Review Of A Ministerial Decision To Publish Dumping Duty Notices Under Subsections 269tg(1) And 269tg(2) Of The Customs Act 1901 In Relation To Imports Of Hot Rolled Structural Sections from the Republic of Korea, the Republic of South Africa and Thailand

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, ie introduced 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 goods after exportation 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 material 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.  Regardless of whether it is found that dumping has caused material injury, it must also 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 threat of 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 anti-dumping measures. 

4.             The Trade Measures Review Officer (the Review Officer) is appointed by the Minister for Justice and Customs to review certain decisions in relation to dumping matters.  The Review Officer is an independent administrative appeal mechanism with no investigative function.  The Review Officer may review a prescribed range of decisions made by the Minister or by the Chief Executive Officer of Customs (CEO).  Reviews are conducted only on application from relevant interested parties as defined in the Act under section 269ZX.

5.             Subdivision B of Division 9 of the Act provides for reviews by the Review Officer of certain decisions of the Minister, including decisions to take, or not to take, anti-dumping action under subsections 269TG(1) and 269TG(2) of the Act.  Subdivision B also describes the procedures to be followed in the conduct of a review.

6.             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.  Unless an application is so unreasonable that it may be rejected in the first instance, the Review Officer will accept it at face value and undertake an investigation.  If an application is made by a party to the original decision, it will be assumed that the applicant has the right to request a review.

7.             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 by the Minister may make submissions to the Review Officer within 30 days after the publication of the public notice.

8.             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 only have regard to information that Customs relied upon to make its decision and any relevant information provided in submissions by interested parties.

9.             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.  In this particular case, an extension of 30 days was granted by the Minister in light of the complex and voluminous nature of the evidence and submissions to be reviewed.

10.         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.

11.         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.

HOT ROLLED STRUCTURAL SECTIONS (HRSS) FROM KOREA, SOUTH AFRICA AND THAILAND.

12.         On 30 November 2001 Customs initiated an investigation into the alleged dumping of certain shapes (ie universal columns and beams, angles and channels) and sizes of hot rolled structural steel exported to Australian from Korea, South Africa and Thailand.

13.         On 20 March 2002 Customs placed the Statement of Essential Facts (SEF) on the public record.  Customs received six submissions in response to the SEF.  It considered these in formulating its final recommendations to the Minister.

14.         On 15 April 2002 Customs made a preliminary affirmative determination (PAD) that there were sufficient grounds for the publication of a dumping duty notice on the goods exported from Korea, South Africa and Thailand.

15.  In its final report Customs concluded that:

  • - there were exports of the goods from Korea, South Africa and Thailand at dumped prices;
  • -  the Australian Industry has suffered material injury
  • - dumped imports have caused material injury to the Australian Industry producing like goods; and
  • - material injury would continue to be caused to the Australian Industry if the goods continue to be exported to Australia at dumped prices.

16.         Customs recommended that the Minister publish country wide dumping duty notices for Korea, South Africa and Thailand.  The Minister did not accept price undertakings offered by certain Korean and Thai exporters and declared that section 8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to:  the goods and like goods exported to Australia from Korea, South Africa and Thailand and entered for home consumption after 15 April 2002 but before the public notification of the Minister’s decision;  and like goods exported to Australia from Korea South Africa and Thailand and entered for home consumption after the date of publication of the Minister’s decision.

17.         Applications were received from Siam Yamato Steel Co. Ltd (SYS), the manufacturer and exporter of the goods from Thailand, INI Steel Company (INI), the manufacturer and exporter of goods from Korea and the Australian Steel Association (ASA), an incorporated body comprising member companies directly concerned with the importation of the goods under consideration.  No application was received in respect of the goods exported from South Africa.

18.         SYS of Thailand, INI of Korea and ASA seek a review of the following Customs’ findings: export price; normal value; dumping margin; material injury; causal link; threat of material injury, and non-injurious price (NIP).

19.         The applicants proffered, as grounds for the review, that the Minister could not be satisfied that:

  • - the export price for sales to Thyssen Mannesmann Trading should have been ascertained in accordance with section 269TAB(1)(a) of the Act not section 269TAB(1)(c) of the Act;
  • - the normal value assessment price comparison was accurate;
  • - Customs’ ascertained dumping margins were accurate;
  • - the dumped imports from SYS were the cause of material injury to the Australian industry;
  • - Hyundai Corporation was the exporter;
  • - section 269TAB(1)(a) of the Act should apply to goods from Korea;
  • - the level of trade status to Stemcor was at the ‘wholesale level of trade’;
  • - the dumping margin was correct given the export price variable and normal value assessment variable;
  • - the imports from INI were the cause of material injury to the Australian industry;
  • - there were no other factors under section 269TAE(2) of the Act causing or threatening material injury to the Australian industry;
  • - Customs’ calculation of a NIP was at FOB level;
  • - Customs’ calculation of market share was accurate;
  • - the causality for claimed price undercutting by the Australian industry could be attributed to dumping;
  • - future imports from Thailand and Korea would be dumped; and
  • - the locally produced goods do not demand a price premium of 10% therefore affecting the calculation of the NIP.

20.         Submissions were received from Onesteel Manufacturing Pty Ltd, the Australian Manufacturer of HRSS, Stemcor (A/Asia) Pty Ltd an Australian importer and Thyssen Mannesmann Trading Pty Ltd an Australian Trading Company.

21.         The Review Officer had regard to relevant information as defined by subsection 269ZZK of the Act.  The Review Officer did not have regard to any new information. 

 

Australian Steel Association (ASA)

ASA’s claims are:

22.      Compliance Issues

Reasonable Understanding

The Public File version of the application does not satisfy the requirements of s 269ZJ of the Act.

The two most critical factors of any material injury argument are price underselling/undercutting and loss of specific sales.

Pages 13,14, 15, 16, for example, of the Applicant’s Public File version purport to detail those two factors, yet, the pages are all, effectively, blacked out.

Correspondence on this was sent to Customs from the December 2001 onwards.

Customs’ failure to require the Applicant to provide a non-confidential summary of these critical material injury factors has denied all affected parties their entitlement of having a reasonable understanding of such and this failure by Customs has severely prejudiced opposing presentations to Customs.

Customs’ policy and practice is stated in Customs Notices and on Application Form B108 under ‘Important Information’ which reads, inter alia:-

‘During an investigation all interested parties are given the opportunity to defend their interests.  A non-confidential version of the application and any subsequent submissions must be provided, etc..  A non-confidential submission should enable a reasonable understanding of the substance of the information submitted in confidence’.

Customs is known to have insisted on this requirement from the Exporters but in respect to the Applicant, Customs appears to have applied a lessor standard of ‘reasonable understanding’.

The Review Officer’s assessment

23.         The Review Officer is of the opinion that an interested party would be unable to ascertain a reasonable understanding of the critical factors purported by the Applicant, OneSteel in its non-confidential version of its submission.  Customs policy indicates that a non-confidential submission should enable a reasonable understanding of the substance of the information submitted in confidence.

24.         The Review Officer affirms the finding that the Australian industry suffered material injury, however the matter of Customs’ approach to the investigation is not a reviewable finding. 

25.         The Review Officer does not affirm Customs’ decision not to require the Applicant to provide a more comprehensive non-confidential version of its submission relating to material injury.

