Tony Sheldon (NSW, Australian Labor Party) Share this | Hansard source

I rise today to add my voice in opposition to the Customs Amendment (Product Specific Rule Modernisation) Bill 2019. The bill removes critically important parliamentary oversight of our laws which prevent the dumping of goods in Australia. We hear a lot about companies that deliberately move their profits around globally to avoid paying tax. Well, there are also organisations that move goods around the world under so-called transshipment arrangements to avoid antidumping or countervailing duties on their products. They do this by abusing the rules-of-origin regime, which is part of a robust, rules-abiding international trade system. Payment of these antidumping and countervailing duties based on rules of origin is what protects Australian companies and Australian workers who are producing goods here. These rules also allow us to give preferential treatment to goods coming from specific countries—for example, our Pacific neighbours.

These are important rules for our trading system. We should be strengthening these rules and should not permit them to be watered down or easily avoided. This customs bill, if passed, would actually dilute the oversight and policing of dodgy operators, who often use highly sophisticated schemes to get around these laws. If passed, this bill will undermine Australian jobs and Australian businesses during a global pandemic, a time when we should be building our sovereign capacity and growing our jobs at home. Let's be clear about what we're dealing with here. These schemes include moving goods through one or more third countries to disguise their origin. These operators undermine Australian companies and the working conditions of Australian workers, who are forced to compete with goods that bear unfair and artificially lowered price tags.

Since 2013 Australia has had an anti-circumvention framework designed to prevent this kind of law-breaking. In 2015 it was expanded, and for good reason. I think the Australian people would be genuinely shocked to know what lengths some unscrupulous companies are going to in order to avoid Australian antidumping laws. The law is complex, but it has to be, to catch up with all the tricks companies use. Just some of the schemes that are used by exporting companies bringing goods into Australia are: avoiding duties by importing parts into Australia, which are then passed off as Australian made; not paying duties by assembling parts in a third country and shipping it via a country that has preferential arrangements with Australia; avoiding the higher rate of duty by making an arrangement with another exporter that has more favourable rates in order to bring those goods in; not increasing the price of the goods with the duties payable by law, so as to undercut local competitors; and avoiding paying duties by slightly modifying goods in an attempt to classify them as outside the antidumping rules.

This bill is also an example of a more general trend that we're seeing from the government. I am talking about the volume of laws that did not get adequate scrutiny by parliament. There is no reason that our product-specific rules-of-origin annexures in trade agreements cannot be updated when the international rules change. Our laws may of course need to reflect those changes in order for the law to be fit for purpose for protecting Australian companies and workers from unfair competition from imports. But this bill also allows for new, updated annexures to our trade agreements to be automatically recognised. These changes will be brought into effect without allowing the parliament to scrutinise them and have the option to vote against them. That's because this bill would drastically diminish the current level of parliamentary scrutiny. It will reduce the scrutiny from a disallowable regulation to the mere requirement that the Joint Standing Committee on Treaties hold an inquiry. The JSCOT has government, opposition and crossbench members, of course, but it's dominated by the government, so its inquiries are unlikely to contradict either the minister or the government. Last year JSCOT held an inquiry into the contents of this bill, and Labor produced a minority report laying out our concerns.

In its submission to that inquiry the Australian Border Force suggested that Australia's existing domestic treaty-making process already allows for parliamentary scrutiny by JSCOT. However, we should be clear that this scrutiny does not mean there will be a vote in parliament. In fact, even if the government's own committee members had a serious reservations about a treaty, an inquiry report that challenged the government's view is advisory only and has no legislative power.

This is highly problematic because Australia's negotiations in trade agreements are largely in secret. There is very little opportunity for stakeholders to be part of the process. That means that workers, unions defending the rights of workers, NGOs defending the state of the environment and those speaking up for health, government procurement and use of local content laws of a sovereign nation are already largely shut out of discussions when the terms of these deals are being thrashed out. In fact, stakeholders in Europe and in the US have more access to trade negotiations and the process of decision-making than we do. In the United States, of course, the congress has to vote to pass trade deals.

In my view, we need more, not less, ability for the Australian parliament to weigh in on the deals we sign with other countries. Of course, this bill goes in the opposite direction. So if our government, behind closed doors, develops an annexure to a trade agreement and the changes are deemed to be technical in nature and don't alter the commitments made in the treaty itself then parliament will have zero ability to disallow these new rules. It's important to understand that this inability to disallow new trade deal rules will apply even if these new laws create the risk that Australian jobs and Australian companies will be undermined by the abuse of the rules-of-origin framework.

