Senate debates

Wednesday, 10 October 2012


Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2011, Customs Amendment (Anti-dumping Improvements) Bill (No. 2) 2012, Customs Tariff (Anti-Dumping) Amendment Bill (No. 1) 2012, Customs Amendment (Anti-dumping Improvements) Bill (No. 3) 2012; Second Reading

12:17 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | Hansard source

This is a very important issue. This is an issue that affects literally hundreds of thousands of Australians whose jobs are at risk because of dumping of goods from other countries at below cost. Dumping is defined as a form of predatory pricing in international trade. It occurs when goods are exported and sold in another country at a cost below what they would sell for in their domestic market. Under WTO rules—the World Trade Organisation—dumping is not prohibited, but countries have the option of taking action where material harm has occurred to their domestic industries because of dumped imports. This action is usually in the form of antidumping duties or tariffs placed on particular goods that have been found to be dumped.

There is another aspect to this, which may be of interest to Senator Williams given the motion that he put up a number of months ago—a very good motion—in relation to EU subsidies. This relates to countervailing duties. Under WTO rules, countervailing duties can be applied to imported goods where those goods have received subsidies in their country of origin. This helps to offset the fact that these goods can therefore be produced at a lower cost to the manufacturer than would be the case in the country where the goods are exported to. A number of months ago Senator Williams moved what I thought was a very perceptive motion in relation to the whole issue of subsidies in the EU. I am not sure whether Senator Williams will be contributing to this debate in the committee stage, but that related to this very issue—to what extent are Australian manufacturers competing against subsidised farmers in other countries?

This is an issue that Senator Colbeck has expressed concerns about also, through his chairing of the very valuable food processing inquiry report. For instance, I was not aware until recently that Woolworths, in one of their private-label brands, was importing ice cream from Spain. It is a long way for that ice cream to travel and stay frozen in a container—who knows what the carbon miles would be. The issue is this: to what extent was that Spanish ice cream the subject of direct or indirect subsidies in Spain, in Europe, and to what extent did that impact on Australian dairy producers that had to compete with that product?

Under the WTO rules, article IV of the General Agreement on Tariffs and Trade relates to dumping and dumping procedures. It relates to investigations and the government's basis for objecting to the reverse onus of proof, which is a key issue in relation to this. My concern is that unless and until we have a reverse onus of proof provision in relation to our dumping laws, it will be very difficult for these particular measures to be as effective as they should be.

I do acknowledge the work that the government has done. I engaged quite comprehensively with the Hon. Brendan O'Connor, the former Minister for Home Affairs. I have not had that opportunity to engage directly with the new minister, but I am grateful to the adviser in his office who provided very useful information. I do acknowledge that. I have also engaged with Sophie Mirabella, the shadow minister for industry, in relation to this issue.

But let us put this whole issue of dumping in perspective. A very telling remark was made by Michael O'Connor, the Secretary of the CFMEU, who told me that at an international forum dealing with matters of trade—and that presumably was to do primarily with issues in respect of timber and wood products in Scandinavia—that some of the delegates there from Scandinavia laughed about Australia. He said that they said to him that Australia is regarded as the 'free trade Taliban' when it comes to their approach to WTO rules, that we take such a purist, fundamentalist view with respect to free trade and that our interpretation of the rules is so literal, so purist. He said that no other country does that, and that is to our detriment in terms of our national interest. Those remarks by Michael O'Connor have been seared into my memory and we need to bear that in mind in terms of the difficulties that Australian manufacturers are having.

I acknowledge Senator John Madigan and the work that he has done in terms of his program, the Australian Manufacturing and Farming Program, because I think that is an excellent initiative that highlights the vulnerability of Australian manufacturing but also the enormous benefit it gives us as a nation and the jobs that it creates.

So my concern is that Australia's free-for-all approach to free trade is putting our manufacturers under ever-increasing pressure as they struggle to compete with cheap imports. Some would say that this is a good deal for Australian consumers, that imports mean cheaper prices, but I also wonder what will happen when one day we turn around and discover that Australia has virtually no manufacturing ability, with no skilled workers in manufacturing and no innovation or experimentation. We will be at the mercy of our trading partners, and that concerns me.

I am not against trade. I think other speakers have made the point that we are a small, open economy and that trade is absolutely fundamental. But let us make sure that the rules are fair and that we are not competing on an unlevel playing field. We need to balance our free trade principles with the understanding that we must always be able to support ourselves and that we need to find that balance within the rules. It appears to me that the WTO rules can and should be interpreted somewhat differently, in a way that does not fall foul of the WTO but is true to our national interests.

