Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

The committee is considering the Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2011 and three related bills. The question is that the bills stand as printed.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I just want to continue with a line of questioning on a number of preliminary matters. I do have a number of amendments in relation to this bill, and I note that my colleague Senator Madigan from the DLP, who is in the chamber, has a number of questions to ask in respect of this bill. I also note that time is short—we only have about 23 minutes or so before other matters are considered by the Senate.

I can say, and I would like to put on the record, that I am grateful for the discussion that I have had with one of the government's advisers in respect of this bill. I want the committee stage to go as smoothly as possible and I want to be able to assist the parliamentary secretary, Senator Feeney, who is representing the government in respect of this bill at this stage. What I have undertaken to do as a result of the discussion I have had with the government is that I will put a number of technical—I would like to think they are forensic—questions in relation to dumping so that we can have a fruitful and expeditious committee stage when this matter is brought back on. I suspect that Senator Feeney is an expert on dumping; I probably do not need that extra briefing from the minister's office! But notwithstanding that, and out of an abundance of caution, I think that it is important that I engage with the minister in relation to this, because I genuinely want a good outcome.

There are 950,000 Australians left in manufacturing jobs in this country. We have already heard from the government's own manufacturing task force that over 100,000 jobs have been lost in recent times and we have had senior union officials who have made the point that 200,000 jobs have been lost in manufacturing since the year 2008—since the GFC. So these are important issues. It is a bedrock of our economy, and dumping of products below cost from markets into this market can cause enormous damage.

There is one matter out of left field that I do want to raise, and it is something that the government may want to take notice of, but it is something that in fact raises an issue in respect of what the Howard government did and implications that it has for an antidumping regime. I am not here to have a go at anyone. I see that Senator Sinodinos is there in the hot seat for the opposition, and I will very much welcome his contribution in respect of this.

My question to the government and, indeed, to the opposition relates to the treatment of China. I will read from a minority report from the Senate inquiry into my 2011 bill in relation to dumping duties. Government senators Cameron and Pratt made this comment at 1.42 under the heading of 'Union and industry concerns':

The former Coalition government recognised China as a market economy as part of its accession to the WTO in 2004. A condition of China’s membership to the WTO was that member countries would not have to recognise China as a market economy for 15 years from the date of China's accession. As an ‘economy in transition’, China’s ability to defend dumping claims is weakened as the country accusing China of dumping has immediate recourse to surrogate (third country) pricing information to judge if goods have been dumped.

And the report of the economics committee into the billalso made this point at 3.60:

The treatment of China (i.e. whether it is given a market economy status (MES), or is classified as an economy in transition (EIT), or a non-market economy (NME)), could also result in differences between the level of measures imposed, and the success of anti-dumping/countervailing applications between the countries.

So in practical terms, my question to the government—and, again, I am happy for this to be taken further on notice and, again, for the coalition to take this on notice because it is an important issue for the alternative government to consider—is: to what extent did the decision of the former Howard government back in 2004 in recognising China as a market economy in respect of the WTO make a difference in respect of dumping claims, firstly? Secondly, to what extent would an economy such as the United States and other countries who have not recognised China as a market economy be able to prosecute dumping claims in relation to a dumping or countervailing duty matter? In other words, are we in a worse position as a result of that decision made in 2004 in respect of dealing with dumping claims on behalf of Australian manufacturers or not?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

Senator Xenophon, I guess that, as you have set out, this is a decision that was made in 2004, and the position of the government, that decision having been made, is that it now falls upon us and indeed successive governments to manage that circumstance as best we can. In terms of its effect and how it might impinge on the conduct of Australian companies seeking redress, I am advised that we are keen to take up your invitation to take that on notice and to provide you with a briefing in due course.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I appreciate the minister's response and I am looking forward to the briefing, but these are matters that ought to be put on the public record. From my understanding of the minority report of Senators Pratt and Cameron of the inquiry into the antidumping bill that I introduced last year, it seems to me that that decision made by the former government to recognise China as a market economy does in fact affect the ability of Australia to robustly prosecute a claim of dumping against China or, indeed, to raise issues of countervailing duties as a direct result of it being recognised as a market economy.

