Degussa AG v Anti-dumping Authority
[1993] FCA 477
•16 JULY 1993
DEGUSSA AG and DEGUSSA AUSTRALIA PTY LIMITED v. ANTI-DUMPING AUTHORITY and THE
MINISTER FOR SMALL BUSINESS AND CUSTOMS
No. VG217 of 1991
FED No. 477
Number of pages - 20
Customs and Excise
COURT
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Ryan J(1)
CATCHWORDS
Customs and Excise - Anti-dumping - ascertainment of "normal value" - whether exporter's domestic prices are relevant and suitable - whether exporter's domestic prices charged after institution of anti-dumping inquiry can be disregarded - threat of material injury to Australian industry - natural justice, obligation of Anti-Dumping Authority to afford exporter an opportunity to be heard on "normal value" - form of report which ADA is required to provide to Minister
Customs Act 1901 ss.269TAC(1), (2), 269TAD, 269TG(1),(2),(3).
Anti-Dumping Authority Act 1988 s.7(1).
Enichem v Anti-Dumping Authority (per Davies J unreported 9 April 1992) referred to.
Enichem v Anti-Dumping Authority (1992) 111 ALR 178 referred to.
Minister for Aboriginal Affairs v Peko-Walsend Ltd (1986) 162 CLR 24 applied.
Edelsten v Wilcox (1988) 83 ALR 99 applied.
ICI Australia Operations Pty Ltd v Anti-Dumping Authority (1991) 104 ALR 474 referred to.
Turner v Minister for Immigration Local Government and Ethnic Affairs (1981) 55 FLR 180 applied.
Hyster Australia Pty Ltd v Anti-Dumping Authority (unreported 17 February 1993) referred to.
HEARING
MELBOURNE, 16 July 1993
#DATE 16:7:1993
Counsel for the first and Mr B J Shaw QC
second applicants: Mr P J Cosgrave
Solicitor for the first and Arthur Robinson and
second applicants: Hedderwicks
Counsel for the first and Mr H Jolson QC
second respondents: Mr S Cageler
Solicitor for the first and Australian Government
second respondents: Solicitor
ORDER
The Court orders:
1. That the decisions of the first respondent to recommend that anti-dumping action be taken against exports of sodium cyanide from the Federal Republic of Germany and to recommend that legal instruments to give effect to such recommendation be signed by the second respondent be set aside and the matters the subject of those decisions be referred to the first respondent to be further considered and determined according to law.
2. That each of the decisions of the second respondent to issue:
(a) the direction dated 8th July 1991 for the adjustment of the normal value of sodium cyanide exported from Degussa AG of the Federal Republic of Germany pursuant to s.269TAC(8) of the Customs Act 1901;
(b) the declaration dated 8 July 1991 that s.8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to sodium cyanide exported from Degussa AC of the Federal Republic of Germany;
(c) the declaration dated 8 July 1991 that s.8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to like goods to sodium cyanide exported from Degussa AG of the Federal Republic of Germany that are exported to Australia after 8 July 1991; and
(d) the direction dated 8 July 1991 pursuant to s.8(5) of the Customs Tariff (Anti-Dumping) Act 1975 for the ascertainment of dumping duty in respect of sodium cyanide exported from Degussa AG of the Federal Republic of Germany; be set aside and the matters the subject of each of those decisions be referred to the second respondent to be further considered and determined according to law.
