Review of decision in respect of anti-dumping action against exports of certain hot rolled steel from China, Indonesia, Japan and the Republic of Korea

20 July 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 of Customs to reinvestigate the finding(s) which formed the basis of the reviewable decision.
  9. In conducting a review, the Review Officer must have regard only 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 t he 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 20 August 2003, following an application by BHP Steel (AIS) Pty Ltd (BHPS), Customs initiated an investigation into the alleged dumping of certain hot rolled plate steel (plate steel) exported to Australia from China, Indonesia, Japan and the Republic of Korea (Korea). During the course of its inquiry, Customs found that the dumping margin for exports of plate steel from Korea by Dongkuk Steel Mill Co., Ltd (Dongkuk) was negligible and, as a result, Customs terminated its investigation in respect of that exporter on 21 January 2004.
  14. Subsequent to the initiation of the inquiry, the applicant, BHPS, advised Customs that, effective from 17 November 2003, BHPS commenced trading as BlueScope Steel (AIS) Pty Ltd (BlueScope). BlueScope is the only Australian manufacturer of the goods the subject of the inquiry.
  15. The goods under inquiry are hot rolled plate steel with a thickness of 4.75mm or more quoted to Australian/New Zealand Standard 3678 grades 250 (excluding plate steel over 150mm in thickness) and 350 (excluding plate steel over 100mm in thickness). The application also excluded:
    • plate sheared from hot rolled coil;
    • boiler plate or pressure vessel plate;
    • quenched and tempered plate;
    • welded beam plate;
    • analysis grades of plate; and
    • impact tested plate.
  16. On 22 March 2004, Customs presented the Minister with its final report in respect of Customs' investigations and findings in relation to this matter.
  17. In its report to the Minister, Customs found that:
    • exports of plate steel from China, Indonesia, Japan and Korea (except by Dongkuk) were dumped;
    • the Australian industry producing like goods suffered injury in the form of price undercutting, price depression, price suppression and reduced profits and profitability;
    • there was a causal link between the dumped imports and the injury to the Australian industry and the injury was material; and
    • future exports of plate steel from China, Indonesia, Japan and Korea were likely to be dumped and material injury to the Australian industry was likely to continue.
  18. Towards the conclusion of its inquiry, Customs received offers of price undertaking from two Indonesian exporters - PT Gunung Raja Paksi (Gunung) and PT Gunawan Dianjaya Steel (Gunawan).
  19. Customs recommended in its report to the Minister that anti-dumping measures be imposed in respect of plate steel exported to Australia from China, Japan, Indonesia (except by Gunung and Gunawan) and Korea (except by Dongkuk). Customs recommended that the Minister accept the price undertakings offered by Gunung and Gunawan.
  20. The Minister accepted Customs' recommendations on 25 March 2004.
  21. In April 2004, the Australian Steel Association Inc (ASA) lodged an application with the Review Officer for review of the Minister's decision to impose anti-dumping measures in respect of plate steel exported to Australia from China, Japan, Indonesia (except by Gunung and Gunawan) and Korea (except by Dongkuk).
  22. The Review Officer accepted the application and, on 21 May 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 submissions were received from ASA and BlueScope.

    THE REVIEW
  23. The application for review from ASA was received on 30 April 2004 and a supporting submission from the applicant was received on 3 May 2004. A copy of ASA's submission is at Attachment A to this report.
  24. ASA is an organisation representing importers of steel products including plate steel.
  25. ASA argued that Customs' report in this matter was flawed and challenged the findings of Customs in relation to:
    • material injury;
    • causal link; and
    • threat of material injury.
  26. Further details in relation to ASA's claims in its application for review are at Attachment A.

    The Review Officer's Assessment
  27. The Review Officer's assessment of the above claims by ASA follows.