I will be moving a number of amendments to these bills. I thank the opposition and the government for the time they have given me in discussing these amendments, as well as the Australian Greens and Senator Madigan from the DLP. These amendments are based on my private senator's bill, the Customs Amendment (Anti-Dumping) Bill 2011. The reason I got involved in this issue is that, back in 2010, I was approached by Darren O'Halloran, who was a worker at Kimberly-Clark in the south-east of South Australia. He drove about 120 kilometres to a function on the River Murray, at the mouth of the Murray, to speak to me about the struggle that Kimberly-Clark was having as a company. He wanted to tell me about the company's struggle against dumping. It started in 2008. After a long battle, the government imposed dumping duties on Chinese and Indonesian paper products. At the time, the Chinese products were retailing in Australia at between two per cent to 25 per cent below the cost in their domestic market. Indonesian toilet paper was retailing at 33 per cent to 45 per cent below value. But, in 2009, that decision was overruled by the Trade Measures Branch because no link could be made between the dumped products and so-called material injury to Kimberly-Clark. Kimberly-Clark is a significant employer in South Australia. It is a global company and Scott Wicker, the general manager of their plant, is a first-class manager who is passionate about the product, about his workforce and how highly skilled they are and about occupational health and safety. He is an exemplary employer. I think his contribution to this ought to be acknowledged.

I think it is important that the definition of 'material injury' according to WTO rules is put on the record. With regard to the antidumping regime, material injury is defined as: (1) material injury to a domestic industry; (2) a threat of material injury to a domestic industry; and, (3), material retardation of the establishment of a domestic industry. Minister Clare issued a ministerial direction earlier this year in relation to this. According to this direction, the factors to be considered in Australia include: facts and not assertions unsupported by facts; injury must not be immaterial, insubstantial or insignificant; there is no threshold amount that is capable of general application—each case must be judged on its merits; dumping or subsidisation need not be the sole cause of injury, but must be material; a range of relevant economic factors can be considered, including the kinds of goods in question, level of profits, the number of people employed, terms and conditions of employment and investment in the industry; lack of growth can also be considered as injury where the industry would otherwise be expected to grow; and whether the injury is confined to a specific region or area of Australia.

The WTO rules require that a link between dumping and material injury must be proven, and that is something that must also be looked at. What needs to be considered is that, in the way that these rules actually work, real jobs have been lost. In February 2011, Kimberly-Clark was forced to announce it was closing two of its four tissue machines and was selling its pulp mill in Millicent, in my home state of South Australia—in your home state, Mr Acting Deputy President Bernardi. Over 230 jobs were lost, not counting the flow-on effects to that community. Darren O'Halloran was one of the people who lost his job. I consider that dumping was not the only factor in this case but it was one that the authorities could have taken steps to mitigate if we had had an effective antidumping regime. It was a case of pushing that industry over the edge, to the point where it could not be economic. They produce a world-class product, have a world-class workforce and world's best practice in occupational health and safety. We will never know whether dumping duties would have saved those 200-plus jobs, but I think it would have made a real difference and would have given them a fighting chance of keeping the jobs there.

In my view, when I introduced my private senators bill in an attempt to address some of these serious concerns with respect to Australia's antidumping policy, and in the view of Australian manufacturers, the approach to antidumping has been weighted too much towards the idea of free trade at the expense of Australian industry. The bill was an attempt to improve the balance of the equation and to find a way to address our free trade responsibilities with enough flexibility to allow us to protect Australian manufacturers from dumped products.

Let us put this into perspective. Since 2008, over 200,000 jobs have been lost in manufacturing, and that is a conservative estimate. That is something that Paul Howes from the AWU, who has been outspoken on this issue, has pointed out. And if Mr Howes's views are not accepted, and I think they should be, the government's own manufacturing task force report found that 106,775 jobs have been lost since the start of the global financial crisis in 2007, with a further 85,600 jobs expected to be lost in the next five years.

Our manufacturing industries currently employ approximately 950,000 Australians. They have a huge, huge impact on our economy. That is 950,000 Australians supporting their families, paying their mortgages and being part of their communities, and that is something that cannot and must not be underestimated. Paul Howes's most recent comments relate to the BlueScope Steel case, and he criticised carmakers, saying that the antidumping rules were also there for their protection. I will speak about that if not in the context of the second reading contribution then in the context of the committee stage of the bill.

Central to the bill that I introduced and central to the amendments that I will be pushing for in the committee stage, is a principle of a reverse onus of proof.

Essentially this would mean that instead of an Australian manufacturer having to provide evidence to show that an importer is dumping products, it would be assumed that dumping is occurring and the importer would then have to show that this is not the case, if certain criteria are fulfilled.

The bill also included measures in relation to greater consultation requirements, provisions relating directly to small businesses, and the introduction of an assumed link between dumping and material harm. Many of these items are included in my current list of amendments, and I will discuss them in detail at the appropriate time in the committee stage. However, it is important to note that the intention of the WTO rules is to provide a framework to facilitate antidumping measures. They are not meant to unfairly restrict or prevent such measures or to penalise countries that undertake them. The problem I have is that we have not done what we ought to do to protect Australian industry. Not in the old-fashioned, tariff protectionist era that we saw up until the 1970s, but in a way that ensures that there is a fair and level playing field, that the true intent of the WTO rules is adhered to, that the antidumping regime and the countervailing measures regime in the WTO rules are actually interpreted in a way that is fair and balanced, because I do not think it has to date. We need to change that perception. Instead of saying, 'These are the rules we will follow, no matter what the outcome', we should be deciding on the outcomes we want in a sense within the scope of those rules and how we can work within the rules to achieve those.