3. That the respondents pay the applicants' costs of the application, including any reserved costs, such costs to be taxed in default of agreement.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
RYAN J This is yet another application under the Administrative Decisions (Judicial Review) Act 1977 ("the AD(JR) Act") seeking orders of review in respect of decisions of the Anti-Dumping Authority ("the ADA") and the Minister for Small Business and Customs arising out of Report No 40 of the ADA. That report was related to the alleged dumping of sodium cyanide from Germany, Italy, Japan, the Republic of Korea, the United Kingdom and the United States of America. The decisions taken to institute the inquiry and to implement recommendations contained in the report have already received considerable attention in this Court; see Enichem Anic v Anti-Dumping Authority unreported 9 April 1992 per Davies J; Enichem Anic v Anti-Dumping Authority (1993) 111 ALR 178 (Full Court) ICI Australia Operations Pty Ltd v Anti-Dumping Authority 104 ALR 474 per Gummow J and Du Pont (Australia) Limited v Comptroller-General of Customs (unreported 25 March 1993 per Heerey J). Accordingly, I do not find it necessary to set out again in full the text of the operative recommendations and decisions or the relevant legislation. However, it is necessary to rehearse in some detail the circumstances in which those decisions have come to affect the present applicants ("Degussa").
After three Australian producers of sodium cyanide, Australian Gold Reagents Pty Ltd ("AGR") ICI Australia Operations Pty Ltd ("ICI") and Minproc Holdings Ltd ("Minproc") had lodged applications in 1990 for the publication of dumping duty notices, the Australian Customs Service ("ACS") commenced an investigation in the course of which Mr Sundstrom, an officer of ACS, produced a "normal value report".
That report adopted as the domestic German price for sodium cyanide a price at which Degussa had sold 10,000 tonnes of the substance to Bayer AG ("Bayer") on 4 April 1990. On 22 January 1991 Degussa made a further sale to Bayer at a new, reduced, price ("the new German price"). That price reduction had been foreshadowed in an internal memorandum of Degussa of 18 January 1991 which, as translated from the German, was in these terms:
"As you are aware we have been reviewing our long standing domestic and European pricing strategy on sodium cyanide. The review is prompted by the recent Australian ani-dumping case but there are also other compelling reasons: - significant increases in world capacity and the likelihood that our major competitors will turn their attention to our domestic and European markets.
- the possibility that the Australian action will become a precedent in other gold producing markets and Degussa AG will again be disadvantaged.
No changes to our existing policy will apply to NaCN sales in liquid form or to sales of solid to the electroplating industry. Our liquid pricing is already determined by strong competitive pressures and our position in the electroplating industry is not at risk due to the very small quantities and the importance of technical and after sales service.
We have concluded that it is in sales to major chemical industry customers, actual or potential, that we are most at risk. They are the natural targets for import competition and we have decided to realign prices to more closely reflect the levels applying in sales on the world market to the gold mining industry. The threshold level for this realignment has been set for the moment at 1000 tonnes p.a. and will be kept under review as the strategy of importers emerges. At present BAYER is our only existing customer who will qualify for price reductions, but any potential customer meeting the treshold (sic) can be approached on the same basis.
Details of the new price level for BAYER will be communicated to you within next few days."
Late in January 1991, Mr Cosgrave, an Australian consultant to Degussa, advised ACS of the sale to Bayer at the new German price. However, on 30 January 1991 Mr Reilly of ACS advised Mr Cosgrave that account could not be taken of the new German price in the preliminary report of ACS as there was insufficient time to verify the information provided by Degussa. Mr Reilly went on to assure Mr Cosgrave that verification would take place as soon as possible after the ACS inquiry.
On 7 February 1991 ACS published its report which included the following passages:
"11. NORMAL VALUE
11.1 The criteria for ascertaining the normal value of goods are set out in section 269TAC of the Act. 11.2 Under sub-section 269TAC(1) of the Act the normal value of any goods exported to Australia is the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter or, if like goods are not sold by the exporter, by other sellers of like goods.
