DUMPING INVESTIGATIONS AND THE ROLE OF THE IMPORTER
The imposition of dumping duties can effectively end supply chains. Often the importer can feel helpless, as much of the investigation focuses on the foreign exporter. However, there are many important steps that the importer can take to reduce the likelihood of dumping duties being imposed.
Make sure the exporter is aware of the investigation
The most important initial task of an importer is to make sure your supplier is aware of the investigation and the importance of being involved. You cannot trust the Anti-Dumping Commission (ADC) to identify and inform your suppliers. Too often we only see suppliers becoming involved once the ADC has set a high dumping duty rate. By this stage it is too late for the supplier to obtain their own rate.
Does the supplier understand Australian investigations
Of course, it is not enough to merely be aware of the investigation, the exporters needs to understand what is required under the Australian system. Importantly, it is not simply a question of whether or not the exporter is selling goods at a loss. Often the key issue is whether the ADC will take into account the supplier’s actual domestic sale prices or whether it will use a constructed value. Even if it uses actual domestic sale prices, the ADC may not refer to all domestic sales.
To have the best chance of avoiding duties or obtaining a low rate, the exporter needs to complete an exporter questionnaire and will most likely need assistance from specialist advisors. If an exporter attempts to navigate the Australian system on their own, the likely outcome is a very high dumping duty rate. A supplier may not be aware of this unless you inform them.
Before dumping duties can be imposed, it must be shown that there was (1) dumping, (2) material injury to the Australian industry, and (3) the material injury was caused by the dumping. The last point relates to causation and is an area where importers are better placed to comment than exporters.
You will know the industry and why the Australian manufacturer is suffering the claimed injury. It may be due to product difference, decreasing demand, bad business decisions, currency movement, increases in production costs, availability of alternative products or cheap imports from countries not the subject of the investigation.
The ADC will not seek out these alternative causes of loss and the local manufacturer is unlikely to volunteer them. CGT’s lawyer’s have been involved in Investigations where dumping was found, but the ADC still proposed to terminate the investigation as it was convinced that the dumping did not cause the alleged injury.
In some cases, the importer can greatly assist their supplier by completing an importer questionnaire. The importer questionnaire can be especially important for related party importers. The ADC will use this information to verify that the Australian sales are profitable, and pricing is arm’s length. If the ADC cannot be satisfied of this, it may not base the export price on the actual sales price, but will derive it from the Australian domestic sale price. This could result in a lower export price and increase the dumping margin.
Keeping the ADC accountable
There are many elements of a dumping investigation that involve choices being made by the ADC. If the only Australian submissions received by the ADC are from the local industry, it will likely adopt that approach. The relevant topics will be guided by the particular investigation but could include:
what goods are and are not included in the goods under consideration
who should be treated as the exporter
what method for imposing duties should be selected
should the ADC use the exporter’s actual domestic sale price or a constructed value to calculate the normal value
if there is a surrogate/benchmark material price used, which material benchmark price should it be
whether security measures should be imposed
whether the local industry has actually suffered injury
What is less relevant, and will generally be dismissed by the ADC, are arguments regarding the public interest in having free and open trade and preventing local manufacturers developing a monopoly position.
Importers and their customers pay the costs of dumping duty, so it is crucial that their voices are heard.