Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I rise tonight to speak on the Customs Amendment (Anti-dumping Improvements) Bill 2011 and to support the comments of my coalition colleagues. I would also like to note that it is very disappointing that tonight the government has pulled all its speakers and seems not to have one single speaker to speak on this important bill.

The coalition supports in principle these modest changes to Australia's anti-dumping system. However, we have substantial concerns about the lack of public announcement and detail for this bill. Also, there is a lot of misinformation in the community about this bill. It has been publicised as an attempt by the federal government to stop foreign manufacturers dumping cheap imports in Australia. We need to be very clear about this bill: it is not about stopping cheap imports. The definition of 'dumping' is 'the act of charging a lower price for a good in a foreign market than is charged for the same good in the domestic market'. This is often referred to as selling at less than fair value. Under World Trade Organisation agreements, dumping is condemned but not prohibited if it causes or threatens to cause material injury to a domestic industry in the importing country.

These definitions are, unfortunately, both arbitrary and obscure. What is the normal value of a good? How is this calculated? Is it the price last week; is it the price last month or last year; or, with other commodities, is it the price it will be in the future? How do you calculate the price in the domestic market? What is the definition of a domestic market? With China, for instance, is it the price the good is sold for in Hong Kong, is it the price it is sold for in Shenzhen or is it the price it is sold for in Shanghai? Both 'normal value' and 'material injury' are slippery concepts, and little effort is made to define them precisely.

Yet another problem that arises with anti-dumping legislation in determining when goods are dumped by foreign firms is when they do not sell the same product in their domestic market as they do in Australia. Today this happens often. Many products that are exported from overseas to Australia are simply not sold on the domestic market. This makes it very difficult for Customs to determine whether the good is sold at a price that is different to the local market. When this cannot be used, there are two alternatives available to Customs: they can look at the price charged by an exporter in another country or make a calculation based on a combination of the exporter's production costs, other expenses and normal profit margins. The agreement under the WTO rules also specifies how a fair comparison can be made between the export price and what would be the normal price. The problems in calculating anti-dumping legislation are huge. It is simply impossible to know what the price of a good would be if it were theoretically available on the market; thus, any estimated price used by Customs is purely an arbitrary concoction. These are the difficulties that Customs face in implementing these regulations. If we were to have an effective anti-dumping regime, we would need to give Customs adequate resources to investigate claims of dumping, but we have no explanation from the government of how these measures will be funded and we have no explanation of where these resources will come from. Unfortunately, this is another example of a policy that has simply not been thought through.

We must remember that a strict anti-dumping regime, although very important, is not a complete panacea for the difficulties facing our manufacturing industry. Recent examples from the US show this to be true. One example is what happened when the US imposed anti-dumping tariffs on Chinese bedroom furniture. In October 2003, the American Furniture Manufacturers Committee for Legal Trade assembled a group of US manufacturers of wooden bedroom furniture and six labour unions and filed an anti-dumping petition concerning imports of wooden bedroom furniture from China. In December 2004, American customs officials determined that the US bedroom furniture industry was materially injured by sales of imports below their actual value, and the Department of Commerce issued an anti-dumping order on 4 January 2005. The tariffs on Chinese bedroom furniture ranged from 0.83 per cent to 198 per cent. They were enacted in January 2005 to apply to all bedroom furniture imported from China into the US.

However, these anti-dumping duties did little to protect domestic jobs in the US. They did little to improve the economic health of hardwood producers during the years 2005 to 2009. In fact, despite these anti-dumping measures being implemented, 36 US wooden bedroom furniture plants closed from 2004 to 2009. In 2001, 44 per cent of all wooden bedroom furniture sold in the United States was imported. By 2004, 68 per cent was imported. But, despite these anti-dumping duties being implemented, imports still grew to 78 per cent of all wooden bedroom furniture sold in the United States by 2009.

In reviewing the effects of the anti-dumping tariffs implemented, Commissioner Daniel Pearson stated that the anti-dumping duties had probably created more legal activity than actually benefitted anyone. He said:

In this particular investigation, additional costs and distortions have been added by the use of the administrative review and settlement process, with little evidence that these distortions have yielded any benefits to the industry overall, the U.S. consumer, or the U.S. taxpayer. The industry continued to suffer ongoing losses in capacity and employment after the funds were gathered and distributed.

The anti-dumping duties placed on Chinese manufacturers of wooden bedroom furniture simply did not stem the tide of imports, but the tariffs, along with rising manufacturing costs in China, caused a rapid shift of production to Vietnam. In fact, the anti-dumping tariffs helped ignite Vietnam's recent boom as a wood-products producer. In 2004, Vietnam shipped $190 million worth of wooden bedroom furniture to the US. However, when the anti-dumping duties were introduced for Chinese production in 2005, shipments from Vietnam to the US increased by 143 per cent.

Nearly overnight Vietnam became a major player in wooden bedroom furniture as Chinese companies shifted production to avoid the tariffs, and US distributors changed their sourcing for the same reason. Now even the introduction of anti-dumping tariffs on Vietnamese furniture would simply shift production to other Asian countries. This is already beginning to occur because of rising wages in Vietnam. At the end of the day, even with the imposition of anti-dumping duties, furniture production and the jobs it used to support in the US has not undergone a renaissance. Yet this was the rallying cry used by domestic producers who first brought the case in 2004.

There are valuable lessons to be learnt from this case study. It demonstrates that our industries must continue to work to leverage any competitive advantage that they have against overseas manufacturers. This is why I have great concerns about the campaign being waged by the leaders of the Australian Workers Union with their Don't Dump on Australia campaign. Certainly we need effective legislation to prevent dumping, but the union's website states:

The fate of AWU members rests with the creation and enforcement in Australia of a strong anti-dumping regime.

But the truth is that the fate of AWU members rests with Australian industries remaining internationally competitive. If the Australian Workers Union were truly concerned about the fate of their members, they would be making sure that Australian industries do remain internationally competitive and they would be voicing their opposition to a carbon tax.

We can have the strongest anti-dumping provisions in the world, but if we have a government that introduces policies such as carbon taxing 500, 1,000 or whatever the number of companies is that operate in Australia but does not apply the same tax to companies that operate outside Australia it will simply place Australian businesses at a competitive disadvantage—and this will cost jobs. Yet we have officials of the Australian Workers Union backing the government and not their union members.

More work needs to be done on our anti-dumping legislation. It is important that we have this for the sake of our manufacturers. The coalition is serious about anti-competitive and predatory dumping. That is why we established the anti-dumping task force earlier this year. We pledge that under the next coalition government we will take real action against this predatory practice to ensure the long-term viability of the Australian manufacturing sector.

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