11.3 Sub-section 269TAC(12) of the Act provides the means for testing whether goods are sold in the ordinary course of trade. The provision requires that the price paid for the goods is to be taken not to have been paid in the ordinary course of trade, whenever the fully absorbed costs to make and sell the goods exceed the price paid for substantial quantities sold for an extended period of time and it is likely that the seller of the goods will not be able to fully recover the losses incurred over a reasonable period of time. 11.4 Where it is determined that sub-section 269TAC(1) of the Act does not apply, paragraph 269TAC(2)(d) of the Act provides that the normal value of any goods exported to Australia may be determined by reference to the price paid for like goods sold in the ordinary course of trade in the country of export to a third country, being sales that are arms length transactions. 11.5 Further, paragraph 269TAC(2)(c) provides that where sub-section 269TAC(1) and paragraph 269TAC(2)(d) of the Act do not apply, the normal value of any goods exported to Australia is such an amount as the Minister determines to be the cost of production or manufacture of the goods in the country of export, the amount of delivery charges and other costs necessarily incurred in that sale and, subject to sub-section 269TAC(13) of the Act, an amount calculated in accordance with such rate, if any, as the Minister determines would be the rate of profit on that sale. 11.6 Sub-section 269TAC(6) of the Act provides that where the Minister is satisfied that sufficient information has not been furnished or is not available to enable the normal value of the goods to be ascertained, under the preceding sub-sections of the Act, the normal value of the goods may be determined, by the Minister, having regard to all relevant information.
11.7 Sub-section 269TAC(8) of the Act provides for adjustments to the price paid for like goods in the domestic market of the country of origin in the following circumstances:
"Where the normal value of the goods exported to Australia is the price paid for like goods and that price and the export price of the goods exported:
(a) relate to sales occurring at different times; or
(b) are not in respect of identical goods; or
(c) are modified in different ways by taxes or the terms or circumstances of the sales to which they relate; that price paid for the goods is to be
taken to be the price paid in accordance
with directions by the Minister so that
those differences would not affect its
comparison with that export price."
11.8 The applicants provided Customs with an assessment of normal values for sodium cyanide exported to Australia from the seven nominated countries based on overseas market inquiries and supported by overseas market reports. GERMANY
11.9 Customs conducted inquiries at the premises of Degussa AG, Germany, for the purpose of assessing a normal value for sodium cyanide exported to Australia. Degussa AG, a manufacturer, makes sales of sodium cyanide on the German domestic market as well as export sales to Australia.
11.10 The company provided Customs with details of domestic and export sales, supported by invoices, financial statements and cost of production information. Inquiries revealed the sales were at arms length and in the ordinary course of trade. Customs considers the information provided by Degussa AG suitable for the assessment of normal values under sub-section 269TAC(1) of the Act.
11.11 In comparing domestic and export sales, adjustments to the domestic selling price were made under sub-section 269TAC(8) of the Act to allow for differences in inland freight, credit terms, environmental laboratory costs, payment discounts and packaging costs. 11.12 A comparison of the assessed normal values with export prices shows that exports were being made at dumped prices. Normal value and export price comparisons are at Confidential Appendix 3.
....
DUMPING MARGINS
11.45 A dumping margin quantifies the difference between the export price and normal value. It can be either expressed as a value or as a percentage of the normal value. 11.46 A comparison of assessed normal values and export prices for the countries under inquiry showed dumping margins ranging from 1.7% to 56.5%.
NON-INJURIOUS FREE-ON-BOARD PRICES
11.47 Sub-section 8(5) and 8(5A) of the Anti-Dumping Act provide for the publication of a notice specifying a lesser amount of dumping duty than the full dumping level, if this is sufficient to remove injury, or threat of injury, to the Australian industry. This reflects Article 8.1 of the Code, which states: "... it is desirable ... that the duty be less than the total amount of the dumping if such less duty would be adequate to remove the injury to the domestic industry".
11.48 A method of determining any lower amount of duty is to have regard to the USSP for the goods manufactured and sold by the Australian industry. Deductions are made from the USSP for all relevant costs incurred by the imported, for comparable sales, to derive a FOB export level, known as the NIFOB.
