Review of a Ministerial decision to take anti-dumping action against imports of polyvinyl chloride homopolymer resin (PVC) Exported from Korea

BACKGROUND

  1. As a member of the World Trade Organisation (WTO), Australia is bound by the World Trade Organisation Uruguay Round Anti-Dumping Agreement and Agreement on Subsidies and Countervailing Measures (the WTO Agreement).  Article 2.1 of the WTO Agreement provides that a product is considered dumped, ieintroduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country.  (The export price is the price paid before any costs in respect of the export are included.  Normal value is usually defined as the price at which a good would be sold in its home market.)

  2. Before any action may be taken against dumped goods the Australian industry concerned must demonstrate not only that there is dumping occurring, but that the industry has suffered injury as a result.  This is done through an application to the Australian Customs Service (Customs) for an investigation into the facts of the case.  If Customs determines that dumping has occurred, it must then establish whether the Australian industry’s performance has deteriorated, whether any injury suffered would be considered material and whether the dumping has caused the material injury to the industry.  Any injury that has resulted from other, clearly identifiable sources must not be attributed to the dumping.  Even if it is found that dumping has not caused material injury, it must be determined whether future dumping threatens to cause material injury to the Australian industry.  This includes an assessment of whether any changes in circumstances would make that material injury both foreseeable and imminent unless anti-dumping measures were imposed.

  3. Under the provisions of the Customs Act 1901 (the Act) Customs has 155 days from the date of initiation of an investigation within which to make a recommendation to the Minister responsible for Customs (the Minister) concerning the imposition of interim anti‑dumping duty.  On the basis of Customs’ recommendations the Minister will then make a decision whether to impose definitive measures.  Once details of the Minister’s decision have been published as required by the legislation, interested parties have up to 30 days to apply to the Trade Measures Review Officer (the Review Officer/TMRO) for a review.  Certain decisions by the CEO of Customs are also subject to TMRO review.  Applicants need to establish to the satisfaction of the Review Officer that, on the basis of the particulars contained in the application, there are reasonable grounds to warrant the reinvestigation of Customs’ finding(s) that formed the basis of the decision.

Reviews by the Trade Measures Review Officer

  1. Subdivision C of Division 9 of the Act provides for reviews by the TMRO of certain decisions of the Minister, including decisions to take anti-dumping action under subsections 269TG(1) and 269TG(2) of the Act.  Subdivision C also describes the procedures to be followed in the conduct of a review.

  2. An applicant must establish to the satisfaction of the Review Officer that there are reasonable grounds to warrant the reinvestigation of the finding or findings specified in the application.  Section 269ZZG of the Act provides that the Review Officer must reject an application if satisfied that the applicant has failed to provide sufficient particulars in relation to the application, including particulars concerning the finding or findings to which the application relates, within the 30 day statutory period.  The Review Officer must reject an application if the applicant claims that information included in it is confidential, or is information the publication of which would adversely affect a person’s business or commercial interests, and the applicant fails to give a summary of that information to the Review Officer.  The summary must contain sufficient detail to allow a reasonable understanding of the substance of the information without breaching the confidentiality or adversely affect the interests concerned.

  3. Before conducting a review, the Review Officer must publish in a national newspaper a notice indicating that the Review Officer proposes to conduct that review.  Interested parties in relation to a reviewable decision may make submissions to the Review Officer within 30 days after the publication of the public notice.

  4. If an application is not rejected, the Review Officer must make a report to the Minister on the finding(s) specified in the application, by recommending either that the Minister affirm the reviewable decision or that the Minister direct the CEO to reinvestigate the finding(s) which formed the basis of the reviewable decision.  The Review Officer must take account only of information relating to the reviewable decision that was before the CEO when making the findings and recommendations set out in Customs’ report to the Minister.

  5. The Review Officer’s report must be made at least 30 days after the public notification of the review, but not more than 60 days after that notification - or such longer period allowed by the Minister in writing because of special circumstances.

Ministerial Decision

  1. Under s269ZZL of the Act the Minister must, by public notice, affirm the reviewable decision if:

  • the Minister accepts a recommendation from the Review Officer to affirm a reviewable decision; or

  • the Minister does not accept a recommendation by the Review officer to require the CEO to reinvestigate the finding(s) which formed the basis of the reviewable decision.

  1. If the Minister accepts a recommendation by the Review Officer to require the CEO to reinvestigate a finding or findings, s269ZZL prescribes that the Minister must, in writing, require the CEO to make further investigation of the finding(s) and report the result of that further investigation to the Minister within a specified period.  In addition, the Minister must, by public notice, indicate acceptance of the Review Officer’s recommendation, including particulars of the requirements made of the CEO.