    Material injury
  28. In its final report to the Minister, Customs found that the Australian industry producing plate steel (BlueScope) suffered material injury in the form of price undercutting, price depression, price suppression and reduced profits and profitability.
  29. In assessing injury to the Australian industry, Customs examined the Australian market and the economic performance of BlueScope over the five year period 1 July 1998 to 30 June 2003 (referred to by Customs as the injury analysis period).
  30. At the same time, Customs examined exports of plate steel to Australia from China, Indonesia, Japan and Korea over the one year period 1 July 2002 to 30 June 2003 (referred to by Customs as the investigation period) to determine whether the goods had been dumped.
  31.  However, in its report to the Minister, Customs failed to identify the date from which it was claimed by BlueScope (the applicant) that material injury from dumped imports had commenced. This is a serious omission since it is crucial in any dumping investigation, for the purposes of comparison, to delineate between periods when dumping was not claimed to have been causing material injury and periods when dumping was claimed to have been causing material injury.
  32.  Because of this, the Review Officer has examined the original application by BHPS (now BlueScope) as well as the relevant Customs files to establish when injury from dumped imports was claimed to have commenced.
  33. The application by BHPS states: "In order to establish the base year for injury, BHPS AIS has included data….back to 1990-91". The application further states: "Although BHPS AIS did suffer injury from imports during 1997-98, for the purpose of this application, BHPS AIS has established the injury period for the examination of material injury claims to be from 1998-99 to the present".
  34. In its initiation report for the inquiry, Customs stated: "BHPS AIS claims it has been suffering injury from the early 1990's. However, for the purpose of this application, BHPS AIS has established the injury examination period from 1998-99 to 2002-03". In its subsequent statement of essential facts, Customs did not address the question of when material injury from dumped imports was claimed to have commenced.
  35. On the basis of the available evidence, the Review Officer concludes that the applicant has claimed that material injury had been caused by dumped imports of plate steel since 1990-91 and certainly from 1997-98 onwards. This means that the five year period in which Customs examined the Australian market for injury assessment purposes (the injury analysis period: 1998-99 to 2002-03) is, in its entirety, a period in which it was claimed that material injury was caused to the Australian industry by dumped imports.
  36. In other words, each of the five years from 1998-99 to 2002-03 is a year in which dumping is alleged to have caused material injury to the Australian industry. Accordingly, a comparison of developments in the Australian market in 1998-99 with those in 2002-03 is not a comparison of a market unaffected by dumping with a market affected by dumping. Indeed, the important point to be emphasised is that 1998-99 is, in fact, a period in which it has been claimed by the applicant that dumped imports did cause material injury to the Australian industry. It is in the light of this that the following analysis proceeds.
  37.  As mentioned earlier, in its examination of the economic condition of the Australian industry, Customs found evidence of price undercutting, price depression, price suppression and reduced profits and profitability. In its report to the Minister, Customs concluded that "its analysis supports the industry's claim that it has suffered injury".
  38. Customs did not, however, specify the period or periods during which injury was found to have been suffered but, as has been stated, Customs' injury analysis period was from 1998-99 to 2002-03 so it must be concluded that Customs found that the Australian industry suffered material injury at some time during that period.
  39. The applicant for review, ASA, claimed that Customs wrongly concluded that BlueScope had suffered material injury, primarily in the form of a diminution of profits, and requested that the Review Officer recommend that Customs reinvestigate the material injury claims. In essence, ASA argued that the evidence did not support a finding of material injury (for further detail, see Attachment A).
  40. The Review Officer has examined all the available data and considers that the Australian industry did not suffer material injury in 2002-03 (the most recent period examined by Customs). In that year, BlueScope increased production and sales of plate steel by almost 10 per cent compared to 2001-02 and its market share improved by 6 percentage points in a slightly smaller Australian market. In addition BlueScope's profits and profitability improved dramatically in 2002-03. From a position of loss in 2001-02, BlueScope's financial performance in respect of its domes tic sales of plate steel rebounded strongly in 2002-03 to a position of strong profits and profitability in that year.
  41. In respect of BlueScope's profits and profitability in 2002-03, Customs stated that "although there has been a recovery in 2002-03, the profits and profitability in that year (were) at levels significantly lower than in 1998-99". Customs further stated that "Customs found that there was a downward movement in profits and profitability from 1998-99 to 2002-03. Customs is satisfied the level of profits and profitability are lower than could be achieved in the absence of dumping".
  42. The Review Officer does not agree with this analysis. It is true that BlueScope's profits and profitability were healthier in 1998-99 than in 2002-03. However, the Australian industry's profits and profitability (and overall economic performance) in 2002-03 were strong and were a substantial improvement on the industry's performance in the previous year. BlueScope's economic performance in 2002-03 was such that the Review Officer (as has been stated) does not consider that BlueScope suffered material injury in that year.
  43. Further, it is not helpful to compare BlueScope's profits and profitability in 1998-99 with those in 2002-03 since, in both of those years, BlueScope claimed that dumped imports had caused material injury to the Australian industry. There is no more reason to compare 2002-03 with 1998-99 than there is to compare 2002-03 with any of the other years examined by Customs in its injury analysis period - none of the years examined by Customs illustrate the Australian industry's performance in a market allegedly unaffected by dumping. Customs has, therefore, no grounds on which to be satisfied that BlueScope's profits and profitability in 2002-03 were lower than could have been achieved in the absence of dumping.
  44. In summary, the Review Officer's analysis of the evidence shows quite clearly that the Australian industry, BlueScope, did suffer material injury in the three years 1999-2002. However, there is no evidence to suggest that BlueScope suffered material injury in either 1998-99 or 2002-03 - in fact, quite the opposite was the case.
  45. The Review Officer concludes, therefore, that the Australian industry suffered material injury in 1999-00, 2000-2001 and 2001-02 from some cause or causes. The Australian industry did not suffer material injury in 1998-99 and 2002-03.
  46. Accordingly, the Review Officer recommends that the Minister direct the CEO to reinvestigate Customs' findings in relation to material injury.

