Press Conference, Parliament House, Canberra

  • The Hon Brendan O'Connor MP, Minister for Home Affairs and Justice
  • The Hon Dr Craig Emerson MP, Minister for Trade

Topics: Improvements to Australia's anti-dumping regime.

Transcript, E&OE

22 June 2011

BRENDAN O'CONNOR: Thanks very much for coming. Can I just make some statements and hand over then to the Minister for Trade. The Minister for Trade and I today are announcing a package of 29 improvements to Australia's anti-dumping and countervailing system. These are the most important changes to Australia's anti-dumping regime in more than a decade and they've required careful and thorough consideration.

In formulating these changes we've considered the Productivity Commission's report on anti-dumping, we've considered Senator Xenophon's private members bill and we've also considered the views of state and territory governments and submissions made to these processes from all parties. In particular, we've closely engaged with manufacturers, producers, importers, downstream businesses, employer bodies and unions when considering these changes.

I also want to make clear that these are sensible changes that are consistent with World Trade Organization rules and we maintain our commitment to the world trade framework. The delivery of certain cheap goods into Australia is a good thing for consumers, but the world trade community recognises that the practice of dumping can cause injury to domestic businesses and that is not in the spirit of international trade.

Dumping occurs when an overseas company exports its goods to Australia at a price below the price it charges in its home market, or below cost. Where that dumping materially injures an Australian business producing similar goods, additional customs duties can be applied as a remedy.

When considering our changes we looked empirically at international comparisons and found that a significant number of our trading partners have had a higher likelihood of measures being imposed for each investigation over the last decade. And those countries include the United States, Canada, Brazil, European Union, South Korea, Malaysia, New Zealand and China.

Today we're announcing a package of 29 improvements that are aimed at creating a modern, balanced and effective system. We have supported 15 in whole or part of the Productivity Commission's 20 recommendations. I should also add we've not supported the recommendation to enact the bounded public interest test, as in our view it is prescriptive, expensive and litigious and its costs outweigh its benefits. And I've always had, as Minister, an unfettered discretion to refrain from imposing duties by taking account of the public interest.

Nor have we supported a recommendation to limit measures to be imposed to eight years, even when dumping continues to cause material injury. This approach is not applied by any of our trading partners and, with respect, it is not an appropriate reform.

Our change will improve timeliness, increase compliance, make accessing the system easier for smaller parties and ensure a more effective approach. These improvements will help secure and provide certainty for local industry and jobs from unfair trade practices.

Our changes will provide certainty for manufacturers and primary producers with respect to having this anti-dumping regime in place, and indeed provide certainty in relation to this regime for workers, their families and their communities.

These are sensible changes that will ensure our anti-dumping system is in accord with world standards.

I don't want to go through all of the reforms now, but I'll touch on the most important:

Now before questions are asked of us, I might turn to the Trade Minister.

CRAIG EMERSON: Thanks Brendan. Australia is a great trading nation and the prosperity that we enjoy today has been built very substantially upon the great market opening reforms of the Hawke-Keating era in fashioning an open competitive economy we've unleashed the entrepreneurship hard work of Australian businesses and employees. And that itself has meant that we've enjoyed the benefits of 20 years of recession free economic growth, placing us amongst the very few advanced countries of the world, and the only major advanced country to have enjoyed such strong recession free growth over that 20 year period.

Australia has long been a supporter of the global trading rules as established originally under the General Agreement on Tariffs and Trade which has been renamed the World Trade Organization. In those global trading rules it's then very important that there is an effective anti-dumping regime. The reason for that is that those who abide by the rules need confidence that dumping, which is in contravention of those rules, is not allowed.

If it were allowed then the system breaks down because you don't have the confidence that if you do the right thing by the rules, that others may not and therefore could get away with not doing the right thing by the rules.

This government has repeatedly and consistently indicated its support for the principles and practice of free trade. And in that context no anti-dumping regime should be a backdoor form of protectionism. I've been involved in this process extensively with Minister O'Connor and it is clear to us as a result of our work that all of these recommendations are fully consistent with the World Trade Organization rules. And that's what gives the assurance that this is supportive of the world trading system.

Just in the last little while a report has been released by the Senate, probably colloquially known as the Xenophon enquiry into the anti-dumping system. We've been following that very carefully; the evidence and the hearings you will find in that, amongst other comments, Coalition senators are saying in somewhat coded words that they want to go into areas that in our view would clearly be WTO inconsistent — inconsistent and that includes a reverse of the ownership — of the onus of proof; the advice to us that a reversal of the onus of proof in anti-dumping cases would contravene the WTO rules.