Selectivity

ASA’s claims are:

26.         Exclusion, 9.4.1

From their visits to ‘Importers’ namely Trading Houses, Customs obtained details of the Trading House sales to Australian distributors, the beneficial owners.Those obviously included the names of distributors and evidence of orders from distributors on the Trading HousesFrom their visit, etc. to the Applicant, Customs obviously obtained evidence of the Applicant’s sales to Australian distributors, including sales to the Applicant’s appointed distributors not owned by the Applicant (unrelated).

The ASA claimed in its submission to Customs that:-

  • -  The Applicant did not sell to each and every distributor – Refer 9.4.1 Report no. 55
  • - Distributors caused the imports; had contractual obligations with the Trading House;  and were the beneficial owners of the goods at the time of importation.
  • - They therefore satisfy the criteria for being an Importer within the meaning of the Act.

Customs states in 9.4.1 of the Report that it was provided with the issues the Applicant ‘considers when determining whether to appoint a distributor.

All Customs had to do in determining the ASA claim was either ask the Applicant or apply the logic of deduction. 

Instead, Customs state ‘in absence of supporting evidence Customs is not able to have regard to this claim’.

Apart from it being self-evident, two proprietors – operators of established Australian distributors of the goods in question, having combined industry record of over 60 years, met with Customs on 25/2/02.

Both proprietors submitted to Customs that they could not obtain supply from the Applicant s269ZJ(4) refers. The ASA states that Customs has the required documentary evidence on supply exclusion.

The Review Officer’s assessment

27.         In conducting a review the Review Officer is only to have regard to relevant information and must not have regard to any other information.  The Act defines relevant information as:

‘ …the information to which the CEO had had regard or was, under paragraph 269TEA(3)(a), required to have regard, when making the findings set out in the report under section 269TEA to the Minister in relation to making of the reviewable decision;  and…’.

28.         Customs indicated that, ‘in the absence of supporting evidence Customs is not able to have regard to this claim [issues the Applicant considers when determining whether to appoint a distributor]’.  The Review Officer did not find evidence that supports the claim of supply exclusion and as such affirms Customs’ determination that it was unable to have regard to this claim.

Obligations

ASA’s claims are:

29.         S 269TEA(2) requires the Customs Report (to the extent ‘that it is practicable’ to do so) must extend to any like goods not covered by the application.

Part 10.1 of Report No. 55 states that Customs did look at other imports up to 9th April 02 as required but that apart from noting the increased volume of such imports, Customs was ‘unable to determine if the identified imports are like goods’.‘Customs’ is ‘Customs’ and one of the responsibilities of Customs is to ensure all imported goods are entered correctly. That responsibility should have applied even more so in this situation as to ignore its results is discrimination.All countries in question overlap, enter a single market, and compete for the same sales since only distributors not involved should be Applicants.Regardless of the impact or affect, ASA claims that Customs had the resources, the data and the obligation to identify other imports for purposes of including this information in its Report to the Minister.By not including the relevant information Customs has failed to provide the Minister with required information.

The Review Officer’s assessment

30.         Customs stated that, in accordance with section 269TEA(2) of the Act it examined like goods not covered by the application imported into Australia during the period starting on the date of initiation of the investigation and ending 20 days after the SEF was placed on the public record (9 April 2002).  Customs claimed that it was unable to determine if the identified imports were like goods covered by the application. 

31.         Section 269TEA(2) requires that injury caused by other factors not be attributed to the imports under investigation.  In considering whether injury is being caused by, or threatened by other factors Customs is required to examine these factors rather than make a final determination about the detriment caused by these factors.  However, in examining these other imports Customs is required to consider the extent to which these other non-dumped imports caused or threatened to cause material injury to the Australian industry.

32.         The Review Officer believes that, based on Customs’ approach in identifying imports of dumped goods to determine the Australian market it would seem reasonable that Customs be able to identify imports of like goods not covered by the application.  The Review Officer does not affirm Customs’ determination that it was unable to determine if the identified imports are like goods.  The Review Officer recommends that Customs’ reinvestigate the matter of non-dumped imports being like goods.

Untested claims and inconsistency

ASA’s claims are:

33.         The applicant’s submission claiming price undercutting and price depression is not only untested and revealed, but conveys the impression that OneSteel has to react to parcels of imports simply landing in Australia – ie. Page 32 Reference:

‘One parcel of imports landed in Australia may require multiple responses in the market as OneSteel is forced to compete directly with imports for the business of distributors as well as being forced to support the pricing of distributors who compete with suppliers of imported product’.  OneSteel SubmissionCustoms only needed to ‘glance’ at the Australian industry structure to determine that:-

  • - OneSteel is not only the sole producer (except for one size of Channel) but also the major distributor (it has the market power).
  • - Over 90% of its GUC are sold via the distributor market.
  • - Its major customers are also it major competitors.
  • - Price affects are determined at time of order, not on their ‘landing’ in Australia.
  • - Distributors cause the import to come to Australia on the basis that they either have to import (supply exclusion) or need to import (compete with OneSteel’s own distributors.
  • - Distributors not owned by OneSteel are appointed on the basis of ‘How they can benefit OneSteel’.
  • - OneSteel therefore has leverage over their ‘arms-length’ distributors.

Given the distinct characteristics of the industry structure, Customs, in terms of its obligations under s269TAE(2A), should have applied its resources more appropriately for reasons of adequately determining what affect s269TAE(2A) (d) and (c) have had on the Applicant’s business.For instance, how do affected parties know that the Applicant was not responsible for ‘price undercutting’ for reasons of ‘buying back’ market share from its major Customer and competitor, Smorgen Steel.This information was requested by the application under Section A-5, Applicant’s Sales.Like most relevant information, however, the response on the Public Record is blacked out.ASA claims that affected parties have an entitlement to know if Applicants for Dumping Duty Measures are subjected to any scrutiny concerning possible anti-competitive activity.Rather than examine all ‘statutory’ factors considered relevant to material injury causation, Customs seem to dismiss this requirement with a general statement that it is satisfied ‘it has not attributed any injury caused by other factors to Structural Steel exported from Korea, South Africa and Thailand’.That statement, in our view, ignores the industry and market realities of a sole producer trying to maximise its returns from its distributor sales.

The Review Officer’s assessment

34.         The Review Officer is limited to what he can have regard to and any claims made in relation to issues to do with allegations of anti-competitive behaviour should be raised with the relevant authority.  The Review Officer can not have regard to any issues to do with conjecture and unsubstantiated claims and can only have regard to relevant information as set out in the Act.

Associated dealings

ASA’s claims are:

35.         The application also requires a response on business association and apart from its obvious related party transactions with OneSteel distribution, the response is silent on the Applicant’s joint venture arrangement with Smorgen Steel which in turn owns Metalcorp.

Metalcorp was an Importer of the ‘dumped goods’Smorgen Steel was the effective importer of the volume of ‘dumped goods’ from Korea in that ASA holds the view that Smorgen Steel was the beneficial owner at the time goods were imported.Section A.2; Question 8 of the application also asked for a response on the applicant having any relationship with an Australian importer.The response makes no mention of the Applicant’s joint venture business arrangement for the acquisition of Email Metals Distribution business.That association is a matter of public record and Email Metals had been the major independent distributor of Hot Rolled Structurals.ASA contends that it was appropriate for Customs to exclude certain imports from any injury analysis on the basis that:-

  • - The applicant had an association with an Importer of relevant product.
  • - That Importer was also a producer of relevant product.
  • - Apart from the Public Record, Customs was aware of both the association and the imports.
  • - WTO principles would exclude Metalcorp and Smorgen Steel imports.
 