A few weeks ago I visited a small South Australian company that makes solar panels. It started in 2011. Tindo is run by three dedicated South Australians and employs 10 people. The panels it produces are high quality, with a 25-year guarantee compared to just five years, for instance, with some other companies. Tindo is Australia's only 60 megawatt PV module manufacturer. While Australia used to make 20 per cent of Australian demand for solar panels, it now only produces about one per cent. That is how the shrinkage has occurred, according to the people at Tindo. Tindo is still in the ramp-up stage and at its full capacity could be employing 100 South Australians—in fact it could expand even more in other states—but it is struggling against cheap imported panels from China and it believes that those panels have been dumped from the information that it has received. So what does it do? It goes and speaks to a law firm to see how it can fight this case. It is quoted—and I am not criticising the law firm for this—$1 million to fight that case. How on earth is a small business, a business that employs just 10 people, but 10 valuable jobs, going to take that on?

I have spoken to Scott Wicker from Kimberly-Clark, part of a global company, part of a successful multinational company, which had enormous costs in fighting that dumping case against Indonesian and Chinese paper products. They did not find it easy, so how on earth will Tindo Solar, with just 10 employees, be able to fund a $1 million case. That is a key flaw in the system. It is all very well and good to say that you have rules in place to protect manufacturers against dumping, but if access to justice—and that is what it is—if access to a fair go is completely out of reach then what is the point? I think the government is moving to rectify that to an extent. That is something that ought to be explored in the committee stage and it is something that I have raised with former Premier of Victoria John Brumby, who I was fortunate enough to meet recently as part of the Brumby review. That goes to the issue of where dumping should be dealt with—whether it should be a separate agency, as I think it should be—but it does not deal with the issue of interpretation, which is outside the purview of the Brumby review.

One million dollars is money that Tindo certainly does not have. It is producing a safe, high-quality product to meet a specific and growing need in Australia. Instead of being supported and encouraged, it is under pressure from all sides. Imported panels are cheaper but they are not necessarily a better or even an equal product. Some of them use DC current, which is less effective and more dangerous. I understand that metropolitan fire services are working on a nationwide strategy to raise awareness about DC solar panel fires. But even the solar rebates and other incentives from state and federal governments to support people in in installing panels do not encourage them to use Australian products. There is little or no support to be found anywhere. I find it adds insult to injury that they do not have the resources in any reasonable way to fight a $1 million case against dumping.

The situation is not much better for larger companies. Last week the Australian Financial Review and other media ran a story about the proposed tariffs for steel imports in response to BlueScope's dumping application. Customs had released preliminary advice that a tariff of up to 15.45 per cent be placed on imported steel. Since then, Ford, Holden and Toyota have all objected on the grounds that it will make cars more expensive to produce in Australia. Holden is a great employer in my home state and they produce a great product, as do Ford and Toyota, at their Australian manufacturing plants. But it is interesting to note that General Motors Holden Managing Director, Michael Devereux, even criticised the lack of legislative exemption for certain industries, and said his company would be approaching the government to change the law. But my appeal to Mr Devereux, who I have not had the pleasure of meeting but I think is a very competent CEO of Holden, is: how would you feel if an overseas manufacture started dumping cheap cars into Australia below cost? The dumping rules should be there to act fairly. I think Paul Howes was right when he made that criticism of car makers, saying that the antidumping rules were also there for their protection. I think it is fair to say that, whatever the views may be on either side of the chamber about Mr Howes and his outspoken views, he certainly does want to keep Australian manufacturing jobs here in Australia and he wants Australian manufacturing to grow. We need to find a balance between imports and protecting Australian industry within the context of these antidumping rules.

In the committee stage I will be talking about ROH Wheels. They manufacture aftermarket alloy wheels and are a very significant South Australian firm. They are firm that has shrunk over the years and I have spent a lot of time with Bill Davidson, their managing director. I think we need to show the farce of our current antidumping regime in the context of what is occurring with respect to what they have faced recently.

I will have a lot more to say about this, but I think it is important that we get it right. Of course I will support this bill because it has a number of useful measures. But unless and until we deal with the issue of the reverse onus of proof, unless and until we provide some real support to small businesses that are struggling against dumped imports so that they can have a fair go, a chance to fight this through the system, then this group of measures will not have the desired effect in giving Australian manufacturers a fair go against dumped products. I look forward very much to the committee stages of this bill, to the amendments, and I hope at the very least, if they are not supported by the government or the opposition, they will be given due consideration. And if they are not going to support them, I ask the government and the opposition to at least tell me why and what other alternatives they have in place to support Australian manufacturing. (Time expired)


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