Review of decision to take anti-dumping action against exports of high density polyethylene from Singapore

 13 April 2004

 INTRODUCTION

  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, i.e. 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 dumping is occurring, but that the Australian 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 (or such longer period as allowed by the Minister) from the date of initiation of an investigation within which to make a recommendation to the Minister for Justice and 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.
     

    THE ROLE OF THE TRADE MEASURES REVIEW OFFICER

  4. The Trade Measures Review Officer (the Review Officer) is appointed by the Minister 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 (CEO) of Customs. 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 by 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 public 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 that 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.
  9. In conducting a review, the Review Officer must only have regard to the information to which Customs had regard when making the findings set out in its report to the Minister. Therefore, in conducting reviews, the Review Officer collects no new data but confines himself to studying the information which was available to Customs at the time of the submission of Customs' final report to the Minister. Applicants for review may (and frequently do) point to particular errors they believe Customs made and the Review Officer of course considers these allegations carefully. However, the Review Officer also examines all other steps in the reasoning used by Customs in coming to the findings under review
  10. 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 (or such longer period as allowed by the Minister in writing because of special circumstances) after that notification.
  11. 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.
  12. 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.
     

    BACKGROUND TO THE REVIEW

  13. On 11 October 2002, following an application by Qenos Pty Ltd (Qenos), Customs initiated an investigation into the alleged dumping of high density polyethylene (HDPE) exported to Australia from the Republic of Korea (Korea), Malaysia, Singapore, Sweden and Thailand. On 14 July 2003, Customs terminated its investigations in respect of one exporter from Korea, one exporter from Singapore and all exporters from Thailand because exports from those sources were either not dumped or were not causing material injury to the Australian industry.
  14. The goods under inquiry are described as HDPE, a polyethylene having a specific gravity of 0.94 grams or more per cubic centimetre. HDPE is produced in several grades and is used extensively in packaging. It also has application in the automotive, homewares and leisure, pipe and construction and wire and cable industry sectors.
  15. On 23 July 2003, Customs presented the Minister with its final report in respect of Customs' investigations and findings in relation to this matter.
  16. In its report to the Minister, Customs found that:
    • HDPE exported to Australia from Korea (except by Daelim Corporation), Malaysia, Singapore (except by Singapore Polymer Corporation (Pte) Ltd) and Sweden had been dumped and had caused material injury to the Australian industry; and

    • future exports from those sources may be at dumped prices and were likely to continue to cause material injury to the Australian industry.

  17. Accordingly, Customs recommended in its report to the Minister that anti-dumping measures be imposed in respect of HDPE exported to Australia from Korea (except by Daelim Corporation), Malaysia, Singapore (except by Singapore Polymer Corporation (Pte) Ltd) and Sweden.
  18. The Minister accepted Customs' recommendations on 5 December 2003.
  19. In January 2004, Chevron Phillips Singapore Chemicals (Private) Limited (CPSC) lodged an application with the Review Officer for review of the Minister's decision to impose anti-dumping measures in respect of HDPE exported to Australia from Singapore by CPSC.
  20. The Review Officer accepted the application and, on 13 February 2004, a public notice of the Review Officer's intention to conduct a review in this matter was published. Interested parties were invited to lodge a submission with the Review Officer and a submission was received from Qenos.
     

    THE REVIEW

  21. As mentioned previously, an application was received by the Review Officer for review of the Minister's decision to impose anti-dumping measures in respect of HDPE exported to Australia from Singapore by CPSC. The application was lodged by CPSC.
  22. The application was received from CPSC on 30 January 2004. A copy of the non-confidential version of CPSC's application is at Attachment A to this report.
  23. CPSC is a Singaporean exporter of HDPE and anti-dumping measures have applied to CPSC's exports to Australia since the Minister accepted Customs' recommendations in this regard on 5 December 2003.
  24. CPSC argued that Customs had erred in its investigation and challenged the findings of Customs in relation to:
    • determination of export price;

    • determination of normal value;

    • establishment of dumping and the level of dumping duty imposed;

    • calculation of unsuppressed selling price; and

    • assessment of material injury and whether dumping caused material injury.