The Review Officer’s assessment

36.         The WTO Agreement Article 4.1(i) states:

‘when producers are related11 to the exporters or importers are themselves importers of the allegedly dumped product, the term “domestic industry” may be interpreted as referring to the rest of the producers…’11 for the purposes of this paragraph, producers shall be deemed to be related to exporters or importers only if (a) one of them directly or indirectly controls the other , or (b) both of them are directly or indirectly controlled by a third person; or (c) together they directly or indirectly control a third person, provided that there are grounds for believing or suspecting that the effect of the relationship is such as to cause the producer concerned to behave differently from non-related producers.’

37.         The Review Officer affirms Customs’ determination that it was not appropriate to exclude certain imports from any injury analysis as the relationship between said parties is not deemed to be between related parties.

Different treatment

ASA’s claims are:

38.         The Applicant’s submission on Page 47 – Table b-1.5.2 stated that: ‘We have chosen to treat Hot Rolled Structural Sections in four shapes (etc) as one product group throughout this application’.

The Applicant’s cost to make and sell is considered to be on a per ton group basis and not a shape by shape basis – Note folio 67 public file.The Applicant requested Customs to assess its application (for material injury) as ‘one product group’.Reasons provided by the Applicant included:-

  • - Structurals are treated as one product group for financial reporting at OneSteel.
  • - All structurals go into the same markets.
  • - All structurals are sold through the same distribution channel.
  • - All structurals are sold domestically under the same market offer.
  • - Structurals are treated as one product category by the same market offer.
  • - Structurals are essentially viewed as one product group by both specifiers as well as users.  –Reference Public File Folios 66/67 OneSteel submission.
  • - Clearly the Applicant treats the different shapes, from costing through to sales, as being one product group.
  • - This was the Customs approach on its Importer and Exporter Visits.
  • - The Applicant, however, succeeded in changing this following its submission of 11th March 02.  –Refer Folio 76 Public File.
  • - It reads ‘However, we believe Customs should calculate the dumping margins on a shape by shape basis, etc’.
  • - The Customs Investigation Process in terms of the Importer and Exporter visits on the ‘one product group’ but then changed subsequently to the shape by shape’ basis.

The Review Officer’s assessment

39.         The relevant provisions of the Act and Customs’ policy on anti-dumping matters guide Customs’ approach to any investigation.  Customs’ decision to calculate dumping margins on a shape by shape basis was made in response to its assessment that differentials in price existed between different shapes of the goods under consideration.  Customs applied a consistent approach to its dumping margin assessment using a shape by shape weighted average export price and a corresponding normal value.

40.         The Review Officer affirms Customs’ decision to calculate dumping margins on a shape by shape basis.

Material injury

Market Size

ASA’s claims are:

41.         The ASA is in agreement with the Applicant’s comments expressed in Para 3.2 (e) of our application, being reference to Folios 66/67 of the Public File submission of 11th March 02 by OneSteel

The ASA provided Customs with the Steel Institute of Australia monthly sales figures for ‘structurals which for the 12 months of the investigation period totalled 281,840 Tonnes.

ABS import data for the same period indicated a quantity of over 56,000 Tonnes making an apparent market supply of around 338,000 Tonnes.

Customs estimated market ‘supplies’ for the relevant Structurals on a year by year basis which for year 2001 was 250,000 Tonnes.

Steel Institute of Australian sales data for the year 2001 was around 284,000 Tonnes.

ABS import data for Structurals indicates a total volume of around 83,000 Tonnes and an apparent market supply of 367,000 Tonnes.

If Customs is incorrect in its market supply analysis then over 117,000 Tonnes or nearly 32% of the apparent market supply is ‘non relevant product’.

This however, does not accord with the Applicant’s comments or with our member companies experience.

The other conclusion can only be that the Steel Institute sales data for Structurals is unreliable. 

In any event, the ASA seeks a review of the market supply estimates by Customs.

The Review Officer’s assessment

42.         Based on the circumstances surrounding the available information used by Customs in determining its estimate of the size of the Australian market for structural steel, the Review Officer affirms Customs’ approach in determining the size of the Australian market using data from its own commercial database and verified sales information gathered from the Australian industry, importers and exporters.

Apparent production

ASA’s claims are:

43.         OneSteel’s application stated that Whyalla produces approx. 1.2 Million Tonnes of Steel each year and about 65% - say 780,000 Tonnes – is transferred by rail to market mills in billet form.

Around 420,000 Tonnes therefore was ‘left’ for Slabs and Blooms (for Structurals and Rail).  Attact A.2.2.-1 refers.The SEF states that around 55% of that steel is transferred to market in mill in Billet Form, which at a steel output of 1.2 Mill TPA is around 120,000 Tonnes less Billet and more Slabs and Blooms.ASA seeks a review of the Applicant’s steel production of Blooms used in the manufacture of Structurals and Rails.

 

Market ShareGiven our market supply estimates of 4.1, the ASA believes the changes in market share as shown in 8.4.2 of Report No. 55 may need to be reviewed.

The Review Officer’s assessment

44.         The Review Officer does not believe that there is a need to review the Applicant’s steel production of Blooms used in the manufacture of Structurals and Rails and affirms Customs’ estimates of production estimates.

Causality

ASA’s claims are:

45.         In terms of causal link and other factors, the ASA had previously outlined its concerns on how Customs has treated the

  • - Supply Exclusion Factor
  • - Other Imports
  • - Price Undercutting
  • - Exclusion of ‘associated import’

Report No. 55, Part 9.5 on Cumulation, however, makes no real sense:-

‘ and the levels and trends of prices, price undercutting price depression and price suppression’.

Whilst the Applicant did not, on our reading claim price suppression, it failed to provide any reasonable understanding of price and price depression.

Customs Report on its visit to the Applicant stated that its domestic prices had fallen more than 10% since 1998 to year 2000/2001. – Refer 5.3 Visit Report.

This represents a nominal fall of around $100 per Ton. 

Report No.55, on dumping Margins and Price Undercutting, determined the following estimated price falls of from 13% to 41% being attributed to Dumping.

 

Country

Dumping Margin

Price Undercutting

Thailand

3.52%

13%-27%

Korea

18.25%

19%-41%

Sth Africa

(Beams, Columns)

42.59%

13.8%-25%

Ref: 7.4

Ref:8.3.1

Report No. 55 noted that the Price Undercutting margins were lowest in 2001 which suggests that for Thailand 13% Price Undercutting occurred; for Korea 19%, and for South Africa 13%.

In respect to Causality, however, how can, in the case of say Thailand, an assumed A$20 dumping margin cause an estimated A$120 per ton Price Undercutting attributable to dumping.

On Korea, an assumed A$70 per ton Dumping Margin is said to have attributed to a price underselling of A$170 per Ton.

ASA claims that the Causality for claimed Price Undercutting can not be attributed to dumping.

 

The Review Officer’s assessment

46.         Customs found that exports from Korea, Thailand and South Africa were sold onto the Australian market at dumped prices.  Customs was satisfied that these dumped imports were sold at prices that undercut OneSteel’s prices.  Customs was also satisfied that that dumped imports had gained market share at the expense of OneSteel and as a result of price depression, price suppression, reduced sales volume and reduced market share OneSteel suffered loss in profits and profitability.