11.49 The USSP for the Australian goods is the price which may realistically be achieved by the Australian product when the effects of dumping are not present in the market. The USSP may be calculated either as a mark-up on the cost to make and sell, or by reference to an adequate return on funds.
11.50 The applicants calculated the USSP from their cost to make and sell plus a mark-up. Customs verified the company's costs to make and sell, and profit. Customs considers the USSP calculated by the applicants to be reasonable. NIFOB comparisons to normal values are at confidential Appendix 11.
11.51 As the NIFOB calculated for Du Pont is higher than the normal value, Customs therefore used the normal value level to calculate the effect of dumping from USA. A comparison of normal value and export price revealed a dumping margin of l.7%.
11.52 For the remaining exporters the NIFOB's are lower than the assessed normal values. The NIFOB's have been used by Customs in its assessment of injury. A comparison of NIFOB and export prices revealed dumping margins of:
Exporter %
Degussa AG 6.2
Enimont 31.0
ICI CandP 4.0
MCL 10.0
Tong Suh 11.2
During February 1991, Mr Cosgrave sought information from ACS on several occasions as to when it would seek to verify the new German price. On 22 February 1991 the dumping investigation was referred by ACS to ADA whereupon Mr Cosgrave was told that verification of normal value for Degussa's product would occur during the period leading up to the final findings by the ADA.
During March 1991 further assurances were given to Degussa that verification of a normal value for its product would occur by May or June 1991. However, at a meeting on 30 May 1991 between representatives of Degussa and Mr Evans of ADA, Mr Cosgrave asked Mr Evans about the progress of the review of German normal value. Mr Evans indicated that events occurring after the public announcement of the complaint by AGR, ICI and Minproc might not be relevant to the ADA's deliberations. At a further meeting on 4 June 1991 Mr Fraser of the ADA similarly indicated that it might be argued that any reduction in overseas prices occurring after the announcement of an anti-dumping inquiry should not be taken into account by the ADA in its assessment of normal values.
Those indications prompted Mr Cosgrave to write to the ADA on 7 June 1991 a letter which concluded:
"The ascertainment of normal value by the Minister is an integral feature of the process, under Section 269TG, of determining whether dumping duties under Section 8 of the Anti-Dumping Act should be imposed. In the first instance the Minister must have regard to specific goods already exported to Australia to determine whether a notice under Subsection 269TG(1) should be published. In practical terms the Minister is usually looking at a period of approximately four months and he must ascertain the normal value that should apply during that period. One element of equitable comparisons between normal value and export price is the notion of contemporaneity. The Minister must act on the latest available evidence of normal values applying to shipments during the period he is addressing. In the event that the evidence shows a change in the normal value during that period he will need to issue more than one notice under Subsection 269TG(1).
The application of the principle of contemporaneity to the Minister's consideration of future exports under Section 269TG(2) requires him, again, to apply the latest available evidence of normal value when issuing a notice under that Subsection. It is only after the issue of such a notice, in circumstances where the Minister forms the opinion that factors relevant to the issue of the original notice have changed, that the provisions of Section 269TAD come into operation.
In the case of exports from Germany the latest available evidence was supplied to the ACS on 24 January 1991 and has been before the Authority from the time the matter was referred to them. My client does not dispute the right of the ACS, the Authority or the Minister to verify that evidence, either by visiting the exporter's premises in Frankfurt or in any other appropriate way. It is not, however, an unqualified right. Verification must occur within a reasonable time to ensure that the principle of contemporaneity is adhered to. It is not open to the Authority or the Minister in June 1991 to use domestic sales in September 1990 as a basis for normal value on the grounds that there has been insufficient time to verify more recent evidence. The evidence presented by my client on 24 January has not been questioned by the ACS or the Authority and we have not been advised of any contrary evidence presented to the Authority by any other party. In these circumstances any normal values that may be ascertained by the Minister for the purposes of Subsections 269TG(1) and (2) must be based on that latest available, unchallenged evidence.
