscure. What is the normal value of a good? How is this calculated? Is it the price last week; is it the price last month or last year; or, with other commodities, is it the price it will be in the future? How do you calculate the price in the domestic market? What is the definition of a domestic market? With China, for instance, is it the price the good is sold for in Hong Kong, is it the price it is sold for in Shenzhen or is it the price it is sold for in Shanghai? Both 'normal value' and 'material injury' are slippery concepts, and little effort is made to define them precisely.

Yet another problem that arises with anti-dumping legislation in determining when goods are dumped by foreign firms is when they do not sell the same product in their domestic market as they do in Australia. Today this happens often. Many products that are exported from overseas to Australia are simply not sold on the domestic market. This makes it very difficult for Customs to determine whether the good is sold at a price that is different to the local market. When this cannot be used, there are two alternatives available to Customs: they can look at the price charged by an exporter in another country or make a calculation based on a combination of the exporter's production costs, other expenses and normal profit margins. The agreement under the WTO rules also specifies how a fair comparison can be made between the export price and what would be the normal price. The problems in calculating anti-dumping legislation are huge. It is simply impossible to know what the price of a good would be if it were theoretically available on the market; thus, any estimated price used by Customs is purely an arbitrary concoction. These are the difficulties that Customs face in implementing these regulations. If we were to have an effective anti-dumping regime, we would need to give Customs adequate resources to investigate claims of dumping, but we have no explanation from the government of how these measures will be funded and we have no explanation of where these resources will come from. Unfortunately, this is another example of a policy that has simply not been thought through.

We must remember that a strict anti-dumping regime, although very important, is not a complete panacea for the difficulties facing our manufacturing industry. Recent examples from the US show this to be true. One example is what happened when the US imposed anti-dumping tariffs on Chinese bedroom furniture. In October 2003, the American Furniture Manufacturers Committee for Legal Trade assembled a group of US manufacturers of wooden bedroom furniture and six labour unions and filed an anti-dumping petition concerning imports of wooden bedroom furniture from China. In December 2004, American customs officials determined that the US bedroom furniture industry was materially injured by sales of imports below their actual value, and the Department of Commerce issued an anti-dumping order on 4 January 2005. The tariffs on Chinese bedroom furniture ranged from 0.83 per cent to 198 per cent. They were enacted in January 2005 to apply to all bedroom furniture imported from China into the US.

However, these anti-dumping duties did little to protect domestic jobs in the US. They did little to improve the economic health of hardwood producers during the years 2005 to 2009. In fact, despite these anti-dumping measures being implemented, 36 US wooden bedroom furniture plants closed from 2004 to 2009. In 2001, 44 per cent of all wooden bedroom furniture sold in the United States was imported. By 2004, 68 per cent was imported. But, despite these anti-dumping duties being implemented, imports still grew to 78 per cent of all wooden bedroom furniture sold in the United States by 2009.

In reviewing the effects of the anti-dumping tariffs implemented, Commissioner Daniel Pearson stated that the anti-dumping duties had probably created more legal activity than actually benefitted anyone. He said:

In this particular investigation, additional costs and distortions have been added by the use of the administrative review and settlement process, with little evidence that these distortions have yielded any benefits to the industry overall, the U.S. consumer, or the U.S. taxpayer. The industry continued to suffer ongoing losses in capacity and employment after the funds were gathered and distributed.

The anti-dumping duties placed on Chinese manufacturers of wooden bedroom furniture simply did not stem the tide of imports, but the tariffs, along with rising manufacturing costs in China, caused a rapid shift of production to Vietnam. In fact, the anti-dumping tariffs helped ignite Vietnam's recent boom as a wood-products producer. In 2004, Vietnam shipped $190 million worth of wooden bedroom furniture to the US. However, when the anti-dumping duties were introduced for Chinese production in 2005, shipments from Vietnam to the US increased by 143 per cent.