47.         The Review Officer affirms Customs’ finding that OneSteel suffered material injury.  However the Review Officer does not affirm Customs’ finding that it has not attributed any injury caused by other factors to structural steel exported from Korea, South Africa and Thailand.  The Review Officer considers that the effect of non-dumped imports needs to be reinvestigated and this impact quantified as to the impact it has had on the material injury suffered by OneSteel.

48.         The Review Officer is of the opinion that Customs should reassess the matter of causality to the extent that it relates to the issue of other factors that may have contributed to material injury suffered by the Australian Industry.

Causality, other factors

ASA’s claims are:

49.         Customs had the Applicant’s 2001 Annual Report which not only reinforced the view that ‘this is a company in transition’ whose commencement coincided with the investigation period – 1/10/00.

More significant, however, was the Applicant’s analysis on its key business drivers, namely:-

Non-residential ConstructionResidential ConstructionIn their own words there was a synchronised downturn in activity with the main reason being ‘the pulling forward of construction activity into the 1999/2000 year related to the Sydney Olympics and the introduction of the GST’

52% of the Applicant’s revenue is derived from construction and as the Annual Report states activity in the three construction sectors fell 16.3%,11.4% and 27.4%.

Whilst Customs claimed that it only looked at the Applicant’s ‘Sructurals’ results and not the whole of its activities, the fact is that all Structurals, as the Applicant clearly acknowledged, go into some form of construction.

The inevitable downturn in activity from what had been unprecedented highs in construction clearly coincided with the Applicant’s ‘new start’.

This causal effect has not, in our view, been given sufficient credence by Customs, which instead has attributed all material injury to ‘dumped imports’.

The Review Officer’s assessment

50.         See Review Officer’s assessment in paragraphs 31-33 and 47-49 regarding Customs’ approach in assessing material injury and associated causality.  The Review Officer recommends that Customs reassess causality to the extent that it relates to other factors contributing to material injury suffered by the Australian industry.

 Threat of material injury

ASA’s claims are:

51.         Whilst we have the benefit of hindsight, the US and world events would prove to have no affect on redirected imports ‘flooding’ the Australian market.  Although Customs had not been able to determine the real extent of other sourced imports, it has not affected exports to the US market from Korea, Thailand.

Customs, however, was satisfied that future imports from Korea and Thailand would be non-dumped and on this basis the Minister could not have been satisfied that imports that may occur in the future may be dumped.

Review Officer Assessment.

52.         Customs indicated that on the basis of available evidence, it is satisfied that, in the absence of measures, it is likely that dumping and material injury will continue.  Customs’ did not indicate that it was satisfied that future imports from Korea and Thailand would be non-dumped.

53.         Based on the circumstances surrounding the available information used by Customs, the Review Officer does not affirm Customs’ assessment that imports of structurals may occur at dumped prices.  The Review Officer is of the opinion that the information relating to threat is inconclusive and therefore insufficient to satisfy the Minister that future dumping will occur and material injury will continue.

54.         The Review Officer recommends that Customs reassess the issues relating to international trends and in particular the claim that the effect of US measures have had no affect on exports to their market from Korea and Thailand and as a result it would be unlikely that surplus exports would move into other markets and in particular the Australian market.

Non injurious price

ASA’s claims are:

55.         Customs claim to have no supporting evidence on the ASA claim that locally produced goods ‘demand’ up to a 10% price premium.

This factor, however, is a market reality and should be reviewed by Customs on the basis of having the Applicant quantify the Dollar value of its claimed tangible benefits which make up its ‘fair value’ market offer.

This factor not only affects the NIP calculation, it is also directly affects the consideration of price undercutting.

The ASA requested Customs to obtain relevant sales and market data from the ‘arms-length’ distributors and this involvement should be part of the Material Injury Analysis.

The US Authorities include distributor level of sales and market data.

Review Officer Assessment.

56.         The calculation of a NIP is based on the non-injurious price being defined as the minimum price necessary to remove any injury caused by dumping.  Given that the NIP has been calculated in accordance with Customs’ guidelines, the Review Officer affirms Customs’ calculation.

SYS-SIAM Yamato Steel Co Ltd.

Export price

SYS claims are:

57.         The assessed dumping margin for SYS was 3.52%

The transactions for the investigation period in question involved the export documentation being prepared by the Trading Arm, Siam Cement Trading (SCT).

Sales to Thyseen Mannesmann Trading (TMT), the Australian wholesaler, for example involved payment to SCT.  SCT effected payment to SYS.

As stated in the Customs Report on its visit to TMT, the invoiced sales by SCT were ‘generally’ Free Along Side Ship –FAS – Para 3.2 of Report refers.

This means FAS sales involved a further cost in getting the foods to FOB level, and on the data provided Customs as a consequence of its verification of TMT transactions, an amount of US$5 per tonne is payable to the Shipping Company was demonstrated to be the cost component the Shipping Company charged TMT.  All import transactions provided Customs in summary form included the US$5 cost to arrive at a FOB invoiced cost.

Confidential Attachment 5.1 to the Customs Normal Value Report for SYS at Point!, states that “SCT” then invoiced the importer.  The importer pays SCT the invoiced FAS price.  In the case of sales to MTC (Metalcorp)  -the importer pays SYS’.

Point 12 of that same Confidential Attachment 5.1 states that “SCT pays SYS the FAS price in Baht less a commission payable to SCT plus an allowance for an export refund.’

Confidential Attachment 2.1 concluded that ‘all charges after FAS are borne by the importer in Australia, including ocean freight and insurance.

The only matter in dispute is the amount of the charges paid for getting the goods from FAS to FOB in the port of Bangkok.  Customs from the ‘export’ end of the transaction determined a cost of 47 Baht – described as ‘wharfage’ whilst the actual cost of US$5 is for ‘lashing/stowing’ the cargo.

Additionally, it was demonstrated to and verified by Customs that TMT paid a commission of 1% of the invoiced FAS value of the goods to its agent in Bangkok.

The TMT Agent performs services on behalf of the importer and this service comprises a ‘pre’ FOB cost for TMT.

SYS is of the opinion that the Export Price for sales to TMT need to be ascertained in accordance with s 269TAB(1)(a), and not s269TAB(1)(c).

This is on the basis the legislation provides for the Export Price to include all charges up to the FOB level of sale and as such, there is no requirement or basis for Customs to adopt a treatment that the Export Price is the price paid/payable by the importer to the exporter.

Given the Export Price is the actual price paid/payable by the importer, the Export Price calculation for sales to TMT result in a higher than previously ascertained Export Price, in that:-

  • - 1 % Agent’s commission had to be added to the FAS price
  • - US$5 per Tonne is added to the FAS price
  • - Customs 47 Baht described as ‘wharfage’ is to be deducted
  • - SCT commission to be added to the Customs calculation.

In summary, around US$8 per Tonne could be added to the Export Prices. 

The Review Officer’s assessment

58.         Customs made an adjustment to the export price of 47 Baht to bring the FAS price to a FOB price.  Customs did not make any further adjustment for any further claimed charges to the export price.  Based on the available information and Customs’ approach to calculating an FOB price the Review Officer is of the opinion that Customs’ determination for an adjustment for FOB charges of 47 Baht be affirmed. 

59.         There is no evidence to suggest that Customs be required to make further adjustments in relation to claims for additional FOB charges.