    Causal link
  47. In its final report to the Minister, Customs concluded that dumped imports of plate steel from China, Indonesia, Japan and Korea had caused material injury to BlueScope in the form of price undercutting, price depression, price suppression and reduced profits and profitability. (The Review Officer notes that there is no indication as to exactly when this was found to have occurred.)
  48. Customs considered that the degree and regularity of price undercutting by dumped imports and the price depression of the Australian industry's prices could be reasonably linked to the existence of dumped imports in the Australian market. The consequent price suppression had resulted in reduced profits and profitability of a level that could not be described as immaterial, insubstantial or insignificant (sic). Customs considered the price and profit effects caused by dumping were greater than that likely to have occurred in the normal ebb and flow of business.
  49. The applicant for review argued that Customs had wrongfully attributed any material injury to dumped imports.
  50. ASA pointed out that Customs had nominated the five year period from July 1998 to June 2003 for the purposes of evaluating the industry's injury claims and had nominated the one year period from July 2002 to June 2003 as the investigation period for determining if exports were dumped.
  51. ASA stated that Customs could not therefore make any finding based on any factual information as to whether the goods in question were dumped during the period July 1998 to June 2002. In essence, ASA argued that, although Customs had found that the goods had been dumped in 2002-03, Customs could not merely assume the goods had been dumped prior to July 2002. In this respect, ASA argued that BlueScope's material injury claims emanated from factors prior to July 2002.
  52. The Review Officer agrees with this line of reasoning by the applicant.
  53. In essence, section 269TG of the Act stipulates that, for the Minister to take anti-dumping action, the Minister needs to be satisfied that the goods under inquiry have both been dumped and because of that, material injury has been caused or threatened to the Australian industry.
  54. The Review Officer is of the opinion that the evidence shows that:
    • the goods were dumped in 2002 -03;
    • there is no evidence to determine whether or not the goods were dumped in the four year period 1998-2002
    • the Australian industry did not suffer material injury in 1998-99;
    • the Australian industry suffered material injury over the three year period 1999-2002 from some cause or causes; and
    • the Australian industry did not suffer material injury in 2002-03.
  55. The only year in which dumping of the goods can be taken to be proven or established is 2002-03. However, in that year, the evidence shows that the Australian industry did not suffer material injury. The Minister cannot therefore be appropriately satisfied for the purposes of taking anti-dumping action as required by the Act. Prior to 2002-03, it cannot be established that the goods were dumped.
  56. The Review Officer concludes that, on the basis of the available evidence, it is not possible to establish a causal link between dumped imports and material injury to the Australian industry. Simply put, dumping cannot be causing material injury if there is no material injury and material injury cannot be attributed to dumping without evidence that dumping has occurred.
  57. Accordingly, the Review Officer recommends that the Minister direct the CEO to reinvestigate Customs' findings in relation to causal link.