Most of the countries around the world—and perhaps this could be taken on notice as well—did not go to that step. They recognised the Chinese economy as an economy in transition, which has a different implication in terms of the way that dumping claims can be dealt with. It would be good to get on the record the difference between dealing with an economy in transition in a dumping claim and dealing with a market economy.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

Senator Xenophon, I am advised that this is a question that is very often raised with government by industry and as a consequence is, I guess, an issue or a set of issues with which the minister and government are familiar. We are happy to provide you with information detailing how Australia and other countries are managing this and how the different status of China in different jurisdictions is perceived by Australia to have an effect.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I take it from the parliamentary secretary's response that the fact that it is raised by industry indicates that there is a concern that the recognition by the Howard government of China as a market economy is an issue that has posed greater difficulties or greater obstacles in respect of dumping cases. If that could be asked—

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

Yes is the short answer. When the decision was made to recognise China as a market economy in 2004 it was a controversial decision and its implications were, and have remained, controversial.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

What position did the government while in opposition have on that decision?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I will need to take that on notice. It is pre-me. I am sorry, I do not know.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

And I thought that Senator Feeney with his long history in the Australian Labor Party would know all, being almost omnipresent when it comes to key and strategic decisions. Very well, that is a matter that needs to be looked at. The other matter that I would like to raise is in respect of the issue of noncooperation. What is the government's position when an importer does not cooperate in an investigation? In other words, what are the thresholds to say that there is a mature level of noncooperation in relation to that?

Also, what happens when an importer starts playing the system? I will give you an example that was put to me by the Australian Steel Institute. Concerns were raised by the Australian institute regarding the capability of Australia's antidumping and countervailing system to deal with ongoing issues. For example, duties were placed on certain types of imported steel products including pipes.

Once the duties were applied, the manufacturer simply added a cheap bracket to the pipe—a $10 bracket—changing the product category and therefore avoiding the duties.

The Australian Steel Institute also provided examples of manufacturers changing factory locations in other countries and swapping between two factories in different countries to avoid duties. Their concern, and I think the general concern, is that Australia's system is not working efficiently in relation to the constant monitoring of products and that Australian manufacturers have to make additional applications with additional cost and additional damage to their industry, given the time it takes to process a new application, to address any avoidance on the part of exporters. The example was given about pipes with brackets on them: whack on a $10 bracket from a Bunnings or a Mitre 10 store or wherever and suddenly it is in a whole new product category and they can avoid duties. Is the government familiar with that particular instance and would that be seen as an example of noncooperation in the context of the dumping regime?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I am advised that included in this set of bills is an anticircumvention mechanism and it is the aspiration of government that the mechanism will serve to alleviate the noncooperation of importers and importers 'playing the system', to use your language. Again, the government is willing and able to provide you with a briefing on those measures and how they are perceived to operate.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I understand my colleague Senator Madigan has a number of questions, but this is a key aspect of the bill. If you have anticircumvention measures, I will be asking the government about these on notice, because this is not about ambushing the government at all. It is about trying to get answers on the record so that those industries that are suffering because of dumped goods and those workers whose jobs are at risk from dumped goods can at least get an idea of how the system will work with these measures. So I am grateful for the government's indication about that.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I have some material here that pertains to anticircumvention. It is long and I am happy to share it with the Senate, but I appreciate time is precious and I do not want to spend long moments trailing over issues that are of no assistance to you. Let me as a minimum at least say this. In developing the anticircumvention inquiry system, Customs and Border Protection consulted extensively with all members of the government's recently established International Trade Remedies Forum and it also considered models from other jurisdictions as well as the ongoing debates occurring within and between WTO members. A fundamental element of this framework is the exclusion of activities which are generally considered to be compliance issues or, in other words, breaches of customs legislation. There are already existing powers to deal with these breaches.

Anticircumvention inquiries focus on activities which are beyond the traditional reach of our compliance activities and I think go to your example, although we will of course have to take the specifics of your example on notice. But, of those activities, there are four types of circumvention meeting the following important criteria: they are relevant to Australia and Australian industry; they are relevant internationally—that is, they have also been targeted by other jurisdictions' anticircumvention models; and there is a high degree of confidence that they could be identified, investigated and addressed within the allocated 155 days. Additionally, the bill introduces a power to make regulations which will proscribe additional circumvention activities, should that be warranted.