Normal value

SYS claims are:

60.         SYS claims that is provided Customs with the information during the Normal Value Verification to justify it claims on price comparison.

Initially this was provided as a build up of component cost incurred in SYS domestic sales not incurred on the Australian export sales, and claimed as a level of trade adjustment.

SYS was provided with up to four Normal Value assessments from the time Customs investigation team left Bangkok, to when the SEF was produced in the SYS claims it was even changed on the day the SEF was produced for the Public File.

Additionally, the duty drawback claim was not allowed by Customs.

The Review Officer’s assessment

61.         Customs’ assessment of normal values was based on information obtained during its exporter visit and on further analysis of this information.  The approach taken by Customs was in accordance with the provisions of the Act and based on this assessment Customs decided that a level of trade adjustment was not to be made as there was insufficient information provided to support this claim. 

62.         The Review Officer therefore affirms Customs’ determination of normal values for SYS based on the information collected and its analysis thereof.

Dumping margin

SYS claims are:

63.         Given the SYS claims on the export price calculation, the consequent dumping margin had to be reduced to ‘de-minmus’.

SYS claims on the determined normal value further reduce the dumping margin.

SYS claims that a review of these two variable factors will result in a no dumping outcome for SYS exports.

Material Injury

SYS claims that a review of its variable factors as stated above will result in ‘no dumping’.

The Review Officer’s assessment

64.         The Review Officer has not recommended that Customs reassess normal values nor that Customs reassess export prices, therefore in the opinion of the Review Officer the determination of dumping margins for SYS is affirmed.

 

Causal link

SYS claims are:

Accordingly, the question of causal link is not a factor.

Even with the disputed 3.52% dumping margin, SYS claims that Customs treatment of its exports by cummulating with the other, lower priced , higher volume imports of say Korea, was inappropriate.

SYS requests the TMRO to consider a review of all the ‘statutory’ type material injury factors and whether dumped imports were the cause for the Australian industry’s claimed material injury.

The Review Officer’s assessment

65.         The Review Officer’s assessment of causal link is contained in paragraphs 31-33 and 47-49 above.

Threat of material injury

SYS claims are:

66.         SYS offered an undertaking that Customs recommended the Minister accept in respect of any future exports to Australia. 

The USA trade ‘safety’ measures excluded SYS exports of Structurals

The Review Officer’s assessment

67.         The issue of the offer of a price undertaking is a matter that cannot be reviewed by the Review Officer, as it is not a finding that is reviewable under section 269ZZA of the Act.

68.         The Review Officer’s assessment of threat of material injury is contained in paragraphs 59-61 above.

INI STEEL COMPANY (INI)Export price

INI’s claims are:

69.         S269 TAB (1) states if circumstances of transactions are;

Goods have been exported to Australia by other than the importer;

Importer purchased the goods from the Exporter;Transactions were arms-length

Then the Export Price is the price paid or payable for the goods by the Importer –(other than any post exportation charges).

Customs Report no. 55 states that ‘the Export Price is the price paid or payable by the importer to the Exporter”. - Para 7.2 refers

INI contends that the Export Price vide s269 is the price paid or payable for the goods by the Importer for all charges up to and including the point of exportation.

It is not, as Customs states, ‘the price paid or payable by the Importer to the Exporter’.

Circumstance – Findings

Customs Report No. 55 found that INI ‘is the Exporter’

In the case of Stemcor, Customs Report found that ‘INI negotiates the price with Stemcor but the Export Agent invoices Stemcor’

Customs was satisfied that sales by INI to the Australian Importers ‘were arms-length transactions in terms of s269 TAA’.

Stemcor is an Australian Importer.

STEMCOR

Both the Customs Visit Report to Stemcor and the SEF N0.55 (p.61) confirms that Stemcor was an Importer of the INI goods in question during the POI.

INI takes issue with Customs’ findings on the Export Price for sales to Stemcor, namely:-

  • - That INI is in fact the actual Exporter when INI factually sold to Hyundai Corporation and Stemcor paid Hyundai Corporation the invoiced FOB value.
  • - That ‘the Export Agent invoices Stemcor”.

It is unclear if the reference to Export Agent means Hyundai Corporation but in any even the Export Price should be the amount Stemcor paid to Hyundai Corporation.

Furthermore, the Export Price for INI sales to Stemcor should include the commission Stemcor pays its Agent, Sung Jin, being 1.5% of the Hyundai Corporations invoiced FOB price to Stemcor.

S269TAB(1)(c)

INI maintains that the Importer, Stemcor, did pay the Exporter, Hyundai Corporation and the Customs resort to s269 TAB(1)(c) is not correct.

As s269TAB(1)(a) fits the circumstance, there is no requirement for Customs to apply s269TAB(1)(c) is not correct.

The Review Officer’s assessment

70.         Customs was satisfied that sales to Stemcor were made through an agent and as such the importer did not purchase the goods from the exporter.  The price paid by Stemcor can not be assessed under s269TAB(1)(a) of the Act.  Customs determined that the exporter is INI and that the importer did not purchase the goods from the exporter.

71.         The Review Officer affirms Customs’ determination to assess export prices for sales to Stemcor under s269TAB(1)(c) having reviewed all circumstances surrounding exportation and the relevant documentation.

Sung Jin commission

INI’s claims are:

72.         Customs Importer Visit Report on Stemcor (Asia) Pty Ltd (Stemcor) confirmed Stemcor was an Importer of INI goods in question.  The SEF, Para 6.1 also refers (SEF No. 55)

That ‘Visit’ Report by Customs also confirmed that Stemcor purchases the INI goods through its buying Agent, Sung Jin, which receives 1.5% commission on the invoiced price.

Para 1.3.1 of the Customs Visit Report on ‘Relationship with Suppliers’ stated, that in respect to this 1.5% commission:-‘

Customs will determine if this is a pre or port exportation expense during its visit to INI’.

Customs Normal Value Report on the Visit Report to INI, however, did not deal with this expense paid by Stemcor.

It is, however, clearly a pre-exportation expense paid by Stemcor in the purchase of the subject goods from INI.

As such the 1.5% commission paid to Sung Jin needs to from part of the Export Price paid by Stemcor in accordance with the meaning of s269TAB(1).

Customs did not include this amount of 1.5% of the FOB invoiced value of the goods, being the invoiced value of the goods by Stemcor.

As such, the Export Price calculation for sales to Stemcor by Customs for the POI is wrong.

The 1.5% commission paid by Stemcor is not an item INI was responsible for in terms of the Customs Verification Visit to INI.

Customs was aware of the commission payment prior to visiting INI; Customs had stated it would determine its treatment of such during their INI visit; the Commission paid by Stemcor to Sung Jin was not taken into account by Customs.

Export Price – Stemcor

Customs Export Price calculation vide s269TAB(1)(a) for sales to Stemcor is considered flawed on the basis:-

  • - Hyundai Corporation was the Exporter.
  • - S269 TAB(1)(a) should apply.
  • - 1.5% commission paid Sung Jin forms part export price.
  • - Customs Export Prices for sales to Stemcor are lower than the legislation provides for.
  • - That amount can be expressed as a percentage of the FOB sale value of Hyundai Corporation’s invoice to Stemcor.
  • - The percentage is 3% comprised of:-
  • - 1.5%on sales from INI to Hyundai
  • - 1.5% paid to Stemcor to Sung Jin.
  • - Customs Basis 269TAB(1)(c)

The Act has no definition of ‘Exporter’ but for the INI – Stemcor ‘transaction’ it has to be Hyundai Corporation.