  2. After receiving a report by the CEO in respect of a reinvestigation, the Minister must either affirm the reviewable decision or revoke that decision and substitute a new decision.  The Minister must give public notice of that decision.

 

TMRO Review

  1. By public notice in the Australian Financial Review (AFR) on 23March2000, Customs notified that the Minister had accepted its recommendation that anti-dumping action be taken in respect of imports of polyvinyl chloride homopolymer resin (PVC) exported to Australia from Hungary and the Republic of Korea (Korea).

  2. The report of Customs’ investigation leading to this recommendation, the Australian Customs Service, Trade Measures Branch, Report No.10 Polyvinyl Chloride Homopolymer Resin Exported from Hungary, Indonesia, the Republic of Korea and Singapore is at Attachment A.

  3. While PVC exported from all four countries covered by the investigation was assessed as dumped, dumping margins and/or the volume of the dumped goods from Singapore and Indonesia were assessed as negligible.  Dumping margins and the dumped volume of exports of PVC from Hungary and Korea were assessed as not negligible.  Customs considered that dumped PVC exported from Hungary and Korea to Australia contributed to material injury suffered by the Australian industry producing like goods.  Accordingly, Customs recommended that the Minister take anti-dumping action against exporters of PVC from Hungary and Korea to Australia, but not against exporters of PVC from Indonesia and Singapore.

Application for Review

  1. On 20April 2000, Quantum Chemicals Pty Ltd (an Australian importer of PVC) sought a review of certain findings of the Australian Customs Service in relation to LGInternational Corporation of Korea (the exporter) which led the Minister to take anti‑dumping action in this matter.

  2. In particular, Quantum Chemicals sought a review of the assessment of dumping duty on PVC exported by LGInternational Corporation Korea (LG), claiming that Customs’ calculations supporting the assessment were inaccurate for a number of reasons.

  3. Quantum Chemicals’ claims are examined in detail in this report, and reasons given for the TMRO’s assessment in respect of the claims.  Unless otherwise specified references in this report to Customs’ investigation are to the investigation leading to the Australian Customs Service, Trade Measures Branch, Report No.10 Polyvinyl Chloride Homopolymer Resin Exported from Hungary, Indonesia, the Republic of Korea and Singapore.

  4. Quantum Chemicals’ application (confidential version) is at Attachment B.  A non‑confidential version of the application has been provided for the public record in accordance with the requirements of the legislation.

  5. One submission to the TMRO was received and considered in the course of this review.  The submission, on behalf of Australian Vinyls Corporation, is at Attachment C.

QUANTUM CHEMICALS PTY LTD

in relation to LGInternational Corporation of Korea

Assessment of Dumping Margin

The Applicant’s Submission

20.       The applicant claims that:

  • There was a substantial difference in the dumping margin assessed for LG and Hanwha Chemical Corporation (Hanwha) in Customs’ Statement of Essential Facts (SEF) although Hanwha was supposed to represent all Korean exporters during Customs’ investigation.

  • LG had sent a letter to Customs submitting that the higher dumping margins assessed for LG were grossly inaccurate, and offering to provide information in support of this claim.  However, Customs deemed this submission too late for the investigation and consequently LG and Quantum chemicals were disadvantaged by not being able to prove their case.

Review Officer’s Assessment

21.       While the Review Officer does not dispute the claim that there is a substantial difference between the ascertained dumping margin for LG and Hanwha, the Review Officer does not accept LG’s claims that Customs’ findings were inaccurate.

22.       The Review Officer notes that Customs wrote to LG on 1April 1999 inviting them to provide a submission in relation to their investigation into the dumping of PVC from Korea.  The Review Officer further notes that on 16 April 1999 and again on 22April 1999 Customs wrote to LG inviting it to provide a submission in relation to this matter.  LG did not provide Customs with a submission.

23.       On 25 August 1999, after Customs provided a copy of its Statement of Essential Facts(SEF), LG wrote to Customs stating that it was ‘surprised’ by the high preliminary dumping margin accorded it by Customs.  In a facsimile of 2September 1999 Customs informed LG that, while it was still possible for LG to provide a submission, it may not be possible for Customs to consider new issues or facts given the statutory time constraints in finalising the investigation.

24.       LG provided Customs with a response to its SEF on 6 September 1999 in the form of an exporter’s submission.  The Review Officer accepts that Customs had reasonable regard to the information in LG’s submission.  The Review Officer also accepts Customs’ assessment of this information and its conclusion that, as insufficient information was verifiable, Customs was not in a reasonable position to reconsider all its original recommendations contained in the SEF.  It should however be noted that Customs was able to verify some of the claims made by LG and recalculated normal values incorporating LG’s information.