    Threat of material injury
  58. In its final report to the Minister, Customs stated "there was general consensus amongst interested parties that the global market for plate steel will remain str ong for t he fore se eab le futu re, bei ng d riven b y inf ra s tru ct ure de velopments in China and shipbuilding activity in Japan and Korea". Customs also reported that interested parties gave evidence that there was currently a high demand for plate steel which was attributed to a number of factors including infrastructure and construction for the 2008 Olympics in China and ship building in China, Japan and Korea. It was said that this activity had impacted on the availability of plate steel for export to Australia and had also led to price increases. The global market was said to be forecasting rising demand and the Australian market was considered to be strong with demand being driven by large projects.
  59. In addition, Customs researched global steel markets and concluded that the global plate steel market was currently in tight supply. The Review Officer's analysis of the evidence is that global capacity to supply steel products, including plate steel, is being outstripped by demand which has and continues to surge as described above. Interested parties claimed that there had been a recent reduction in global capacity in the steel industry (five steel mills in Japan had been rationalised under two corporate groups) which had affected supply. Customs found that China, Japan and Korea were gearing up to increase steel capacity to meet ever growing demand.
  60. Customs then, however, opined that any correction in the global market may result in excess capacity and/or production. Customs argued that there was an uncertainty surrounding supply and demand in the global steel markets and considered that failure to put in place a dumping duty notice would result in a continuation of material injury caused by dumping.
  61. The applicant for review, ASA, strongly refuted this finding by Customs. ASA stated that Customs had no factual basis for claiming a threat of material injury existed in that there was no foreseeable or imminent threat of material injury other than Customs' reliance on the local industry's assertions and unsubstantiated claims that a threat of material injury did exist.
  62. ASA said that Customs ignored factual information furnished by Japanese producers and exporters that there was simply no possibility of any threat of material injury due to the current, foreseeable global supply and demand situation. In essence, reports on the global steel supply and demand situation generally had been daily occurrences in not only the industry specific journals, etc., but all countries print and news media outlets had also "been reporting on the "China" factor "sucking" in all available steel products resulting in steel prices spiking to record highs and a demonstrable reduction in the availability of supply to markets such as Australia".
  63. The Review Officer agrees with the applicant. The available evidence portrays a global steel market characterised by burgeoning demand that will continue to stretch world supply capacity for the foreseeable future. There is no hint of evidence that this situation will change imminently or in the foreseeable future - indeed the available data indicates that current market conditions in the steel industry in Australia and overseas are likely to continue for quite some time. Therefore, it is the opinion of the Review Officer that there is no "correction" or "uncertainty" in sight.
  64. In addition, the Review Officer disagrees with Customs' conclusion that failure to put in place a dumping duty notice would result in a continuation of material injury caused by dumping.
  65. Firstly, the Review Officer considers that there is no material injury to be continued. The Review Officer has found that the Australian industry producing plate steel did not suffer material injury in 2002-03 (the latest period for which data is available). In that year, BlueScope increased production, sales and market share significantly and turned a loss situation into one of strong profits and prof itability
  66. Secondly, there is no imminent or foreseeable likely change to this turnaround in the Australian industry's fortunes. The evidence indicates that world demand for steel products, including plate steel, will continue to be strong for the foreseeable future. The Review Officer's assessment is that there are no likely changes in circumstances that would make any threat of material injury both foreseeable and imminent unless anti-dumping measures were imposed.
  67. The Review Officer concludes that there is no threat of material injury to the Australian industry producing plate steel from future dumped exports of plate steel from China, Japan, Indonesia and Korea.
  68. Accordingly, the Review Officer recommends that the Minister direct the CEO to reinvestigate Customs' findings in relation to threat of material injury.