Nearly overnight Vietnam became a major player in wooden bedroom furniture as Chinese companies shifted production to avoid the tariffs, and US distributors changed their sourcing for the same reason. Now even the introduction of anti-dumping tariffs on Vietnamese furniture would simply shift production to other Asian countries. This is already beginning to occur because of rising wages in Vietnam. At the end of the day, even with the imposition of anti-dumping duties, furniture production and the jobs it used to support in the US has not undergone a renaissance. Yet this was the rallying cry used by domestic producers who first brought the case in 2004.

There are valuable lessons to be learnt from this case study. It demonstrates that our industries must continue to work to leverage any competitive advantage that they have against overseas manufacturers. This is why I have great concerns about the campaign being waged by the leaders of the Australian Workers Union with their Don't Dump on Australia campaign. Certainly we need effective legislation to prevent dumping, but the union's website states:

The fate of AWU members rests with the creation and enforcement in Australia of a strong anti-dumping regime.

But the truth is that the fate of AWU members rests with Australian industries remaining internationally competitive. If the Australian Workers Union were truly concerned about the fate of their members, they would be making sure that Australian industries do remain internationally competitive and they would be voicing their opposition to a carbon tax.

We can have the strongest anti-dumping provisions in the world, but if we have a government that introduces policies such as carbon taxing 500, 1,000 or whatever the number of companies is that operate in Australia but does not apply the same tax to companies that operate outside Australia it will simply place Australian businesses at a competitive disadvantage—and this will cost jobs. Yet we have officials of the Australian Workers Union backing the government and not their union members.

More work needs to be done on our anti-dumping legislation. It is important that we have this for the sake of our manufacturers. The coalition is serious about anti-competitive and predatory dumping. That is why we established the anti-dumping task force earlier this year. We pledge that under the next coalition government we will take real action against this predatory practice to ensure the long-term viability of the Australian manufacturing sector.

Sharman Stone (Murray, Liberal Party) Share this | Link to this | Hansard source

This whole business about anti-dumping is nothing to do with trying to substitute tariffs for an anti-dumping regime. It is nothing to do with trying to protect industry in Australia. It is all about trying to give all of our manufacturers—our food suppliers, our growers of fine foods, grains and fibre—a fair go, because, of course, small and large manufacturing businesses are a major creator of jobs in this country. A definition of dumping is where you have a product imported below the comparable price at home or below the costs of production.

As our previous speaker said, and made the point very well, it is often an extraordinarily difficult thing for an Australian manufacturer to prove exactly what the price of the product is at home, especially if there is not a comparable product being offered in, say, China or Greece. Also, how do you demonstrate and research the actual costs of production in a country which has a managed economy—for example, a country like China? A company is expected to have the resources to go out, research and prove that they have had material damage occur and that the cost of production of the product that is being dumped, they allege, is in fact a real below-the-cost-of-production situation.

This legislation being debated today, tries to go a little further in the battle against the problem of dumped product in Australia, but it is a work in progress. As each of the speakers on the coalition side have said, we need to make sure that it is a properly resourced program, and we need to understand that this still does not go far enough in giving us world best practice in terms of an anti-dumping regime which is easily administered, fair, totally transparent, has appropriate time frames and makes sure that there cannot be vexatious activity on the part of someone who simply wants to reduce competition in their market.

In this bill there are four key areas of change. The first is to time limits set for the minister to make a decision after receiving a recommendation, reducing the overall time frame to conclude an investigation. That is good, as long as the company bringing the action has sufficient support and resources to do the detailed work of proving the action. It is intended that the time limit will provide, subject to extenuating circumstances, for the minister to make a decision within 30 days of receiving a recommendation.

The second major change amends the legislation to reflect that the minister may consider any impact on jobs or any impact on investment in the domestic industry producing like goods. This is an important change. In determining whether the Australian industry has suffered material injury, the minister may have regard to any impact on jobs, including new changes to the terms and conditions of employment of the workforce of the relevant manufacturers producing like goods, such as the number of hours worked, the incidence of part-time employment and any impact on investment in the industry producing the like goods.

