Commonwealth Numbered Regulations - Explanatory Statements

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CUSTOMS AMENDMENT REGULATIONS 2003 (NO. 9) 2003 NO. 319

Section 270 of the Customs Act 1901 (the Act) provides that the Governor-General may make regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed or as may be necessary or convenient to be prescribed for giving effect to the Act or for the conduct of any business relating to the Customs.

The purpose of the proposed Regulations is to prescribe matters to which the Minister must have regard in determining whether market conditions do not prevail in a particular country in respect of the selling price of goods, for the purposes of Australia's anti-dumping regime.

Under Australia's anti-dumping regime, dumping occurs where the export price of goods exported to Australia is less than the normal value of the goods, and material injury to an Australian industry producing like goods has been caused or threatened.

Generally, the normal value of goods is determined by the price paid for like goods sold in the country of export in the ordinary course of trade for home consumption in that country. However, where the economy of the country of export is an economy in transition from a centrally planned economy to a market economy, it is not possible to calculate the normal value of goods according to this general rule.

New subsections 269TAC(5D) and (5E) were inserted into the Act by Part 1 of Schedule 1 to the Customs Legislation Amendment Act (No. 1) 2003. Subsection 269TAC(5D) of the Act sets out how the normal value of like goods is to be determined by the Minister where he is satisfied that the goods have been exported from a country that has an economy in transition, and that at least one of four specified situations apply. Two of these situations are that:

•       the exporter sells like goods in the country of export and market conditions do not prevail in that country in respect of the selling price of those like goods; or

•       the exporter of the exported goods does not sell like goods in the country of export but others do, and market conditions do not prevail in that country in respect of the selling price of those like goods.

The third and fourth situations involve the exporter failing to satisfy the Chief Executive Officer of the Australian Customs Service, by way of a questionnaire, that the first two situations do not apply.

Subsection 269TAC(5E) provides that, to be satisfied that the conditions in the first two situations exist, the Minister must have regard to the matters (if any) prescribed by the regulations.

The amending Regulations prescribe matters for the purpose of subsection 269TAC(5E) by inserting new regulation 183 into the Customs Regulations 1926. These matters include whether the exporter or producer of the goods makes decisions about prices, costs, inputs, sales and investments in response to market signals and without significant interference by the government of the country of export and whether the entity keeps accounting records in line with international accounting standards. Other matters include whether the accounting records are independently audited and whether the country of export has laws relating to bankruptcy and property to which the exporter or producer is subject as well as matters relating to the organisation and ownership of an entity, the ability of an entity to carry on business activities and supply of major production inputs.

Details of the amending Regulations are set out in the Attachment.

The amending Regulations commenced on the commencement of Part 1 of Schedule 1 to the Customs Legislation Amendment Act (No. 1) 2003. That Part commenced upon a day fixed by Proclamation, which was 19 December 2003.

0301443A

ATTACHMENT

Customs Amendment Regulations 2003 (No. 9)

Regulation 1 - Name of Regulations

Regulation 1 provides that the amending Regulations are named the "Customs Amendment Regulations 2003 (No. 9)".

Regulation 2 - Commencement

Regulation 2 sets out when the amending Regulations commenced. It provides that these Regulations commenced on the commencement of Part 1 of Schedule 1 to the Customs Legislation Amendment Act (No. 1) 2003 (the Amendment Act).

Part 1 of Schedule 1 to the Amendment Act, which sets out the new provisions dealing with the determination of the normal value of goods if their country of export has an economy in transition, commenced on a day fixed by Proclamation.

Regulation 3 - Amendment of Customs Regulations 1926

Regulation 3 provides that Schedule 1 amends the Customs Regulations 1926 (the Principal Regulations).

Schedule 1        Amendment

Item 1 - After regulation 182

Item 1 inserts new regulation 183 into the Principal Regulations.

New regulation 183 Matters to which the Minister must have regard (subsection 269TAC(5E) of the Act)

Subsection 269TAC(5E) of the Customs Act 1901 provides that, in order to be satisfied that the conditions in paragraph 5D(a) or (b) exist, the Minister must have regard to the matters (if any) prescribed by the regulations. The conditions that the Minister must be satisfied exist are that market conditions do not prevail in the country of export in respect of the domestic selling price of like goods.

New regulation 183 sets out the matters that the Minister must have regard to for the purposes of subsection 269TAC(5E).

New subregulation 183(1) set outs two definitions for the purposes of regulation 183.

Entity, in relation to goods, means each of:

(a)        the exporter of the exported goods mentioned in subsection 269TAC(5D) of the Customs Act; and

(b)       if the exported of the goods is not the producer of the goods, but the goods are produced in the country of export - the producer of the goods.

Government, of a country, means any level of government of that country.

Subregulation 183(2) prescribes the matters that the Minister must have regard to for subsection 269TAC(5E). The matters are:

(a)       whether the entity makes decisions about prices, costs, inputs, sales and investments:

(i)       in response to market signals; and

(ii)       without significant interference by a government of the country of export;

(b)       whether the entity keeps accounting records in accordance with generally accepted accounting principles in the country of export;

(c)       whether the generally accepted accounting standards in the country of export are in line with international accounting standards developed by the International Accounting Standards Board;

The Note to this paragraph provides that International accounting standards developed by the International Accounting Standards Board can be found on the International Accounting Standards Board website at http://www/iasc.org.uk/cmt/ooo1.asp

(d)       whether the accounting records mentioned in paragraph (b) are independently audited;

(e)       whether the entity's production costs or financial situation are significantly affected by the influence that a government of the country of export had on the domestic price of goods in the country before the country's economy was n economy in transition;

(f)       whether the country of export has laws relating to bankruptcy and property;

(g)       whether the entity is subject to bankruptcy and property laws mentioned in paragraph (f);

(h)       whether the entity is part of a market or sector in which the presence of an enterprise owned by a government of the country prevents market conditions from prevailing in that market or sector;

(i)       whether utilities are supplied to the entity under contracts which reflect commercial terms and prices that are generally available throughout the economy of the country of export;

(j)       if the land on which the entity's facilities is built is owned by a government of the country of export - whether the conditions of rent are comparable to those in a market economy; and

(k)       whether the entity has the right to hire and dismiss employees and the right to fix the salaries of employees.

Subregulation 183(3) provides that in assessing whether there is significant interference for subparagraph 183(2)(a)(ii), the Minister must have regard to the following:

(a)       whether a genuinely private company or party holds the majority shareholding in the entity;

(b)       if officials of a government of the country of export hold positions on the board of the entity - whether the officials are a minority of the members of the board;

(c)       if officials of a government of the country of export hold significant management positions within the entity - whether the officials are a minority of persons holding significant management positions;

(d)       if the entity's ability to carry on business activities in the country of export is affected by;

(i)       a restriction on selling in the domestic market;

(ii)       the potential for the right to do business being withdrawn other than under contractual terms;

(iii)       if the entity is a joint venture in which one of the parties is a foreign person, or is carried on in the form of a joint venture - the ability of the foreign person to export profits and repatriate capital invested; and

(e)       whether the entity's major production inputs (including raw materials, labour, energy and technology) are supplied:

(i)       by enterprises that are owned or controlled by a government of the country of export; and

(ii)       at prices which do not substantially reflect conditions found in a market economy.