    CONCLUSIONS AND RECOMMENDATIONS
  69. 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 the application and submissions presented to the Review Officer.
  70. The reviewable decisions of the Minister in this particular case are:
    • a decision by the Minister to publish a dumping duty notice under subsection 269TG(1) of the Act in respect of goods exported to Australia from China, Japan, Indonesia (except by Gunung and Gunawan) and Korea (except by Dongkuk); and
    • a decision by the Minister to publish a dumping duty notice under subsection 269TG(2) of the Act in respect of goods exported to Australia from China, Japan, Indonesia (except by Gunung and Gunawan) and Korea (except by Dongkuk).
  71. The foregoing analysis shows that, in the opinion of the Review Officer, Customs' findings in respect of:
    • material injury to the Australian industry;
    • causal link between dumping and material injury to the Australian industry; and
    • threat of material injury;
    • need to be reinvestigated.
  72. Accordingly, the Review Officer recommends that the Minister direct the CEO of Customs to reinvestigate the matters referred to in the preceding paragraph.

Richard Oliver
Trade Measures Review Officer

20 July 2004


ATTACHMENT A

 

 

 

NON-CONFIDENTIAL APPLICATION
FROM
AUSTRALIAN STEEL ASSOCIATION INC

 

 

 

IN RELATION TO CERTAIN HOT ROLLED PLATE STEEL EXPORTED FROM CHINA, INDONESIA. JAPAN AND THE REPUBLIC OF KOREA


Australian Steel Association Inc
ABN 24 762 435 928

Mr Peter Jonath
Trade Measures Review Officer
Australian Customs Service,
Canberra, ACT 2600


(via email)

 

 
NON - CONFIDENTIAL

 

ACDN 2004/09

Statement

on grounds for

Re-Investigation

Contact Details
Writer: M J Howard
Ph: 03-9338 8353
Fax: 03 9338 1434

May 2004

Introduction:

Dumping occurs when the Export Price is less than the Normal Value but before Customs can take any action against dumped goods, it must be demonstrated that "*not only is dumping occurring, but that the Australian industry has suffered material injury as a result". (* TMRO - HR Sections).

More importantly, however, and as the TMRO has previously stated: -

"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."

Critically, the TMRO has further stated:-

"Any injury that has resulted from other, clearly identifiable sources, must not be attributed to the dumping."

Finally, and again as the TMRO has stated: -

"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."

The ASA claims that the Minister's decision to publish Dumping Duty Notices in this instant was based on a flawed Customs report in that the Customs report wrongly concludes that the industry, namely Bluescope Steel has suffered material injury, primarily in the form of a diminution of profits, and further Customs have wrongly attributed this form of material injury to the dumped imports.

Moreover, Customs had no factual basis for claiming a threat of material injury existed in that there was no foreseeable or imminent threat of material injury other than Customs reliance on the local industry's assertions and unsubstantiated claims that a threat of material injury did exist.
Customs findings, and thus decision making, has to be in line with the real world and has to be based on factual material.

Whilst this factual material is obviously limited by way of what is reasonably available to Customs, it is our claim that in this instant, Customs ignored factual information furnished by Japanese Mill producers and exporters that there was simply no possibility of any threat of material injury due to the current, foreseeable global supply and demand situation.

The industry on the other hand had no factual material or market information necessary to substantiate its view, and this obvious absence of substantiated or verified information means that Customs failed in their duty to make decisions based on the most reliable, persuasive information available.

In essence, reports on the global Steel supply and demand situation generally have been "daily" occurrences in not only the industry specific journals, etc., but all countries print and news media outlets have also been reporting on the "China" factor "sucking" in all available Steel products resulting in Steel prices spiking to record highs and a demonstrable reduction in the availability of supply to markets such as Australia.

Information specific to the Steel Plate in question (GUC) was supplied to Customs which could only have substantiated the fact that future Plate exports to Australia, regardless of whether they would be dumped or not, represented no threat of material injury.

For example, the industry's reliance on extrapolation of import volumes is simply absurd due to such statistics being totally meaningless when viewed in any context of the real world situation on Plate Steel's global supply and demand.

Customs assessment on whether "dumping and material injury will continue" is considered contrary to the factual situation in that, for example, it ignores

1. the lead times involved with imports of Steel Plate from order date to arrival (and pricing contract dates, etc.);

2. the reality concerning the China and US removal of safeguard measures;

3. The actual detail on capacity increases in China, Japan and Korea and the real time factors on demand ‘drivers' for Plate such as shipbuilding and construction.