25.       The Review Officer accepts Customs’ determination of export prices under s269TAB(3) and normal values in accordance with s269TAC(6) of the Act. 

26.       The Review Officer also accepts Customs’ determination in ascertaining a maximum dumping margin for LG of 25.9%.

The Applicant’s Submission

27.       The applicant claims that:

  • The dumping margin percentage between major suppliers from the same country should be close for a commodity over a comparable period.

  • LG and Hanwha are both Korean producers of similar size, so the large differences in assessed dumping margins are due to inaccurate calculation and oversight on Customs’ part during the investigation.

Review Officer’s Assessment

28.       The Review Officer does not accept the claim that the large difference in assessed dumping margins for similar size producers of PVC was due to inaccurate calculations and oversight on Customs’ part.  While Customs was able to verify claims in relation to Hanwha’s normal values, Customs’ officers were not able to verify information pertaining to LG’s operations - consequently normal values for LG were assessed as higher than those of Hanwha.

29.       The Review Officer therefore accepts Customs findings in relation to ascertained dumping margins for LG.

The Applicant’s Submission

30.       The applicant claims that:

  • While it accepts Customs’ calculation of export price based on Customs’ import database (TRACE), Customs has overestimated normal value.

  • Customs calculated Hanwha’s normal value and drew subsequent conclusions on LG’s normal value, but considered some parameters and ignored others.  Customs erred in calculating the following aspects of normal value:

    • included sales commission percentage, in particular in relation to sales through Quantum Chemicals;

    • credit given to domestic customers in Korea by LG; and

    • rebate given to domestic customers in Korea by LG.

Review Officer’s Assessment

31.       The Review Officer does not accept LG’s claim that Customs erred in its normal value calculation.  Customs made an adjustment to the ‘other manufacturers’ normal value for credit terms (using information provided by LG), inland freight and waste resin costs.  Customs could not verify domestic rebates and therefore recommended that no adjustment be made. 

32.       The Review Officer accepts Customs’ assessment of the information provided by LG in its submission of 6 September 1999, and its treatment of this information.  Customs considered this information in its assessment of LG’s normal value and export price calculations, however LG did not provide sufficient verifiable data to cause Customs to reconsider all elements of its original assessment of normal values calculations.

 

The Applicant’s Submission

33.       The applicant claims that:

  • LG was willing to participate in the investigation before final recommendations were given to the Minister.

Review Officer’s Assessment

34.       The Review Officer accepts that LG was willing to participate in the investigation before final recommendations by Customs to the Minister were finalised.

35.       The Review Officer notes, however, that Customs was not able to verify all the data provided in LG’s submission - given the statutory requirement to finalise its report to the Minister, and the fact that LG only provided a submission after Customs had issued its SEF.  At this stage of the investigation Customs had already undertaken exporter visits to Korea and it would be unreasonable to then visit LG to verify data provided in its submission.  LG had been afforded the opportunity to provide Customs with a submission which would have enabled Customs to conduct a exporter visit to LG within the investigation period.

36.       The Review Officer notes that at no stage during its investigation was Customs working on the assumption that Hanwha was representing all Korean PVC manufactures in this matter.  The Review Officer does not accept the claim by LG that it believed that Hanwha was representing its and other manufacturer’s interests in relation to Customs’ investigation.

Provision of Information

Quantum Chemicals’ Submission

37.       Quantum Chemicals claims that:

Once dumping has been decided it is normal practice for Customs to provide non‑injurious free on board price (NIFOB) and normal values information to the importer, however Customs has not yet done so in relation to this matter.

Review Officer’s Assessment

38.       The Review Officer notes that Customs provided Quantum Chemicals acting on behalf of LG, with information relating to ascertained export prices and normal values in a facsimile of 17March 2000. 

Conclusion and Recommendations

39.       The Review Officer has considered the claims by the LG, and, in accordance with Subdivision C of Division 9 of the Customs Act 1901, has conducted a review of the decision of the Minister for Justice and Customs to publish dumping duty notices in respect of imports of polyvinyl chloride homopolymer resin (PVC) exported to Australia from the Republic of Korea (Korea).

40.       Based on the above assessment the Review Officer does not accept LG’s claims that Customs erred in its assessment of normal values and ascertained dumping margins.  The Review Officer therefore recommends that the Minister accept Customs’ original findings and recommendations in respect of LG.  The Review Officer recommends that no further action be required of Customs in this matter