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Dumping Duty April 2018
Dumping Duty
April 2018
Topics
• Why is this important
• Dumping Duty Basics
• Compliance issues
• Helping clients
• Investigations
• Compliance activity
Why is this important
• Dumping investigations are politically popular
• Trump has made it topical
• Dumping duty can end supply chains
• Dumping duty compliance is a priority of the ABF
• The risks are high for brokers
• You can make a big difference
Dumping – Quick facts
• Dumping is not illegal
• Exporters do not have to be selling at a loss to be found to have
dumped products
• Dumping duty is not technically based on tariff classification
• You cannot obtain rulings regarding the application of dumping
duty
• FTAs do no reduce dumping duty
• It is a key Customs compliance priority
When is dumping duty imposed
• Dumping occurs when goods exported to Australia are priced
lower than their "normal value" which is usually the comparable
price in the ordinary course of trade in the exporter's domestic
market.
• "Normal value" may also be determined using either comparable
prices to a third country or the cost of production plus selling,
general and administrative expenses and profit.
• Anti-dumping duties may be imposed when dumping causes, or
threatens to cause, material injury to an Australian industry.
What goods are subject to dumping
• In most cases, dumping duty is imposed after an application is
made by the Australian industry
• A lengthy investigation is carried out that may result on dumping
duties on goods from a particular country
• Dumping duty will only be on products where there is an
Australian industry
Examples: steel and aluminium products (bulk of measures),
tomatoes, power transformers, pineapple, deep drawn stainless
steel sinks, cooling towers, wind towers, currents, clear float glass,
ammonium nitrate, A4 copy paper, 2.4 – Dichlorophenoxy acid
Constructed value
Exported good
Export Price $200
Profit (10%) $20
Steel $150
Overheads $15
Selling costs $15
Based on profits on domestic
sales
Constructed normal value
Constructed Price $264.50
Profit (15%) $34.50
Steel $200
Overheads $15
Selling costs $15
Based on benchmark steel price
Actual domestic sale price: $207
Constructed value - outcome
Normal value ($264.50) is 32.25% higher than the export price
($200)
Dumping margin: 32.25%
If actual domestic sale price is used ($207) the dumping margin is
3.5%
To avoid dumping you need one or more of the following:
• very low profits on Chinese sales
• high profits on Australian sales
• material costs that match global benchmarks
Dumping can occur even when Chinese prices are lower than export
prices
Get involved in the investigation
• The exporter needs to get involved
• The financial information determines the dumping margin
• Many financial factors can be influenced:
• allocation of shared costs
• use of benchmark costs
• determination of profit
• adjustments of credit, terms of sale, port costs
• The “all other exporters” rate is a penalty rate:
• Highest normal value compared to the lowest normal price
• It is not an average margin
• Basic assistance – Explain the process, help translate, facilitate
meetings with the ADC
Involvement of the importer
• Has the local manufacturer incurred a loss – hold he ADC to
account
• Cause of the loss:
• How big a factor is price
• Other factors:
• general economic conditions
• exchange rate
• domestic products
• imports from other countries
• decisions by the local manufacturer
• Test the claims of the local manufacturer
Investigation
• Get involved early – timeframes are strict
• Exporter questionnaires are harder than anyone expects
• Early strong involvement may prevent high provisional measures
(can be applied after day 60)
Goods compliance update – Jan 2018
Goods Compliance Update - Examples
• Misclassification due to incorrect identification
• Identification of hollow structural steel as ‘line-pipe’
• Identification of lengths of aluminium extrusions as
’handles for cupboards’
• Application of exemption for clear float glass for
suppliers other than the exempt supplier plants
named in the Dumping Notice
Hollow structural steel
• Seeing multiple claims where the ABF claims the gods
are subject to dumping duty and importer claims the
goods are parts of structures
• Key issue – is the item identified as a pipe or a part of a
structure
• Focus is not on the importer’s intended use of the
goods
• Try to identify specifications or features that prevent the
product being classified as a pipe
• The ABF will be swayed by classification
Aluminum extrusions
• Issue is again with identification
Aluminum extrusions
• Objects that have a separate identity:
• handles – have to be cut to size, shaped and with holes
• can have a separate identity and still be an aluminum
extrusion
• Kits
• If part of a kit, will not be subject to duty
• Easy when the kit is contained in the one package
• Unassembled goods is the challenge
• How can you prove it is not merely inventory parts
• advertising, ordering, exact number of parts, how
goods will be used
Clear float glass – who is the exporter
• Particular exporters can obtain their own rate
• To do so the exporter must go through an investigation
• A low exporter rate is a big competitive advantage –
continuing supply can be a problem
• In China it always seems that the producer is never the
producer
• The ABF is looking at ports of loading and comparing to the
factory location of the exempt exporter
Clear float glass cont.
• Issues occur when the exporter is not the producer
• ABF position is that almost always the manufacturer will be the
exporter
• Being the contractual supplier does not make you the exporter
• Exporter is considered to be the company that delivers the goods
to the port for export
• Exporter will also extend to a supplier that manufacturers goods
intended for export
• Related companies – no relevance – only the one company
obtains the preferential rate
• Case law is unclear - past cases consider supplier and
manufacturer in different countries
Dealing with demands for dumping duty
• Review:
• Internal tariff review is one solutions
• Most claims follow industry wide investigations – so ABF position
may be reasonably established
• AAT – cannot pay duty under protest and have AAT review
• Other AAT options:
• pay the duty and then seek a refund application – Rejected refund
applications can be reviewed
• Pay customs tariff duty under protest and seek a review
• FTA rates can change according to classification
• Federal Court review – will have to show a legal error
• Wait for demand to be enforce and dispute the demand
Dumping duty assessment
• Dumping duty paid at the time of import is interim dumping duty
• In some circumstances a dumping duty assessment can take
place
• This assessment reviews the actual dumping margin for the
particular exporter – will be better than the “all other exporter”
margin
• Can not be worse – you pay the lower of the amount paid or the
assessed margin
• Does not provide an ongoing rate
Dumping duty assessments
Difficulties:
• You need the exporter’s cooperation – its almost as much work
as the original investigation
• All of the exporter’s exports have to be assessed
• Timeframes for applications are strict
• By the time a demand is made, the timeframe has passed
Dumping duty review
• An ongoing rate for the exporter
• Have to wait 12 months from the end of the investigation
• Can only have one review every 12 months
• Intensive process
Exemptions
There are five grounds on which exemptions may be granted from
anti-dumping measures:
• Exemption One - Like or directly competitive goods are not
offered for sale in Australia to all purchasers on equal terms
under like conditions having regard to the custom and usage of
trade;
• Exemption Two - A Tariff Concession Order under Part XVA of
the Customs Act 1901 in respect of the goods is in force;
• Exemption Three and Four - Exemptions based on by-laws for
the goods being in existence in a schedule to the Customs Tariff
Act 1995 and there are no equivalent goods; and
• Exemption Five - The goods, being articles of merchandise, are
for use as samples for the sale of similar goods.
Protect yourself
• Claims against brokers do happen – clients can prove that they
would not have imported he goods had they known about the
dumping duty
• Make sure you are aware of which goods may be subject to
dumping duties
• Advise clients of the risks of duty and the rates
• A tariff advice will provide classification certainty
• Infringement notices will be imposed on customs brokers
Questions
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CONTACTRussell Wiese
T: 03 8602 9231
Lynne Grant
T: 03 8602 9246