We know that abuse of the rules of origin is a growing problem. The latest evidence we have from the Australian Border Force is from a report in April 2019, and it does not make for reassuring reading. In the antidumping countervailing part of this compliance report, Australian Border Force revealed that in the year to March 2019 more than 34 per cent of shipments they inspected that were subject to antidumping duties were found not to be compliant. These goods were misclassified, but the report does not reveal what the reasons for misclassification were. They could have been using dumping duty exemptions illegally, or there could have been a misdeclaration of country of origin or illegal transhipment.

Meanwhile, Border Force busted a large shipment of aluminium from China in 2019. The importers had attempted to tranship the aluminium to Australia via third countries such as Indonesia and Singapore to avoid the significant duties that would have applied. In addition, Capital Aluminium ran an anticircumvention inquiry into extrusions transhipped from China to avoid duties. The Anti-Dumping Commissioner made findings in relation to aluminium extrusion exported by Zinaco Industrial and Hardware Industries Ltd from Thailand and Yun Sin Enterprise Co. Ltd from Taiwan, and, by following the exporters from Thailand, Bay Enterprise Co. Ltd, Siam Industrial Supplies Ltd and V-Power Biotech Limited Partnership.

Last year, Australia's Anti-Dumping Commissioner also found that aluminium extrusion which originated in China and which was manufactured by Foshan ZP Aluminium Co. of China were exporters to Australia, except that it was deliberately shipped via Malaysia and Thailand. The commission concluded that this constituted circumvention activities.

Also last year, in a Senate estimates hearing, My colleague Senator Carr questioned the Anti-Dumping Commissioner, Dale Seymour, on efforts to try to catch companies avoiding antidumping duties. Mr Seymour said:

The problem with anti-circumvention is that once the tax has been imposed it's almost guaranteed that businesses will try and limit their exposure to those obligations. You'd like to think they'd do that legally and, obviously, many of them might think they're doing it legally but they're actually in breach of Australian customs law.

He went on to say:

What's really interesting is the emergence of what I call 'intermediaries' who are neither technically the importer nor the exporter but seek to be a mid-point trader who speculates—takes a certain level of risk in buying and selling in the international market, clips the ticket, if you like, and takes the cut on the way through—and who openly advertise circumvention services on the internet—

not the dark web, the internet—

and specifically say that they will ensure that the Australian duties on this product will not need to be paid through their actions to circumvent and tranship those products.

When asked if this was legal, Mr Seymour said:

No, I don't believe it's legal. It's contrary to an obligation that an importer would have to pay a duty on a product that is subject to a measure. So, in that sense, it's in contravention of the Customs Act. We have the ability now—the legislation was amended a couple of years ago—to run our own investigations on those transhipped products. We did so with aluminium, and the minister agreed with my recommendation, and we altered the notice and we named a number of foreign actors in the space who were clearly circumventing. The ones that we weren't able to capture, however, were these intermediaries who, under the current law, I'm unable to name on the notice. I think, going forward, I would be talking to my colleagues on the policy side about how we might be able to provide some disincentives to stop that practice occurring, but it is extremely challenging and difficult.

What's quite clear with this legislation is that we have to have a robust system for oversighting circumvention and the actions by various corporations around the world, such as those companies that I have named within this speech. They are just a few of the examples of the challenges that we have.

What is also critical is that there isn't a simple decision made by departmental advice from the minister and the government on matters of grave economic importance to this country. It's critical these matters aren't simply handed over to a well-meaning bureaucrat who can't be oversighted appropriately and properly by parliament and by an area of trade, an area of responsibility that's important for this particular parliament and this Senate.

It's incredibly important that we have a robust system that makes sure that those avoiding duties by importing parts into Australia and then assembling them here and passing them off as Australian made are held to account. We have to make sure that we don't just simply leave someone to come up with a view about what should be changed, or set a ministerial precedent that can't be overturned, even under necessity and with the will of parliament. Not paying duties by assembling parts in a third country is a critical issue that we need to concentrate our efforts on. We need to be aware of those who are avoiding the higher rate of duty by making an arrangement with another exporter with more favourable rates to bring those goods in, the issues that come up with not increasing the price of goods commensurate with duties payable by law so as to undercut local competitors, and, of course, those who are avoiding paying duties by slightly modifying goods in an attempt to classify them as outside the antidumping rules. Mr Seymour went through a long list of the challenges that are within his purview. He's done an exceptionally sterling job in taking up those challenges.

So there you have it: what we need in Australia, according to our own expert officials, is a more robust antidumping regime, not the weakened one the government is proposing. (Time expired)