John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

Senator Feeney, are you able to give an example where either the current or a former government has ever gone in to bat for an Australian manufacturer in the WTO on a dumping matter?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I will have to take that on notice, but I tentatively would suggest that the matters you are talking about occur between governments rather than between a government and private-sector interests.

John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

Have you got any examples of when the government has ever gone in to bat for an Australian entity in the WTO?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I have to take this on notice. The reason is not simply my own lack of familiarity with the subject matter but also the fact that these matters are handled by the Department of Foreign Affairs and Trade, through Trade, rather than through here. That is a piece of information we will have to secure from DFAT.

John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

Assuming that the government or previous governments have ever gone in to bat for an Australian manufacturer or primary producer or food processor, have any of the amendments to legislation that the government is proposing come about as a result of any of these cases?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I am not in a position to provide you with an answer to that question. What I can say is that a large portion of the bill, and certainly the reason for the government's intent in promoting this bill and commending it to the Senate, is the fruit of extensive consultation with industry. Obviously in that consultation process industry has been able to raise with the relevant officials and department the various challenges they confront in dealing with the issues you have described. As for detail beyond that, I am afraid I will have to take that on notice.

John Madigan (Victoria, Democratic Labor Party) Share this | Link to this | Hansard source

Would it be possible, then—if the current government or former governments have had any success at any time—to take that on notice and get examples of when they have been successful, if they ever have been?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

I am happy to take that on notice.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

Going back to the issue of anticircumvention inquiries, I note that this bill does introduce a new division in part XVB of the Customs Act, division 5A, anticircumvention inquiries. If this division allows Australian industry or the minister to initiate an anticircumvention inquiry, what would the criteria be for such an inquiry to be initiated, and how in practical terms would it work? And how does this tie in with the whole issue of part 6.1.0 of the WTO article, which I will refer to briefly—that is, the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade—which is the section that the government has relied on, I think, to say that my proposal for a reverse onus of proof would somehow circumvent the WTO? There are two matters tied up in that, but I would be grateful if, firstly, examples could be given of the way that anticircumvention inquiries would be initiated, what the thresholds would be, what the level of interface with industry would be—particularly small to medium businesses that may have concerns about these sorts of matters?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

A fundamental element of the anticircumvention framework is the exclusion of activities which are generally considered to be compliance issues or, in other words, breaches of Customs legislation. There are existing powers to deal with these breaches. Anticircumvention inquiries focus on activities which are beyond the traditional reach of our compliance activities. Of those remaining activities, these four types of circumvention meet the following important criteria: they are relevant to Australia and Australian industry; they are relevant internationally—that is, they have also been targeted by other jurisdictions' anticircumvention models; and there is a high level of confidence that they can be identified, investigated and addressed within the allocated 155 days. Additionally, the bill introduces a power to make regulations which prescribe additional circumvention activities if warranted.

Anticircumvention inquiries will not solve every problem. However, a mechanism to inquire into circumvention activities benefits Australian industry in a number of ways: it will deter businesses from engaging in practices which are aimed at avoiding paying duties; it ensures that foreign imports have the appropriate amount of antidumping duty imposed on them, providing a level playing field for Australian businesses; and it increases confidence in Australia's trade landscape by addressing what are often perceived to be unfair business practices.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I am grateful to the parliamentary secretary for his answer. In the remaining one minute and 27 seconds, could the minister give an example. We know what it will do, but in what circumstances would it be triggered? What is a practical example of an anticircumvention inquiry? What sort of example would there be that could be readily given in the next one minute and five seconds as to how it would work? Again I am happy for the parliamentary secretary to take this on notice. I am looking forward to engaging with Minister Clare next week on this issue.

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

While the adviser is delighted to take up the opportunity to speak with you, of course, let me make plain that Minister Clare is also willing and able to advise you on these matters and we will talk to you further about that. In terms of your request for a case study or a specific example, I do not have one of those available now, so again I will take that on notice. In considering the anticircumvention inquiry, I would conclude on this note and say that, in relation to an applicant— (Time expired)

Progress reported.