It is not open to the Minister or the Authority to disregard that evidence on the ground that it can be verified at a later time and, if substantiated, form the basis of a normal value re-ascertained under Section 269TAD."
On 18 June 1991, Mr Purtell, an officer of the ADA, asserted, over Mr Cosgrave's objections, that he (Purtell) had been instructed to base all normal value calculations on sales occurring before the public announcement of the dumping complaint.
At another meeting between representatives of Degussa and the ADA on 21 June 1991, Mr Cosgrave asked Mr Fraser whether the ADA had any misgivings about the reduction in price to Bayer. Mr Fraser replied that the price change might have been an attempt to circumvent Australian anti-dumping legislation and that he "did not get excited about large overseas chemical companies attempting to destroy Australian industry." When the representatives of Degussa denied this imputation, Mr Evans, the other representative of the ADA, replied that "some people might argue" that the sales to Bayer at the new German price were not in the ordinary course of trade.
On 24 June 1991, Degussa wrote to the respondent Minister contending:
"There are two fundamental issues to which we wish to draw your attention. Firstly, it is not open to you to ascertain a normal value based on domestic sales in Germany because there are no sales in that market which are suitable for use in determining such a value.
Secondly, even if you do proceed to ascertain a normal value based on domestic sales, both the GATT Anti-Dumping Code and the Anti-Dumping Legislation compel you to proceed on the most recent available evidence of prices in the German market. Such evidence has been available to the Australian Customs Service since 24 January 1991 and remains unchallenged.
Any statement as to the ascertained value of goods which you may issue pursuant to subsection 269 TG (3) of the Customs Act must be based on that evidence."
On the same date, the ADA completed its review and reported to the Minister. The ADA Report No 40, as already noted, has been the subject of considerable judicial attention in this Court so I confine myself to setting out or summarizing only those parts which bear directly on the present application.
After referring to the ACS preliminary finding, the ADA Report contains the following findings in respect of the Australian industry and market:
"As only AGR was established and commercially producing sodium cyanide when the application was lodged, the Authority has treated AGR as the industry for the purpose of assessing whether material injury has been suffered. To assess the question of threat of material injury, the Authority has treated all three companies as comprising the industry.
4.2 The Sodium Cyanide Market
In 1990, the Australian market for sodium cyanide was about 78 000 tonnes. Over 70 000 tonnes was used in the gold mining industry, with the balance of 8000 tonnes consumed by the pesticides, metal pickling and electroplating industries in Australia. Australia accounts for about 20 per cent of the world usage of sodium cyanide.
With improved exploration methods and the introduction of new gold mining techniques - enabling the development of large open-cut gold mine projects with short pay-back times - global and Australian demand for sodium cyanide grew rapidly in the early 1980s. As a result, global supply of sodium cyanide was unable to meet demand during some years in the mid 1980s. Some parties to the inquiry expressed the view that since AGR began operation a number of overseas companies have expanded or are about to expand production capacity. As a result, the world supply of sodium cyanide may soon exceed demand. Until late 1988, all sodium cyanide used in Australia was that imported in a solid form.
Sodium cyanide is now supplied to gold mines as a liquid by the three Australian producers and as a solid by imports and by two Australian producers, ICI and Minproc.
Because of the high freight costs and hazards associated with the transport of sodium cyanide in liquid form, some mines only purchase solid sodium cyanide. Thus, AGR is not able economically to supply some gold mines in Western Australia, nor any gold mines in other States and Territories, with liquid sodium cyanide. With the establishment of ICI and Minproc in late 1990 and an increase in AGR's capacity, Australian producers now have the capacity to supply about 80 per cent of the Australian market. Sodium cyanide is generally sold through a tendering process. A gold miner calls for bids for the supply of a quantity of sodium cyanide for a specific period. The miner then select one or more suppliers to fulfil its sodium cyanide requirements. 4.3 Like Goods
In the context of a dumping inquiry, section 269T(1) of the Customs Act defines 'like goods' as follows: like goods, in relation to goods under consideration, means goods that are identical in all respects to the goods under consideration or that, although not alike in all respects to the goods under consideration, have characteristics closely resembling those of the goods under consideration. During its inquiry, Customs considered whether the liquid sodium cyanide manufactured by AGR, ICI and Minproc should be assessed as like goods to the solid form exported to Australia. In its preliminary finding report, Customs stated, inter alia, that
for the purposes of this inquiry Customs considers the liquid sodium cyanide manufactured by AGR to be like goods to the sodium cyanide exported from the seven nominated countries.