The Export Price is not, as Customs state, ‘only’ the price the Importer pays the Exporter.

Part 12.8 of the Customs Visit on INI is considered to be invalid, namely ‘we have considered that INI is the Exporter irrespective of the channels for invoicing and payment’.  This part does, however, confirm the 1.5% commission on FOB value for Hyundai.

The Export Sales route employed by INI has been the ‘industry’ practice by Japanese and Korean Steel Mills for more than 25 years.  Customs would know this from day to day ‘entries’.

Hyundai Corporation is a Trading Company and is not an associated company of INI.

Hyundai is the Exporter and does not sell goods on home market.

If Customs rationale for determining the Exporter as outlined in Part 7.2.1 of Report No. 55 is to be accepted, then Stemcor is not the Importer.

Importer

The Act does define Importer and for our situation it is the ‘beneficial owner of the goods at the time of their arrival within the limits of the Port of Australia.

On that basis, given that the Customs Visit to Stemcor confirmed and verified Stemcor’s contractual sales of the goods in question to Australian distributors, the Australian distributors customers of Stemcor are the Importers.

They in fact negotiate price, delivery and effectively cause the goods to come to Australia.

The Review Officer’s assessment

73.         Customs concluded that INI was the exporter irrespective of the channels for invoicing and payment.  The price paid by the Australian importer is the full price negotiated by the importer and INI.

74.         Based on the circumstances surrounding the available information in relation to exports used by Customs and the approach taken by Customs in its assessment of export price the Review Officer affirms Customs’ determination to assess export price under section 269TAB(1)(c).

Normal value H-Beams

INI’s claims are:

75.         Customs assessed Normal Value for INI sales of H-Beans under s269TAC(1), with adjustments to Domestic Selling Prices in accordance with s269ATC(8).

INI does not seek a review of the Normal Values assessed for Angels or Channels.

Domestic sales

76.         Part 7.3.1 of Report No. 55 on INI domestic Sales states:

‘As Domestic Sales at the same level of trade as Export Sales occurred in sufficient volume to permit fair comparison, Customs has based its assessment of Normal Value upon all of those sales.

Part 7.3.1 also states that ‘INI sells H-Beams domestically to distributors and end-users’.

Stermcor, the Australian Importer, is not a distributors or end-user in that its function is selling INI Beams to Australian distributors. 

Level of trade

77.         Stemcor occupies the trade level of a wholesaler in the distribution chain.

Customs Visit Report on Stemcor, Part 1.3.1, on the Company’s functions states that ’approximately 90% of all Stemcor’s Structural Steel is sold to 7 or 8 of Australia’s largest independent distributors.  It does not sell direct to fabricators’.

Export Sales to Stemcor were not at the same level of trade as INI domestic sales.

Misconception

78.         Part7.3.1 of Report No. 55, under the heading “adjustment’ states inter alia, -

INI claimed that an adjustment to Normal Values for level of trade was required as it sells to both distributors and endusers on the domestic market while all Export Sales to Australia are to distributors.’‘

Therefore, Customs used only sales to distributors in assessing Normal Values and no adjustment was required.’

The preceding statements are factually incorrect and could only possibly apply to ‘INI’ sales to Metalcorp as Stemcor is clearly a wholesaler, not a distributor.

Claims

79.         Customs practice and policy on level of trade adjustments is to distinguish a Company’s actual level trade by the trade level to which it in turn sells the goods and by the functions the company actually carries out.

Specifically, the policy and practice is that adjustments for differences are allowed where relevant sales of like goods at the next level of trade must be used to determine Normal Values.

In this instant, Customs used domestic INI sales to distributors to determine Normal Values for Export Sales to a wholesaler and did not allow or make any relevant or appropriate adjustments on the basis that the differences materially affected price comparability.

Part 12.1 of Customs Visit Report to INI states:-

‘We noted the weighted average INI Domestic Selling Price for H-Beam for the investigation period (all grades) to distributors was approximately 4.1% lower than to end users’.

That confirms Customs recognition of the price differences based on the level of trade, in this instant, 4.1%.

Customs ‘conclusion’ in Part 12.1, however, is flawed since it is based on a misconception.  “We propose to use only sales to distributors for the purpose of assessing Normal Values and not to make an adjustment for level of trade.

This conclusion was based on the notion INI sales to Hyundai to Stemcor were also sales to the distributor level of trade and clearly they were at the ‘lower’ wholesale level trade’.

INI claims it was denied the opportunity to benefit from a legitimate, factual positive adjustment of at least 4.1% to its normal Value Assessment.

INI were denied this benefit because of Customs incorrect treatment of Stemcor’s level of trade status.

The Industry norm of price differentials between wholesaler and distributor is known to Customs from verification of sales by the Australian Industry Applicant, One Steel.

That difference for purposed of price comparability is in the range of 5% to 10%.

INI Normal Value Assessment is incorrect since there was no allowance on price comparability for reasons of differences in the level of trade.

It is generally accepted that wholesalers are at the same level of sale as, say, the INI ‘ex-mill’ sales and that there is a distinct difference in prices between that and distributors.

Fair comparison

80.         Report No. 55 states –

‘Customs was not satisfied that the price comparison between Domestic and Export Sales is affected by any differences in indirect selling expenses’.

Indirect selling expenses are considered to be only one cost difference for purposes of comparable adjustments and INI claims it made this cost data available during the Customs Verification.

Common sense

81.         Whilst recognising the onus on INI to substantiate the cost differences in ‘Dollar pre Ton’ terms, commercial and common sense dictates that there must be costs associated with INI Domestic and Export Sales is affected by any differences in indirect selling expenses’.

Indirect selling expenses are considered to be only one cost differences in ‘Dollar per Ton’ terms, commercial and common sense dictates that there most be costs associated with INI Domestic Sales (on credit to distributors who can source ex-stock) that are not associated or incurred in larger volume, direct, ‘cash’ sales to an Export wholesaler to Australian distributors.

For the reasons outlined in Para 2.1 to 2.8, INI claims it was denied the benefit of this adjustment through a misconception of fact by Customs.

INI does not accept that Customs’ ‘refusal’ to entertain this adjustment was due to any omission on its part by way of not providing sufficient information during the verification.

 

The Review Officer’s assessment

82.         Based on the information submitted by INI that domestic indirect selling expenses were 0.25% of sales revenue while export sales represented 0.29% of sales revenue, Customs was not satisfied that there was sufficient explanation provided to identify indirect selling expenses in respect of discrete groups.  Customs was also not satisfied that the price comparison between domestic and export sales was affected by any differences in indirect selling expenses.

83.         The Review Officer can only consider the information that Customs used in making its assessment and based on this information the Review Officer affirms Customs’ decision not to allow an adjustment for indirect selling expenses.

Price premium

INI’s claims are:

84.         4.1 OneSteel Claims The Australian Industry Applicant, OneSteel, claims that in relation to its domestic sales of like goods, it has a standard market offer that ‘provides a competitive price at fair value, which includes tangible benefits’ such as:-

  • - Reliable delivery
  • - Short lead times
  • - Full product range
  • - Quality product
  • - Quality systems
  • - Market development
  • - Technical support

And 30 day term, etc..