  25. Further details of CPSC's claims in its application for review are at Attachment A.
     

    The Review Officer's Assessment

  26. The Review Officer's assessment of the above claims by CPSC follows.
     

    Determination of export price

  27. CPSC claimed that the export price ascertained by Customs for its exports was inaccurate and did not reflect actual transactions during the investigation period. The applicant stated that the export price set by Customs was "at levels far above those which the goods are sold domestically within CPSC's local market" and would exclude CPSC from remaining in the Australian market.
  28. The Review Officer has examined all the available information in relation to CPSC's exports to Australia. Customs has calculated weighted average export prices for CPSC's exports of HDPE to Australia over the investigation period. Being weighted averages, the resultant export prices do not, of course, necessarily correspond with any actual transaction prices over the period.
  29. The Review Officer has scrutinised Customs' assessment of export prices for CPSC and agrees with Customs' calculations in this regard.
  30. Accordingly, the Review Officer recommends that the Minister affirm Customs' findings in relation to determination of export price.
     

    Determination of normal value

  31. CPSC claimed that Customs had "erred in using the domestic price in calculating the normal value because of the lack of a comparative domestic market both in size and in grades of HDPE sold". The applicant contended that the normal value of HDPE could not be determined by sales on the domestic market in Singapore as the grades and quantities of sales in Singapore were not representative of the grades and quantities of sales to Australia. CPSC argued that Singapore had a very small domestic market for HDPE and that the company's total sales in Singapore represented only about 2.5 per cent of its total sales of HDPE. CPSC said it was effectively an export-oriented manufacturer and its selling prices were based on internationally competitive prices.
  32. Customs established normal values for CPSC under section 269TAC(1) of the Act using domestic sales by CPSC.
  33. Section 269TAC(2)(a) of the Act stipulates, in essence, that normal values cannot be ascertained under section 269TAC(1) of the Act if there is an absence, or low volume, of sales of like goods in the market of the country of export that would be relevant for that purpose. Section 269TAC(14) of the Act defines a "low volume" of domestic sales as less than 5 per cent of the volume of goods the subject of the application that are exported to Australia by the exporter.
  34. In its report to the Minister, Customs was satisfied that there was a sufficient quantity of domestic sales of like goods in the ordinary course of trade by CPSC for normal value purposes. The Review Officer has compared CPSC's domestic sales of HDPE (the goods the subject of the application) and its export sales to Australia during the investigation period and agrees with Customs. The Review Officer has found that CPSC's domestic sales of HDPE over the investigation period accounted for well over 5 per cent of CPSC's exports to Australia and were therefore suitable for normal value purposes under section 269TAC(1) of the Act.
  35. Accordingly, the Review Officer recommends that the Minister affirm Customs' findings in relation to determination of normal value.
     

    Establishment of dumping and the level of dumping duty imposed

  36. CPSC claimed that HDPE exported from Singapore had not been dumped onto the Australian market. The applicant disputed Customs' calculations of export price and normal value (see above) and maintained that only a small amount of HDPE exported from Singapore was dumped and the levels of dumping were negligible.
  37. Customs found that HDPE exported from Singapore to Australia had been dumped in substantial quantities during the investigation period and that the dumping margin was significant.
  38. Having reviewed all the available information, the Review Officer agrees with Customs' findings and conclusions in this regard and recommends that the Minister affirm Customs' findings in relation to the establishment of dumping. The level of dumping duty imposed is an issue considered in the next section of this report.
     

    Calculation of unsuppressed selling price

  39. CPSC argued that the unsuppressed selling price and the resultant non-injurious price should have been based on the lowest undumped import price in the Australian market rather than the industry cost to make and sell plus a margin for profit.
  40. This claim pertains to the level of dumping duty imposed as mentioned earlier (see paragraph 38 above).
  41. The unsuppressed selling price is the price at which a good could be sold in a market unaffected by dumped imports. The non-injurious price is the free-on-board equivalent of the unsuppressed selling price. Simply put, the unsuppressed selling price is the price at which an Australian industry could sell its goods in the Australian market when prices are not depressed by competition from dumped imports from any source. This unsuppressed selling price is necessarily a market price i.e. a delivered and final price. The non-injurious price is derived from this price by deducting the costs of importation (such as overseas and inland freight, handling, storage and delivery costs, duties payable and an amount for importer's profit) to arrive at a non-injurious free-on-board export price.
  42. The dumping duty payable is the difference between: the lower of the ascertained normal value or the ascertained non-injurious price; and: the ascertained export price. This is to ensure that, in accordance with Australia's obligations under the WTO Agreement, the dumping duty payable is less than the margin of dumping if such lesser duty would be adequate to remove the injury to the domestic industry.
  43. Customs, in its report to the Minister, considered different options for calculation of an unsuppressed selling price in this case. Customs did not consider it appropriate to use the lowest price for undumped imports as the basis for the unsuppressed selling price since selling prices in the Australian market had been affected by dumping. Customs calculated the unsuppressed selling price (and the resultant non-injurious price) using Qenos' cost to make and sell plus a margin for profit.
  44. The Review Officer, having considered all the available information, agrees with Customs in this regard and recommends that the Minister affirm Customs' findings in relation to calculation of unsuppressed selling price.
     