The third major area of change is updating subsidies provisions. There is an amendment updating and reflecting the full range of actionable subsidies provided by the World Trade Organisation Agreement on Subsidies and Countervailing Measures and the WTO Agreement on Agriculture. These are typically called the WTO agreements. The WTO agreements limit the kinds of subsidies that can be the subject of countervailing measures, and the coalition also supports that change.

The fourth area of amendment is to clarify that the definition of 'interested party' includes industry associations, trade unions and downstream industry members, whether or not they are the importer. It is intended that section 269T of the Customs Act will include industry associations directly concerned with the production or manufacture of like goods in Australia. Unlike the existing inclusion of trade organisations, the industry associations would not need to have a majority of members directly concerned with the production or manufacture of like goods. The section will also include trade unions directly concerned with the production or manufacture of like goods in Australia. Unlike the existing inclusion of trade organisations, the trade unions would not need to have a majority of its members directly concerned with the production or manufacture of like goods.

Finally, this amendment includes the downstream industry members, being manufacturers or producers that use the goods, the subject of the application or like goods as inputs to the production or manufacture of downstream products. This is an important recognition that dumping does not just injure the party whose products are in direct competition with the dumped goods but that damage is also done to like goods in what is always in Australia a highly competitive market.

Lest we think that dumping is not a major problem in Australia, let me remind people that 34 per cent of fruit and 19 per cent of manufactured vegetables consumed in Australia are imported. Australia imports a greater value of processed fruit and vegetables than it exports. We have an enormous volume of imported product. This anti-dumping legislation is not about knocking out competition. It is about making sure that when product comes into Australia it comes in at a fair price and is not priced in a predatory way which is likely to do serious damage or even knock out of existence an Australian product which is priced absolutely according to Australian labour and input costs.

Dumping is of course a serious problem. It is not the only problem confronting us in Australia. One of our problems is this government's contraction of the resources available for Customs and for biosecurity and quarantine services. Where we have been told that with this anti-dumping legislation there will be extra resources for Customs—that there will be 14 new staff—it is very disappointing to find that, no, there will not be 14 additional staff; there will be the redeployment of 14 positions somewhere else in the agency to be put into this anti-dumping area. That is a concern because just today we saw the apple fire blight protocol finally presented as a fait accompli by this government and we see there an incredible diminution of biosecurity activity when it comes to making sure that there is a very limited possibility of fire blight getting into Australia on fresh apples. It is the case that the New Zealand government and New Zealand pome fruit industry will be responsible for monitoring and managing the quarantine requirements that this government has put on them—and they are very limited indeed—in exporting fresh apples from New Zealand to Australia.

In this area of anti-dumping, one of the greatest difficulties our often very small companies have is how to find the time and resources to go into a country—for example, an economy such as China—and prove that the product that is wiping them out domestically is priced in a certain way in that country. Customs will have some additional staff to assist them, apparently, but I have great concern that this is not going to translate into real extra support.

A lot of the manufacturers in my electorate are struggling to survive right now and they tell me that a number of things are making it difficult for them. These include the pressures of the supermarket duopoly, where they are pressured to supply house brands in direct competition with their own branded product, which causes enormous difficulty. Their own branded product has to compete with the premium, middle or cheap end of that home-brand product category. They invariably also mention the problems of bringing about a successful anti-dumping case. My food manufacturers have tried with products as diverse as canned peaches from Greece and tomatoes from Italy. The problems they have had in trying to prove those cases, while all the time experiencing the unfair competition in their market, have often led them to think twice and conclude it is just not worth the effort. This is a serious problem for a country like Australia, particularly at present when the dollar is so attractive when it comes to importing product.

If you take this inadequate anti-dumping legislation and add the amendments in front of us, which will be passed with coalition support, this country still has an inadequate anti-dumping regime. As I said before, we also have the problem of too much unconscionable behaviour and market power exercised by our supermarket duopoly concerning their suppliers in Australia. Next we will have the carbon tax imposts. These will make the costs of production of all of our manufactures, whether in the food or other sectors, higher compared to imports, which will not have the carbon tax imposts even though they will have produced emissions during their manufacture in other countries. Of course, we have the ongoing problem in this country of less flexible workplace regulations brought about by this government, which make it very difficult to manufacture product which has to respond to seasonality.