Now if that happens to be the position adopted by the Opposition Leader, Tony Abbott, then he is embracing policies that would have Australia fall foul of the WTO rules and the consequences for Australia could be horrendous because we would then be in a position of having to confront retaliatory action by other countries. So what we've done, Minister O'Connor and I and the Government as a whole, is found a way where we can make the anti-dumping regime more effective, but in a way that is fully consistent with the principles and practice of an open trading system.

JOURNALIST: Minister Emerson, Doug Cameron and Louise Pratt seem to be pushing further than either of you have gone today. And it's not just Coalition senators who are critical of the current system. Why haven't you gone down the path that your backbenchers are pushing for? And are you one of the free market ideologues that are referred to in the report?

CRAIG EMERSON: I probably am one of the free market ideologues referred to in the report. But then again I'm proud to share the heritage of the Hawke and Keating Governments, having been an economic adviser, including a trade adviser to Bob Hawke. Titles don't bother me. Some people call me doctor, some people call me things that are less flattering. That's fine by me.

What's really important here is Australia's national interest, not labels, not tags, but Australia's national interest. And we have worked hard and assiduously — not only Minister O'Connor and I, but the entire Government and our departments, including the Department of Foreign Affairs and Trade — to ensure that everything that we do is fully consistent with the World Trade Organization rules and therefore passes the test of being an anti-dumping regime that supports the world trading system.

If you go further than that into issues such as reversal of the onus of proof and you're right, the minority senators' report on our side I think do embrace that. So do the Coalition senators, then you are falling foul of the WTO rules and the consequences of that could be horrendous for this country.

BRENDAN O'CONNOR: And if I can just add to Minister Emerson's comments, with respect to the report that was handed down today by the Senate Economics Committee, we looked closely at the bill. Those parts that had merit and were consistent with World Trade Organization rules we looked to incorporate, if it was a good suggestion.

But as Minister Emerson has made very clear, there were some parts that would offend and are in breach of WTO rules and we would not at all incorporate those. And whether there are Government members recommending those matters or not, that is not the position of this Government in the way in which we deal with anti-dumping.

JOURNALIST: So are you saying these are effectively the toughest rules you can give…

CRAIG EMERSON: It would be difficult to go through each and every aspect of the anti-dumping regime and say each and every one of those is the toughest. What we've sought is effectiveness. One of the barriers to the pursuit of anti-dumping cases is just the time and the cost to business of doing it. And at the heart of many of these reforms is just reducing those business costs and the difficulty of establishing a case.

But at the same time we want to ensure that you can't just go along and presume dumping and have the importer having to prove that no material injury has occurred as a result of that. That's the reversal of the onus of proof.

Look, the Xenophon enquiry and the senators that contributed, if I can support what Minister O'Connor has said, have come up with some very useful observations and conclusions. But we don't agree with all of them and we don't agree with Coalition senators saying, we're going to really toughen this up and to hell with the World Trade Organization rules, because let's look quickly at the consequences of breaching those rules.

They are able — that is those who are offended by us taking an anti-dumping action, or employing an anti-dumping regime that's inconsistent with those rules, can retaliate. If we damage their exporters to Australia they can inflict damage upon us, call for reparations to that damage. These are very serious matters and I think it's incumbent on Mr Abbott to rule-out quickly those recommendations that appear to be supported by his Coalition members that breach the World Trade Organization rules.

It's all very fine for him to be popular saying, we don't care about the WTO; if you don't want to be in the world trading system and pull out of it then anyone can do anything to you. Anyone can do anything; they can inflict any unfair practice, they can put any tariff on you, whatever they want to do, because you're outside the system.

And what we've seen in the last few years, including Brendan, right now, other countries trying to accede, that is join the World Trade Organization. Why would you want to join it if being in it is a disadvantage? What they're indicating by wanting to join it is that being in it is in their national interest.

JOURNALIST: Has this package been to Caucus? Has Caucus had any opportunity to contribute before you announced it? And also do you expect a debate at the next…

BRENDAN O'CONNOR: No, we've briefed Caucus members on this. And can I also say — just joining Minister Emerson — it really is incumbent upon Tony Abbott to make some things very clear. He has made rhetorical references to dumping, but he has not at all addressed any of the 20 recommendations in the Productivity Commission's report. He has not addressed any of the matters in relation to the Senate Economics Committee report on the Xenophon Bill. It is incumbent upon the Opposition now — given Tony Abbott's made some rhetorical comments about protecting workers — he now needs to now declare where he stands in relation to compliance with WTO and ensuring we have an effective regime to identify dumping where it occurs, but, of course, so far all we've had from him are slogans and rhetorical flourishes.