The Authority has given further consideration to this issue. It notes that solid sodium cyanide is converted into a liquid solution before it is used to recover gold from gold bearing ores. Therefore the products possess similar characteristics during usage.
The Authority notes that the imported solid sodium cyanide and locally produced solid sodium cyanide are identical. Accordingly, the Authority is satisfied that imported sodium cyanide and the sodium cyanide manufactured in Australia in both solid and liquid form are 'like goods'."
After an introductory discussion of the concept of dumping, the ADA Report then continues:
"5.2 Determination of Normal Values
During the Authority's inquiry, many importers and exporters expressed the view that normal values should take account of the changes in price in overseas markets since the inquiry was initiated by Customs on 10 October 1990.
The Authority notes that normal values are assessed for two purposes and that different issues apply in each case. The first purpose of normal values is to provide a comparison with export prices so that a determination can be made on whether goods have been dumped.
A key question is the time period from which to select normal values and export prices.
The Authority notes that the initiation of an inquiry may influence the normal value or export price (or both). So a comparison of these prices after the initiation of an inquiry may give a distorted answer.
The time period would therefore normally be before the initiation of the inquiry.
It is also important that the question of dumping is examined in the same period that the applicant claimed to suffer injury. As this is normally immediately before the lodgement of the application, a time period close to this event is clearly preferable.
The second purpose of normal values can be to act as a basis for anti-dumping measures.
If dumping is established, and this dumping is found to have caused material injury, then the Minister may decide to publish a dumping duty notice.
This notice may specify that where the export price of the goods is below the normal value then a duty equivalent to the lower of the normal value or the non-injurious free-on-board (NIFOB) must be paid.
Where the price of the goods is subject to large variations over a short period of time (and goods produced by the chemicals industry typically behave in this manner) then a normal value relating to a period some nine to ten months before the Minister signs a notice may bear little relationship to current prices. In the present case, the Authority is concerned that normal values may indeed have been influenced by the initiation of the inquiry. The Australian market is a significant proportion of the global sodium cyanide market, and developments in Australia could reasonably be expected to have some influence in other markets. In support of this view, the Authority was provided with information that suggested that domestic prices in some overseas markets were being reviewed, in part, as a result of the dumping inquiry.
The Authority has therefore confined its examination of normal values to the period before the initiation of the inquiry by Customs."
At para 5.3 of the Report the view is expressed that by virtue of s.269 TAC(1) of the Act:
"...subject to certain conditions, the normal value is the price paid for goods in the domestic market of the country of export. Adjustments may need to be made to a normal value to ensure that it is comparable to the export price. These adjustments, called 'due allowances', can, for example, be made for differences in the terms and conditions of sale, in technical specification, and in taxation. Adjustments to normal values are made under subsection 269TAC(8) and (9) of the Act."
Then, in paragraph 5.4, the ADA indicated its approach to the assessment of normal values, saying:
"Except in the case of the USA, sodium cyanide is not sold in domestic markets of the countries under inquiry for use in gold extraction. In these countries, sodium cyanide is mainly used in the chemicals industry and electroplating.
Some parties suggested that such sales are not relevant for the purposes of subsection 269TAC(1) and that other approaches to assessing normal values should be used.
