A Victorian manufacturer of wind towers has blamed dumped Chinese steel for its failure to win a contract to produce a $360 million wind farm in western Victoria. The manufacturer has called on the Federal Government to mandate the use of Australian produced steel.
Under WTO rules, Australia has the right to impose dumping duties on certain imports where it is found that there is dumping and that dumping is causing material injury to an Australian industry. Dumping is generally said to occur where a product is exported for a price lower than its domestic sale price.
Many Chinese steel and aluminium products are subject to high dumping duties (sometimes over 100%). However, these products are not exported to Australia at a price lower than their sale price in China. These dumping duties are imposed because the Australia has formed the view that the Chinese Government interferes in the Chinese domestic steel and aluminium markets. Once a finding of market interference is made, dumping margins are not based on actual Chinese sale prices, but rather a comparison between export prices and a benchmark/constructed domestic sale price.
The difficulty with Australian manufactures demanding that the Government dictate the use of Australian steel by private companies is that it is the same type of behaviour that resulted in dumping duties in the first place. The Chinese dumping duties are not imposed because Chinese steel is being sold cheaper to Australian customers than to Chinese customers. Dumping duties are being imposed as a result of the interference of the Chinese Government in the market for Chinese steel.
Dumping duties are a protectionist tariff imposed under a system which the Productivity Commission has said is negative for the Australian economy. There is currently no public interest test. For instances, when imposing dumping duties the Australian Anti-Dumping Commission (ADC) cannot consider the benefit of cheaper wind farms for all Australians against the economic impact on Australian steel and wind farm producers.
The ADC can also not take into account the possibility that Australia's heavy history of imposing dumping duties on Chinese products has resulted in China imposing dumping duties on Australian barley and wine. Both of these dumping duties had at their heart the allegation that the Australian Government had interfered in the domestic barely and wine markets.
It can't be the case that it is OK for Chinese Government interference to be the justification for dumping duties on Chinese steel and at the same time the Australian Government is expected to mandate the use of Australian steel. Such double standards will no doubt weaken the case for dumping duties on Chinese steel and at the same time, place Australian exports of steel at risk of attracting dumping duties.
If Australia wants to impose dumping duties to promote free trade, than it needs to resist calls from its own manufacturers to interfere in the domestic market for Australian produced products.
Please contact Russell Wiese at Customs and Global Trade Law (rwiese@cgtlaw.com.au) to discuss any issues regarding dumping investigations by the ADC or dumping compliance audits by the Australian Border Force.