Details of Request:

1. Firstly, it needs to be recorded that the ASA member companies involved with this Customs investigation were provided all reasonable opportunity and due consideration in relation to the Customs investigation.

In this submission, the Association is referred to as the ‘ASA' and the application industry is referred to as ‘BSL'.

2. The thrust of our claims for a review of certain findings on material injury and causality comprises certain information the applicant industry (BSL) did provide, and information that was either not provided by BSL, or was not subjected to proper scrutiny due to BSL not disclosing relevant information.

3. Matter of Causation
Customs nominated the five year period from July 1998 to June 2003 for purposes of evaluating the applicant industry's injury claims (BSL).

The investigation period for determining if exports were dumped, however, was only the one year period from July 2002 to June 2003.

Customs could not therefore make any finding based on any factual information as to whether the goods in question were dumped during the period 1/7/98 to 30/6/02.

The ASA claims this is of critical importance in that: -

  1. (a) Customs could not merely assume the goods in question to have been dumped prior to July 2002;
  2. (b) Customs did not identify any material injury factors that must have impacted on the industry applicant BSL during the four year period July 1998 to June 2002;

  3. (c) The W.T.O. Agreement (Anti-Dumping Agreement) demands Customs comply with the essential requirement that any material injury finding must be caused by the dumped imports.
  4. (d) Clearly, this requirement has not been satisfied since BSL's material injury claims, on the balance of probability and reasonableness would have been caused by factors prior to July 2002 and those factors have not been attributed to any dumped imports.

4. Non Dumped Imports

Customs did, however, terminate the investigation concerning exports by the Korean Mill DongKuk during the investigation period July 2002 to June 2003.

There can be no argument that the DongKuk exports entered a single Australian market in competition with the dumped, (and other) exports and BSL's goods.

It must follow therefore that DongKuk's exports were the lowest priced source of non-dumped goods to the Australian market during the investigation period.

Customs state in para 8.4.3 of Report No. 76 that:-

"Customs notes the volume of Plate Steel imported from DongKuk, when considered in isolation, was considerable."

The market reality is that DongKuk imports compete for sales with other imports.

Customs "concluded" that:-

"Customs considers the prices of DongKuk Plate sold in Australian (sic) would also have been influenced by the selling prices of dumped imports."

The fact of the matter, however, is that the DongKuk imports were not dumped and thus the lowest priced source of non-injurious imports that entered a single market and at prices to the same level of trade and customer that the dumped imports had to compete with.

5. Conclusion

The fact that

  1. (a) the dumped exports had to compete for the same Australian sales as the non-dumped exports of DongKuk, and
  2. (b) Customs could not, prior to July 2002, attribute any material injury to dumped exports, means that Customs has not satisfied the requirements of Article 3.5 of the ‘Anti-Dumping Agreement' that reads: -

"The authorities shall also examine any known factors other than the dumped imports which at the same time are injuring the domestic industry, and the injuries caused by these other factors must not be attributed to the dumped imports."

s269 TAE (2A) of the ‘Customs Act' states the various, but non-exhaustive list of material injury factors that need to be taken into consideration by Customs and this sub-section mirrors the requirements of Articles 3.4 and 3.5 of the Anti-Dumping Agreement.

6. Relevance

The ASA claims that BSL knowingly and deliberately created a set of circumstances during the period prior to July 2002 that caused any material injury it claimed resulted from dumped imports and that Customs failure and inability to objectively examine the consequent impact of BSL's self inflicted injury has resulted in Customs wrongly attributing the effects of BSL's own induced causal factors to dumped imports.

The findings by Customs, in our view, make no distinction, in terms of act and degree, of any injurious effects of the BSL created factors (and non-dumped imports) and the dumped imports.

7. Material Injury Factors
7.1 BSL claimed injury in the form of:-

  1. • Loss of market share
    • Reduced utilization of capacity
    • Reduced profits and profitability
    • Price effects

7.11 Market Share
Contrary to BSL's claim, Customs found that BSL' market share was: -

"almost 10 percentage points higher in 2002-2003 than in 1998-1999."

7.1.2 Capacity Utilisation
The ASA challenges Customs finding that:-

"BlueScope's capacity remained unchanged over the injury analysis period."