It's time for him to do some work and actually respond to the PC recommendations and, indeed, the Senate Committee Report that was tabled today.

JOURNALIST: So you briefed Caucus, but did Caucus approve this package?

BRENDAN O'CONNOR: I'm saying to you that they were briefed on this matter and, indeed, of course, as you know, arising out of these recommendations there'll be proposed legislation and, of course, what will be the case is the Caucus will have to approve the legislation that is arising from the announcements that Craig and I are making today. And, of course, that will go through the due process of Caucus committees and Caucus, but I can assure you the Caucus has had an opportunity to be briefed on the elements of these reforms.

CRAIG EMERSON: And also had the opportunity to make their views known during Caucus, and that has occurred in the recent past.

JOURNALIST: And what about the national conference — do you expect this will be an issue?

CRAIG EMERSON: It is a bit hard to anticipate what is going to go on an agenda for a national conference that's going to be held in December. I'm actually a supporter of proper debate in national conferences, but I think that that debate should centre around the benefits from trade. But also, if people want to talk about the need for an effective anti-dumping regime, I'm perfectly relaxed about that because an effective anti dumping regime is integral to the proper functioning of the world trading rules.

JOURNALIST: What sort of goods are we talking about by the way; manufacturing and…

CRAIG EMERSON: Manufacturing and agriculture mainly, goods, yeah.

JOURNALIST: So practically you'd say there are benefits from consumers of trading? What are manufacturing examples? What are some of the sorts of, and also agricultural examples?

CRAIG EMERSON: Well we could get you a list of the most recent, and even over the last ten years, cases that have come, some of which have succeeded, some of which haven't. The — over the period of ten years the strike rate, if you want to call it that, it's not the technical term, but is 50 per cent, so half of the applications for dumping have been upheld and the other half have not. But we can get you a list of the sorts of examples.

JOURNALIST: Is really what you've done here is, there are many recommendations or many decisions, but the effect is not to change the rules we've got but to enhance the administration of them. Is that a…

BRENDAN O'CONNOR: Can I just say, as the Minister responsible for the regime and making decisions on this matter, as Craig said, a lot of the issues or deficiencies were about resources, about expertise, about ensuring that we properly identify where people breach WTO rules. And I accepted and, indeed, Craig has accepted the contention that there was a lack of capacity, and I won't go to any particular cases, but I will say that we could do better in identifying where dumping caused material injury, and that's why you provide greater resource. And we could do better in verifying assertions that are being made by parties to matters so that we can get to the bottom of what is being asserted and substantiated. And that's why we have more expertise.

Now there are, of course, other things that we've put in place, including ensuring that importers and industry are involved in an ongoing process with government. We should engage.

In the ideal world you'd have an anti-dumping regime that was universal, that is you've have a regime in the WTO membership that would be the same. But each anti-dumping regime operates domestically and we want to make sure that we're in accord with our trading partners, and I believe these reforms ensure a greater accordance with those standards that are set in like countries including Canada, Brazil, China, other places who have had actually a higher incidence of measures as a result of investigations than Australia over the last ten years.

JOURNALIST: Is it correct to say this is about the way in which the rules are applied, the administration, the resources applied to it, rather than changing the rules?

CRAIG EMERSON: I think I can help in answering — support Brendan in answering that by saying this: the definition of dumping has not changed. So this is a way of ensuring that if dumping does occur and the dumping is causing injury to an Australian business, then the likelihood of that case succeeding rises. So we're simply…

JOURNALIST: Just because there are — not necessarily I suppose, but the…

CRAIG EMERSON: I'm talking about probabilities. Well if you have…

JOURNALIST:…because you've got more resources applied to it.

CRAIG EMERSON: Well, that's important to it.

BRENDAN O'CONNOR: If it is the case that we are not, through a lack of resources or expertise, identifying dumping that exists that's causing material injury to businesses in the country that are producing white goods, then of course we need to respond. We've agreed with the contention we could do with more resources and greater expertise, expertise for example that understands markets and other sectors in other economies that are our trading partners.

It is important, it seems to me, and if we want to be intellectually honest, we want to have the facts, we want to deal with this empirically and we want to determine it through resources and through expertise. And that's why we've made a lot of the fact that we are looking to increase customs resources by nearly 50 per cent and we're looking to bring a panel of experts in to involve themselves in investigations, forensic accountants and others, in order to identify what's being asserted, to verify or otherwise those assertions so we get to the right answer.