Normal value

OneSteel’s tangible benefits of 4.1 justify a price premium for its domestic sales of like goods and it is only reasonable for Customs to apply this same ‘acceptance’ to INI’s domestic sales.

Reliance

This reinforces INI’s claim that its Normal Value Assessment, based on domestic sales to distributors, has to be adjusted downwards for reasons of any fair price comparability to wholesale export sales.

INI’s Normal Value Assessment by Customs fails to account for the differences in level of trade and as such is overstated by a leat 4.1% and that INI was denied any reasonable opportunity to claim and substantiate this ‘due allowance’ as provided for by 2269TAC(8).

The Review Officer’s assessment

85.         Customs’ assessment concluded that there was sufficient volume of sales to distributors upon which normal values could be based.  Customs used sales to distributors to calculate dumping margins therefore no level of trade adjustment was required.

86.         The Review Officer affirms Customs’ assessment of normal values based on sales to distributors.

Dumping margins

INI’s claims are:

87.         Stemcor Imports

Based on INI’s claims relating to Customs calculation and treatment of the Export Price to Stemcor as outlined in Part (A) of this application and INI’s entitlement to a level of trade adjustment as outlined in Part (B) of this application, these are obvious grounds for reviewing the 18.25% dumping margin.

Clearly, the 18.25% calculation being the difference between the assessed Normal Value for INI and the ascertained Export Price for Stemcor is flawed.

INI claims that the dumping duty margin should, factually, be no more than 10% based on:-

- Ascertained Export Prices being 3% less than the actual money price paid by Stemcor

- Assessed Normal Values not being on a fair comparison basis for reason of price differences of at least 5% between INI Domestic Sales to distributors and Export Sales to wholesaler.

- INI requests the TMRO to recommend a review of the dumping margin calculation based on the verified information held by Customs as a result of Customs’ visit to Stemcor and INI.

The Review Officer’s assessment

88.         The Review Officer affirms Customs’ determination of export prices and normal values therefore the dumping margins for INI remain unchanged.

Material injury: reasonable understanding ACDN 2000/32

INI’s claims are:

89.         Affected parties such as INI have access to the industry applicant’s non-confidential version of its submission claiming material injury.

The applicant, OneSteel claimed its case on material injury – ‘has been in the form of price depression and loss of volume equating to market share due to imports sold or offered at dumped prices’

OneSteel further claimed that the ‘major dimension of competition is price’

Pages 13,14, 15, and 16 of the applicant’s non-confidential submission on ‘price’ are virtually blacked out’, so as to preclude any understanding of what the applicant is claiming.

Australian Customs Dumping Notice No. 2000/32 is titled:-

‘Interested parties responsibilities in relation to the public record.  Provision of non-confidential versions of submissions.’

It reads ‘inter alia’:- ‘parties should ensure that non-confidential versions enable reasonable understanding of the substance of the information submitted in confidence’.

‘Parties present practice of simply deleting information in relation to costs or prices does not meet non-confidential requirements’

‘The same considerations also apply when a party is submitting to or responding to a question of material injury’.

‘The basis of the claim should be in a form that enables the other party to be aware of the particular areas of dispute.’

Given the critical nature of pricing, INI has been denied the benefit of having any, let alone, a reasonable understanding of OneSteel’s primary claims on material injury.

INI requests the TMRO to consider whether OneSteel’s public record submission satisfied the requirement of ACDN 2000/32.

The Review Officer’s assessment

90.         See the Review Officer’s assessment in paragraphs 24-26 concerning Customs’ approach to the issue of non-confidential submissions by interested parties.

 

S269ZJ(5) and (6)

INI’s claims are:

91.         Sections 269ZJ(5) and (6) of the Act provide that if the CEO disagrees with the party’s claim of confidentiality, etc., the CEO may disregard the information unless the information is demonstrated to be correct.

INI’s claim is that as OneSteel has made the following statements, it is entitled to be given an opportunity to ‘demonstrate the correctness’ of such information:-

Page 12 OneSteel submission:

‘In the case of South Korea the targeting of Australia for Export.’

Page 14 OneSteel Submission: ‘The dumped imported product is sold directly into the fabrication and end-user market by certain resellers, distributors and import stocklists at significantly lower prices than those of the majority of other distributors and resellers of OneSteel’s Hot Rolled Sections.

CEO Customs Given the blackouts of relevant information in OneSteel’s submission, the CEO could only have accepted the OneSteel claims – such as (a) and (b) – on the basis the CEO demonstrated them to be correct.

Non factual The Page 14 Statement at 2.2 (b), however, could not have been substantiated for reasons of:

a)             There are distinct levels of trade, namely

  • - Wholesaler (OneSteel/Stemcor)
  • - Distributor – “Importer Stockist”

         End-user - Fabricator

b)             Customs did not consider or take into account any sales by distributors or ‘Importer Stockists’ as it states in Report N0. 55: Part 6.1:- ‘

‘For injury analysis purposes, Customs considers that sales to distributors, whether these are sales by the Australian Industry, Importers or Overseas Mills is the appropriate level at which to compare sales of Structural Steel’.

c)             OneSteel, the manufacturing entity, as distinct from OneSteel the major distributor entity, could not have provided Customs with sales data.

d)             Customs rejected a request to consider sales, ‘into the market’ so as to test OneSteel’s claim of 2.2(b).

The Review Officer’s assessment

92.         See the Review Officer’s assessment in paragraphs 24-26 concerning Customs’ approach to the issue of non-confidential submissions by interested parties.

Industry structure

INI’s claims are:

93.         Any reasonable view of the Australian Industry Structure would conclude that:-

a) OneSteel is effectively the only producer

b) OneSteel dominates the distributor sector

c) OneSteel has the other significant distributors – ie Smorgen Steel – as ‘appointed distributor sectors.

d) OneSteel’s claim as stated can only be viewed as fallacious.

It must have been, as Customs verified, OneSteel’s own distributors selling ‘into the user market’ at significantly lower prices, etc..

OneSteel Requirements Given the price premium OneSteel ‘demand’ on its Structurals for reasons of ‘tangible benefits’ and the requirements it ‘demands’ from its appointed distributors, any material injury claims should have been ‘reasonably outlined’ to affected parties such as INI.

Non confidentiality requirement

INI’s claims are:

94.         S269 TB(4) indicates that OneSteel’s application must contain such information as the form requires.

Vide s269 TC(1) there must be a consideration by the CEO of Customs as to whether OneSteel’s application complied with s269 TB(4).

INI requests the TMRO to review this matter.

Whilst the CEO can exercise direction under s 269ZJ (6), INI has not been provided with any information that particularises the OneSteel claims on material injury.

The Australian legislation on this is consistent with Australia’s obligations under Article 6 of the Agreement on Implementation of Article 6 of the Agreement on Implementation of Article V1 of General Agreement on Trade and Tariffs 1994.

The Review Officer’s assessment

95.         See the Review Officer’s assessment in paragraphs 24-26 concerning Customs’ approach to the issue of non-confidential submissions by interested parties.

Causal link

INI’s claims are:

96.         OneSteel’s claim of causal link between ‘dumped imports’ and material injury is based on price undercutting by Importers to Distributors of Structural Steel. Reference; 9, Report No. 55

Customs is required under s269(TAE)(2) to consider what other factors may be causing or threatening material injury.

For reasons outlined in INI’s grounds for Review on Export Price, Normal Value and Material Injury caused by price underselling, INI needs to request a review on causal link.