    Assessment of material injury and whether dumping caused material injury

  45. CPSC maintained that there could be no causal link between the export of HDPE by CPSC and the alleged material injury suffered by Qenos. The company argued that exports to Australia from Singapore had been relatively stagnant during the investigation period and that its HDPE prices were based on world prices. Qenos, it was said, could not be shielded from world prices and should not be protected from international competition. CPSC believed that Qenos, by instituting the dumping investigation, were trying to regain the market share and price they were achieving prior to industrial action. The applicant stated that CPSC should not be held responsible for any loss incurred (by Qenos) due to this industrial action and that anti-dumping measures should not be used to protect Qenos from the results of industrial action taken at their manufacturing facility.
  46. Qenos, in its original application to Customs, claimed that material injury from dumped imports had commenced during the third quarter of 2001. For the purposes of determining whether dumping had occurred, Customs examined imports in the period 1 October 2001 to 30 September 2002. For its injury analysis, Customs used the period 1 July 1999 to 30 September 2002.
  47. Customs, in its report to the Minister, acknowledged the impact that industrial action at Qenos' plant had had on the company's performance in the period September 2000 to September 2001 and found that Qenos' production was affected from the December quarter 2000 to the September quarter 2001. That period was excluded from Customs' analysis of the economic performance of the Australian industry.
  48. Customs found that, during the investigation period, significant volumes of dumped goods from Korea, Malaysia, Singapore and Sweden had been sold into the Australian market at prices that had undercut the Australian industry's prices. At the same time, the Australian industry had suffered injury in terms of price, profit and profitability. Customs was satisfied that, while there may have been other contributory factors, dumped HDPE from Korea, Malaysia, Singapore and Sweden had caused material injury to the Australian industry.
  49. The Review Officer has had regard to all the available information and agrees with Customs' analysis in respect of its assessment of material injury and whether dumping had caused material injury.
  50. The available data show that the impact of the industrial dispute at Qenos' manufacturing facility had clearly dissipated by the middle of 2001. Qenos had returned to full production of HDPE by the September quarter of 2001 and no longer needed to import product to cover the shortfall in its local production.
  51. However, in the period September 2001 to September 2002 (after the industrial stoppage), Qenos continued to incur significant losses on its production and sale of HDPE and thereby suffered material injury during that period. This contrasts with the period before the industrial unrest (September 1999 to September 2000) when Qenos' HDPE operations were profitable. It should also be noted that the period before the industrial action was not a period in which it was claimed that dumped imports had caused material injury to Qenos.
  52. In addition, there was verified evidence that, in the claimed injury period, the prices of dumped imports had extensively undercut Qenos' HDPE prices in the Australian market and Qenos incurred substantial losses in that time. The evidence shows that none of this can be attributed to the effects of the earlier industrial dispute.
  53. The Review Officer therefore concurs with Customs that dumped imports of HDPE from Korea, Malaysia, Singapore and Sweden caused material injury to the Australian industry in the claimed injury period.
  54. The Review Officer is also satisfied that HDPE exported to Australia from Singapore by CPSC during the claimed injury period was dumped. The dumping margin for CPSC's exports was not insignificant and the volumes involved were substantial.
  55. Accordingly, the Review Officer recommends that the Minister affirm Customs' findings in relation to assessment of material injury and whether dumping caused material injury.
     

    RECOMMENDATIONS AND CONCLUSIONS

  56. 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.
  57. The reviewable decisions of the Minister in this particular case are:
    • a decision by the Minister to publish a notice under subsection 269TG(1) of the Act (which provides that the Minister take action against dumped goods that have already been exported to Australia) in respect of HDPE exported to Australia from Singapore by CPSC; and

    • a decision by the Minister to publish a notice under subsection 269TG(2) of the Act (which provides that the Minister take action against like goods that may be exported to Australia in the future at dumped prices) in respect of HDPE exported to Australia from Singapore by CPSC.

  58. The Review Officer's analysis of the matters raised in the application for review indicates that the findings by Customs that formed the basis of the reviewable decisions should be affirmed.
  59. Accordingly, the Review Officer recommends that the Minister affirm the reviewable decisions.
 
Richard Oliver
Trade Measures Review Officer
13 April 2004
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