It is a very difficult time for our manufacturers in Australia. I had hoped that we would have had with this government a world's best practice anti-dumping regime. I had hoped that we would look at the European, American, Canadian or even New Zealand legislation, picked the eyes out of all of that and produced a system that was transparent, was not open to abuse, was quick and timely and came at minimum cost to those who were aggrieved and bringing anti-dumping action. Unfortunately, what we have is a little bit of tweaking of the legislation. There is a promise of extra resourcing, but I am afraid that promise is not likely to really deliver any great support to vexed parties. We still have not addressed the issue of a reversal of the onus of proof. I would very much like to see that investigated. Instead of our companies, without any real hope of achieving a good outcome, somehow having to demonstrate the cost in the home country of a like item or the cost of production, why shouldn't the party importing the product into Australia have to prove the value of the product or the cost of the production of the product under consideration?

We really have not got this right yet. We will have to wait for the coalition to come into government. I just hope that not too many companies are damaged in the meantime, because this is not about protection—it is not about trying to substitute anti-dumping tariffs for subsidies or other tariffs—this is about fair trade and fair practice. It is about trying to produce a level playing field.

Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

As we know, Australia is a nation that relies by majority on exports for its economic wellbeing, but it also needs adequate anti-dumping legislation. As the member for Murray said, the Customs Amendment (Anti-dumping Improvements) Bill 2011 really is a work in progress. There is a lot more to be done.

We have a small domestic economy compared to our ability to produce commodities and goods, so we rely heavily on trade. In 2009, during the global financial crisis, our exports were worth $250 billion—or one-quarter of a trillion dollars. This was 10 per cent down on the previous year but still a formidable figure. Of this, 41 per cent came from the resources sector, especially iron ore and coal, but the parliament would do well to note the contribution made by Western Australia to the nation's resource exports, especially in oil and gas as well as iron ore. According to the Western Australian Department of Mines and Petroleum, WA produced 68 per cent of the country's mineral and energy exports. Given that the same report identifies that Western Australia holds 70 per cent of the nation's resource exploration and 62 per cent of its private new capital investment, the importance of the west to the nation's economy should not be underestimated, but neither should it be only seen as a cash cow for the Labor government. In addition to the resource sector, $27 billion, or 11 per cent, of Australian exports come from the rural sector, especially in wheat and meat.

This bill is one small part of the trade picture in Australia and the ambitions appear to be modest. It is definitely a work in progress, but I do wonder where the members of the Labor government are if they are genuinely committed to anti-dumping legislation. I note that there are a group of 20 Labor backbenchers from manufacturing electorates who are calling for additional assistance for the manufacturing sector. I would ask where they are while we are debating this bill here tonight. Anti-dumping is a very real issue for manufacturing right across the board. Where is the member for Throsby? Where are the members for Newcastle and Deakin? Where is the member for Wakefield and the member for Werriwa? I would have thought this anti-dumping legislation was critical in their electorates. If they are calling for manufacturing assistance, I would have thought speaking on anti-dumping should be very much a part of that.

This bill aims to put a 30-day time limit on the minister making a decision after receiving a report, which is a positive step. It also allows the minister to examine more fully the impact of imports on jobs and on domestic industry. I really think this is an important step to examine the impact on jobs and on domestic industry. It expands the definition of interested parties to a decision on trade dumping to include, amongst others, unions—something that we certainly would expect from the Labor government.

The bill also addresses issues relating to the WTO anti-dumping agreement and agreement on subsidies and countervailing measures. As we know, dumping is defined by Australian Customs as a form of price differentiation where goods are exported to Australia at a price below their normal value, which of course is to the detriment of the locally produced goods. It includes the use of export subsidies paid to the benefit of a foreign exporter of goods into Australia, be those subsidies direct or indirect. That gives a price advantage to the foreign entity causing or threatening material injury to an Australian industry, and we see this repeatedly.