This request is on the basis that the dumping margin calculated by Customs is considered to be incorrect and that a much lower margin should apply. 

It is then arguable whether the factual dumping margin for INI’s ‘Exports’ via Hyundai to Stemcor is the cause for OneSteel’s claimed, but not known or demonstrated, price reduction.

Report No. 55 found that ‘Korea” undercut OneSteel’s prices by between 19% and 41%.  INI’s claimed 10% dumping margin cannot therefore be the cause of OneSteel’s price undercutting of from 19%-41%.

INI also requests the TMRO to recommend that Customs should be required to provide detailed particulars on imports of other like goods in accordance with s 269TEA(2).

INI’s understanding is that Customs has an obligation to ensure that all imported goods are entered correctly.  Customs must do more that claim it ‘is unable to determine if the identified imports are like goods’ as it states in Part 10.1 of Report No. 55.

INI would like the TMRO to review this requirement and recommend that Customs fulfil its obligation on such.

 The Review Officer’s assessment

97.         See Review Officer’s assessment paragraphs 31-33 and 47-49 concerning Customs’ assessment of other factors contributing to material injury suffered by the Australian Industry.

Threat of material injury

INI’s claims are:

98.         S269TG(2) requires that the Minister must be satisfied that future imports may be dumped before imposing any measures.

INI offered an undertaking under s269TEB that its future exports would not be at dumped or less that fair value prices.

Customs recommended the Minister accept the undertaking.

The Minister could not have been satisfied that future imports from INI that may occur may be ‘dumped’.

Customs also confirmed that the volume of INI ‘sales’ by Stemcor were to Smorgen Steel.

Part 10.1 Report 55 states that in confirming OneSteel has a .’new supply’ agreement with its appointed distributor, Smorgen Steel, it will be forced to lower its price in order to complete with dumped prices in the future’.

INI, however, provided an undertaking, accepted by ‘Customs, that its future ‘imports’ would not be dumped.

Logically, therefore, any price ‘lowering’ by OneSteel could not be attributable to INI’s future ‘imports’.

The Minister has erred in taking measures against INI for reasons of s269TG(2) in that Customs provided the Minister with a recommendation that future INI ‘imports’ would be non-dumped.

The Review Officer’s assessment

99.         The decision by the Minister not to accept the offer of a price undertaking is not a decision that can be reviewed by the Review Officer.  An offer of a price undertaking and the recommendation by Customs that the Minister accept that price undertaking does not infer that the Minister could not be satisfied that future imports from INI may be dumped. 

International trends

INI’s claims are:

100.     Part 10.2 of Report No.55 titled ‘International Trends’ is considered fallacious in respect of the goods in question.

There is no basis for the following statements by Customs:-

  • - ‘It appears that the Section 201 action will have a further depressing effect on world steel prices, as EU estimates indicate that around 15 million Tonnes of steel products are subject to the US measures’
  • - ‘Prices n the US have risen as a result of Section 201 action.  However, the increase in US prices has not been matched by an increase in prices from other sources’
  • - ‘World prices are unlikely to recover in the short term because of the availability of steel that was destined for the US market’.

There is no apparent source for these comments by Customs to the Minister which presumably were offered around May 02.

Minister announced his decision on July 5th 02.

Following on the Customs comments stated in para 3.2 (a), (b), (c), Customs Report to the Minister concluded with:-

On the basis of available evidence, Customs is satisfied that, in the absence of measures, it is likely that dumping and material injury will continue.

Concern is that the Minister’s decision was influenced by Part 10 of Report No. 55 which apart from being irrelevant for the goods in question, is simply wrong in respect goods other than the like goods in question.

Fact is that the ‘201’ measures invoked by the US President, referred to and relied on by Customs in its Report, excluded imports of the goods in question.

As for any question of re-directed imports of like goods from the US Market, the reality, based on fact, is that it is totally, a non issue.

Additionally, OneSteel issued a press release on 6/3/02 headed ‘Impact of US Section 203 Decision Negligible’.

On March 5 2002, the President (Bush) issued Proclamation 7529 which established increased in duty and a tariff rate quota (safeguard measures) pursuant to Section 203 of the Trade Act on Imports of Certain Steel Products. 

Certain Steel Products, however, were excluded from Section 203 Safeguard Measures, and Hot Rolled Structural Shapes of Angle, U., I., H., are excluded – Ref N319-04.

Part 10 of Report No. 55 also failed to mention to the Minister that Steel Products fall within two broad but distinct categories, namely:-

  • - Flat Products
  • - Long Products

H.R. Structurals fall within Long Products category and overseas price have increased.  INI’s Exports of H.R. Structurals to the US were not affected by the US measures.

On Flat Products for example the commodity product is Hot Rolled Coil.

Prices, universally, have increased from

  • - US$170 per Ton FOB in Feb. 02 to
  • - US$310 per Ton FOB in June 02.

Customs comments in Part 10 are unfounded, are considered misleading, and would have influenced the Minister’s decision.

INI has the view that Customs should have canvassed and verified its comments before providing them to the Minister.

INI’s domestic situation on HR Structurals has changed significantly since the POI and the TMRO is requested to recommend the Minister initiate either a Review or Reinvestigation.  It should be taken into account that when Customs state that INI’s ‘Export’ Prices declined in the second half of the POI, so too did INI’s Domestic selling Price.

Those price variables, however, are no longer relevant in terms of INI’s future ‘imports’ to Australia.

The Review Officer’s assessment

101.     -See Review Officer’s assessment in paragraphs 47-49 regarding Customs’ approach to threat of material injury.

 

Non injurious price

INI’s claims are:

102.     TMRO is requested to recommend that Customs take account of OneSteel’s claimed tangible benefit when determining a non-injurious price at FOB level.

The tangible benefits which OneSteel claim justifies its fair value market offer are itemised in Para 4.1 of Part ‘B’, Page 15 of this Application.

All of those benefits incur a direct cost and as such OneSteel should be required to quantify the component benefits so as Customs can fairly determine a NIP.

The Review Officer’s assessment

103.     The calculation of a NIP is based on the non-injurious price being defined as the minimum price necessary to remove any injury caused by dumping.  Given that the NIP has been calculated in accordance with Customs’ guidelines, the Review Officer affirms Customs’ calculation

Review Officer’s Recommendations and Conclusions

104.     In conducting this review, the Review Officer has taken account of all the evidence available to Customs during the course of its inquiry as well as the arguments contained in applications and submissions presented to the Review Officer.

105.     The reviewable decision by the Minister in this particular case is:

  • - a decision by the Minister that section 8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to:
  • - the goods and like goods exported to Australia from Korea and Thailand and entered for home consumption after 15 April 2002 and before 5 July 2002;  and
  • - like goods exported to Australia from Korea and Thailand and entered for home consumption after the date of publication of the Minister’s decision.
  • 106.     The foregoing analysis shows that, in the opinion of the Review Officer, Customs’ findings in respect of:
  • - causal link, to the extent that it relates to the issue of other factors that may have contributed to material injury;  and
  • - Customs’ determination that future dumped imports from Korea and Thailand may cause material injury to the Australian industry if measures are not imposed;

need to be reinvestigated.

107.     Accordingly, the Review Officer recommends that the Minister’s original decision in this matter be set aside pending a reinvestigation by Customs of the matters referred to in the preceding paragraph.

16 October 2002

Richard Oliver
Trade Measures Review Office