If this finding is based on BSL's information than it is considered to be misleading in that no distinction has been made in respect of installed, nominal capacity and operating effective capacity.

As the ASA submission to Customs stated, BSL's publicly stated capacity to produce Steel Plate at the time of its demerger was 300,000 tonnes p.a..

Para 5.4 of Customs Report No.76 states the Australian market "was about 240,000 tonnes in 2002-2003" which means that for the goods in question, BSL sold around 160,000 tonnes.

Prior to its demerger, BSL had a known Steel Plate capacity of over 600,000 tonnes p.a..

The issue therefore is one of operating capacity compared to installed capacity and this has not been addressed by Customs.

Significantly, Customs did note that BSL's "only significant capital investment during the injury analysis period was in 1998-1999, and "this was for a new computer system".

This submission claims that demonstrably, BSL made decisions to:-

• Reduce its operating capacity by around half during the material injury analysis period


• Not to invest in the Steel Plate production facility
• Effect a consequent reduction in employment
• Focus on the more value added Hot Rolled Coil production for both domestic and export "consumption", etc..

These decisions by BSL must have had a financial impact on BSL in terms of:-

- Reduced output
- Higher unit cost to make due to non-cash expenses such as depreciation charges
- Designating the Plate Mill as a secondary or non priority product category as no capital investment was allocated to this facility for the past four to five years.

Accordingly, these BSL decisions must have had an adverse impact on profitability and this effect has been caused by BSL's management decision making, not by dumped imports. Customs cannot attribute this to dumped imports.

7.1.3 Price Effects
Customs state they found evidence of:

• Price Undercutting
• Price Depression
• Price Suppression

ASA challenges these findings on the basis of:-

- A lack of transparency on relevant pricing data

- A lack of independent export analysis of BSL's pricing and costing data, and specifically, its claimed unsuppressed selling prices, this analysis needs to be subjected to proper scrutiny since BSL, being an integrated Steel maker has the obvious ability to practice price and profit discrimination.


7.1.4 Other Issues
The most significant issues for the ASA include those concerning the distribution and marketing practices of BSL and the emergence of an end-user customer demand for value adding profiling services.

Re the BSL distribution policy, Para 8.4.1 of Customs Report No.76, for example, is rejected as being commercially unrealistic.

The facts are:-
• Market reality is that BSL will not supply all established distributors.

• Those distributors reliant on the only other source of supply - e.g. imports - cannot be expected or required to buy from their market competitors who are at the same level of trade and are favoured by BSL's discriminatory selling practices.

• Distributors in question have provided evidence to Customs on this discriminatory arrangement.

• The technological and customer driven demand for value added profiled Steel Plate services has been ignored by Customs in terms of this market development being a "causal factor".

• The consequence of BSL only selling to its favoured distributors and the customer demand for value added services means that BSL's elected market outlets cannot satisfy customer requirements.

The TMRO is known to be reluctant to consider distribution marketing policies as being a basis for a re-investigation.

The ASA urges the TMRO to reconsider its policy in light of market realities and causality of material injury.

Logically, if BSL decide not to service an existing, established, viable and legitimate segment of the market for Steel Plate, and that segment is totally reliant on imported goods which include non-dumped goods, then BSL, especially given its commercial decisions on production, etc., has no claim to Government protection.

Summary:

Diminution of profits is considered the most persuasive indicator for demonstrating any material injury and BSL, for reasons provided in this submission, has been totally responsible for its decisions causing the apparent reduction in Plate Mill profitability, namely:-

- Halving its production capacity;
- Failing to make any capital investment other than a computer six years ago;
- Refusing to supply an established and legitimate segment of the market.

The TMRO is requested to recommend that Customs re-investigate the material injury claims, the causality of any material injury and to have independent expert analysis undertaken on BSL's unsuppressed selling prices.

The ASA also claims that the absence of any imminent or foreseeable threat of material injury meant that the Minister had no proper or factual basis for imposing dumping duty measures.

The TMRO is urged to give particular consideration to BSL's marketing and distribution practices on the basis that the Government's policy is not to provide Australian industry with any unintended protection by way of five year dumping duty measures.