Put simply, anti-dumping measures apply a temporary import duty. It is not about protection; it is about fair process. It is called an interim dumping duty on products that are sold below the cost of production and a countervailing duty for subsidised products in order to eliminate that cost advantage that would give the foreign supplier an unfair advantage and damage local production and manufacturing.

Many countries around the world provide a form of advantage for their industry and that can include, as I have said, subsidies and tariffs. It can include some low input and labour costs and low levels of necessary government compliance and regulation, which does have an impact on cost of production. These, in turn, provide cost and price advantages to their products in mature overseas markets where local producers often are inundated with compliance and cost issues. In this international marketplace, Australia produces, in spite of that, some of the world's best agricultural, food and manufactured products and extremely high quality manufactured goods.

The price disadvantage is unfortunately exacerbated by the Labor government consistently making compliance more onerous and more expensive for Australian businesses. In competing with cheaper foreign products, which are underpinned and underwritten by cheap labour, subsidies or even lower quality control, our producers and manufacturers have to rely on productivity, on efficiency, on quality, on safety and on a perception as well as genuine reputation to that effect. This reputation of quality in Australian products should not be put at risk or underestimated.

It should also be noted by the parliament that the Labor government has a poor record of defending Australia's borders and maintaining our customs, quarantine and biosecurity. Australian farmers and food producers rely on our clean and green image and the capacity to deliver top-quality products to find and maintain markets around the world. Agricultural production in this country drives $155 billion a year in economic production, over 12 per cent of GDP, generating around 1.6 million Australian jobs and $32 billion a year in farm exports.

Around the world Australian produced food is safe, clean and green, and it is essential that we maintain that reputation. A lot of that food comes from my electorate. However, this reputation is put at risk by the neglect of our biosecurity by Labor. The clean, disease-free status of Australian food and produce is paramount. That is why we cannot believe the way that this government is continually undermining border security and biosecurity.

It is incredible that the government would slash $35.8 million from the quarantine and biosecurity budget and $58 million from the Customs budget, leading to 4.7 million less air cargo consignments being inspected each year and 2,150 fewer vessels being boarded on arrival. Unfortunately, that neglect has set a trend that is continuing in the current budget, with another $32.8 million cut from the operational budget of the Department of Agriculture, Forestry and Fisheries, which reduces the capacity of the department to deliver services to Australian agriculture.

The Beale quarantine and biosecurity review, commissioned by Labor, called for hundreds of millions of dollars to be spent on AQIS and quarantine annually to provide proper real protection to our nation's borders. Instead of heeding this report, the government has failed to act, except to basically spend the last 2½ years and the last two budgets running down and stripping assets. This is particularly important in this debate because, without price advantage, Australian producers and manufacturers have to rely on quality, safety, productivity and efficiency to compete effectively in the marketplace, be it domestically or internationally, as reflected in this bill.

We saw only today the announcement by the government following on from the Prime Minister's personal decision to make an announcement in the New Zealand parliament that she would allow the importation of New Zealand apples into Australia. This means that Biosecurity Australia has been forced by the Prime Minister's statement to abandon the need for adequate protocols to prevent the incursion of serious diseases like fire blight with the importation of New Zealand apples. We saw the result of that today. Let us not be in any doubt: these proposals by Biosecurity Australia are an abandonment of the quarantine principles that have made us amongst the cleanest producers of high-quality food in the world.

As we know when we look at the anti-dumping measures in this bill, dumping affects like goods as well as those it affects directly. Consistently we have seen the minister hide behind Doha in dealing with these matters instead of producing the type of legislation that would make a difference. We heard previously from the member for Murray about the amount of fruit that is imported and that there is more fruit imported than exported. There are very real issues when we talk about anti-dumping and anti-dumping measures and how the government should be responding. There has been no greater acknowledgement of the lack of equity in trade than the failure of the government to deliver through any of the Doha talks.

Debate interrupted.