EFFECTIVE anti-dumping rules are critically important to Australian industry with dumped manufactured goods having the potential to undermine local businesses and erode Australian jobs.
In the US, anti-dumping regimes are viewed as a legitimate response, sanctioned by the World Trade Organization (WTO), aimed at dealing with unfairly traded goods that injure domestic industry.
The view should be the same here.
The anti-dumping debate should not be driven by hard and unrealistic ideological positions and it is not about ‘protectionism’. It is about having redress when a foreign company sells its product in Australia at a price below that in its own market causing harm to the competing Australian producer.
Anti-dumping mechanisms are an internationally accepted way to handle unfair trade. They enable countries such as Australia to open up their economies to international competition, while at the same time ensuring such competition remains fair.
Having an anti-dumping regime puts us on common ground with our trading partners and we are not seeking anything more than that. The US, the EU and Canada all have anti-dumping systems that are heavily utilised by their business sectors. China, India and South Korea have, in recent times, become major users of anti-dumping, as have other developing countries. China, for example, has initiated 138 anti-dumping actions since 2000, the Europeans, 186 and the United States, 268.
Australian manufacturers are facing extreme pressure from unrelenting import competition, turbo-charged by a high Australian dollar. Any weakening of the anti-dumping system will only add to that pressure.
The scale of the problem was seen in a recent survey of Ai Group members, which found more than one in five companies felt they had suffered from dumped imports from China alone. WTO figures show that exports from China have been the subject of 433 dumping actions worldwide since 2000.
One of the arguments used against anti-dumping is that there have never been any cases of ‘predatory pricing’ by which an exporter uses its monopolist position in its own country to finance the dumping of products in an export market so as to drive out competition.
In fact, most dumping is opportunistic rather than predatory and predatory intent is not required by WTO anti-dumping rules. So it is not surprising that ‘documented’ cases of predatory behaviour are hard to identify.
This type of behaviour is more damaging for industries in Australia that are not big by international standards and need a reasonable market share in Australia in order to survive.
It also must be remembered that dumping measures can only be imposed if it can be established that a domestic industry is materially injured by the dumping of goods at unfair prices. Australian practice is to apply the “lesser duty rule”, which means dumping duty is only imposed to the level necessary to prevent the continuation of material injury to the industry.
Against this background, it is surprising that the Federal Government announced it would refer the anti-dumping issue to the Productivity Commission. This had been mooted in recent years, but for good reason was not proceeded with. There was a Joint Ministerial Review in 2006 that provided some useful changes to the system and it’s arguable that another inquiry is unnecessary.
It is also a particularly bad time for a review from a trade-negotiations perspective. The present Doha Round of WTO negotiations is considering revisions of both anti-dumping and subsidy law, but certainly not the rationale for having such a system. It would be politically risky for Australia to question the need for anti-dumping at a time when the WTO is considering revisions to its rules in this area.
Should the Productivity Commission Review go ahead in this environment, we would urge the Government to ensure that terms of reference reaffirm a strong commitment to our anti-dumping system and the fundamental and internationally accepted basis on which it operates.
It should be noted that the EU is in the process of conducting a re-examination of dumping practice, but its terms of reference do not question the need to have an anti-dumping system.
It is also critical that Australia retains the core principle that anti-dumping cases be determined only on the evidence provided by the specific parties involved.
Ai Group will work closely with the Trade Remedies Task Force (TRTF), which we chair and which represents a wide range of companies and industry associations, in making a detailed submission to any review. We are confident we will present a strong case. Anti-dumping law isn’t about protectionism — it is about having rules and safeguards consistent with WTO practice that put us on common ground with our competitors…no more, no less.
Editor, Alan Johnson, is on long service leave.