JOURNALIST: You've mentioned the 45 figure. How many people is that?

BRENDAN O'CONNOR: It's from 31, so 14 people. So, as I say, just under a 50 per cent increase.

CRAIG EMERSON: And consider who the beneficiaries are of that sort of extra staffing — small to medium enterprises. Going back to my economics training, if I dare, transactions costs for small and medium size enterprises can be very high to prohibitive and they might actually have a legitimate case. But under the current system they would have to bear very substantial costs in order to get that case properly considered with all of the relevant evidence. And their case might actually be sound, but they may not have either the expertise or the financial resources to be able to present all the relevant evidence.

Now I'm not interested, Brendan's not interested, in unsound cases being found to be successful. We are not interested in an anti dumping regime being some sort of backdoor form of protectionism, but where there are transactions costs that are prohibitive and there is genuine dumping occurring, we think that that's reasonable.

JOURNALIST: And you think there are sound cases in the past which have failed.

BRENDAN O'CONNOR: No, I'm not going to go to that.

CRAIG EMERSON: Yeah.

JOURNALIST: No, no, that's implicit in what you're saying, Minister. There are sound cases that have failed because the small businesses haven't had the resources or expertise.

CRAIG EMERSON: Well there could be different to that and that is, and I won't — and I know you're not asking…

BRENDAN O'CONNOR: It's sort of hypothetical in that we say that small and medium enterprises may not have taken actions for lack of resources and, secondly, it's…

JOURNALIST: Or they may never have got to.

BRENDAN O'CONNOR: Well, they may not. And the second thing is, and just to add to Minister Emerson's point, it's not just about the resources for those who don't have the economies of scale to actually take these matters forward. It's also to bring forward the timelines of these matters because people are concerned about the length of time taken to determine these issues and with more resources we'll be able to, of course, expedite proceedings.

CRAIG EMERSON: During which material damage could well have been inflicted on those businesses.

JOURNALIST: Have you modelled, do you have any estimation of how much more quickly those things could be processed?

BRENDAN O'CONNOR: Each case is so different from the next, it's hard to do that. But I can say there's no doubt if you increase the resources and you provide more expertise we're going to get to the nub of the issues that are relevant to determining the matter for Customs to recommend to me far quicker.

JOURNALIST: Minister Emerson, on another topic, Hawkey; have you spoken to him? Do you know how he's going?

CRAIG EMERSON: Yes, I have twice, yesterday and today, and he's going well actually. The treatment has worked very well and he'll be up and about very, very soon. I had good long — two long discussions with him and you can't keep a good man down.

BRENDAN O'CONNOR: Did he ask you to place a bet?

CRAIG EMERSON: You cannot keep a good man down. No, he's cured, he's cured of his ailment and he's also cured of betting [laughs].

BRENDAN O'CONNOR: I know you used to be…

CRAIG EMERSON: So am I [laughs].

BRENDAN O'CONNOR: Craig used to be a conduit for the former Prime Minister.

JOURNALIST: On the trade remedies forum, what sort of person would you be looking for to chair it?

BRENDAN O'CONNOR: Trade remedies forums, well that hasn't been determined, but the Trade Remedies Forum is to comprise of relevant agencies of government, industry, importers, downstream businesses, all of the stakeholders that have got a vested interest and have an effective anti-dumping regime.

JOURNALIST: Is there any given the importance of renewable energy and the fact that China has been dumping solar panels into the Californian market and disrupting that market and taking over, they are also dominating the Australian market now, is there room for prospective action to allow infant Australian solar cell industry to get underway?

CRAIG EMERSON: I doubt that you could seek to take action against a country for prospective commercial behaviour. I think they would have to exhibit that commercial behaviour. That's even a little bit further than the reversal of the onus of proof, it's sort of a pre-emptive strike and we're not into pre-emptive strikes.

And I should add this: in all of this we are not seeking to isolate or identify any particular country. The anti dumping regime applies across the board to all those members of the World Trade Organization and it's important that whether they are advanced market economies, developing economies, emerging economies, big countries, little countries are treated the same and that's what we'll be doing.

JOURNALIST: If China doesn't impose a carbon tax on its steel production, would that be considered a disadvantage to Australia's steel production?

CRAIG EMERSON: I don't think you're obliged to apply the sorts of policy measures in other countries. Dumping actions or applications are more excited by the definition which is to sell below cost and it can involve subsidies as well. But not applying something that other countries apply wouldn't of itself constitute dumping.

BRENDAN O'CONNOR: Thank you.

CRAIG EMERSON: Thanks very much.

Media enquiries