The Authority notes that subsection 269TAC(1) does not include a test concerning differences in the domestic and export marketing of the product. Rather the tests focus on whether sales are in the ordinary course of trade and at arms length. Where the terms and circumstances of domestic and export sales differ and prices are affected, subsection 269TAC(8) requires adjustments to be made to account for these differences. Therefore, where the Authority is satisfied that domestic sales meet the tests imposed in subsection 269TAC(1), it has used this subsection together with adjustments under subsection 269TAC(8) to assess normal values.
Sodium cyanide is exported to Australia from the countries under inquiry by Degussa AG (Germany), Enimont Anic SRL (Italy), Tong Suh Petrochemicals Corp. Ltd. (Korea), Mitsui and Co (Japan), ICI CandP (UK) and E.I. Du Pont De Nemours and Co (Inc) USA. Customs conducted inquiries at the premises of each exporter to verify information contained in submissions. Customs considered all the normal values should be assessed under subsection 269TAC(1) - with adjustments, where appropriate, made under subsection 269TAC(8).
The Authority received further submissions from the exporters. It agrees with Customs' determination that for all the countries under inquiry, subsection 269TAC(1) was appropriate to assess normal values with the relevant adjustments made to domestic selling prices under subsection 269TAC(8) to enable comparison with export prices.
The Authority made the following adjustments to normal values using subsection 269TAC(8):
Germany: differences in freight, delivery charges, packing, credit terms; and additional costs incurred in making domestic sales in Germany."
After referring to the statutory concept of export prices, the ADA's Report went on to indicate that, amongst others, the purchases by Degussa Australia Limited could be treated as arms length transactions and that accordingly, invoice prices could be used to assess export prices under s.269TAB(1)(a) of the Customs Act.
Under the heading "Dumping Margins" the ADA's Report concluded:
"5.7 Dumping Margins
A dumping margin measures how far the export price lies below the normal value, expressed as a value or as a percentage of the normal value. Thus if goods whose normal value is $10 are exported at $8, the dumping margin is $2 or 20 per cent. When the export price is equal to or higher than the normal value, there is no dumping and hence no dumping margin.
The Authority found dumping margins for all countries under review. Dumping margins established by the Authority are listed below:
Germany 25 - 34 per cent
Italy 34 - 54 per cent
Korea 20 - 34 per cent
Japan 26 - 29 per cent
UK 25 per cent
USA 0 - 2 per cent
The Authority compared normal values and export prices for more shipments than Customs. For the USA, goods were only found to be dumped during one month in 1990."
The ADA then proceeded to consider whether dumped imports of sodium cyanide were causing or threatening material injury to the Australian industry. In that context it examined various indicators including levels of sales by local producers compared with imports, market size and market share as to which it concluded:
"The Authority examined AGR's market growth by quarter since the commencement of operations in November 1988 to the end of 1990. It notes that AGR's market share grew steadily from 3 per cent to nearly 20 per cent. Sodium cyanide produced in Australia by ICI and Minproc held about 4 per cent of the market in 1990 as a whole.
In 1989 imports from all sources held 88 per cent of the Australian market. In 1990, the market share of imports dropped to 76 per cent.
Imports from the countries under inquiry held about 80 per cent of the market in 1989. In 1990, their market share fell to about 72 per cent.
Confidential Attachment 7 sets out the details of market supplies."
After then reviewing the operation of concepts designated as "Price Effect", "Profits and Profitability" and "Threat to Establishment of a New Industry", the ADA expressed these conclusions on material injury at para 6.7 of its Report:
"The Authority notes that:
- sales by AGR have grown steadily since it commenced production;
- AGR's share of the Australian market grew by 17 percentage points from 1989 to 1990;
- AGR's prices were depressed and suppressed and were undercut by imports in 1990; and
- AGR suffered a fall in profits and profitability in 1990. The Authority notes that prices in 1988 and 1989 were unusually high both in Australia and internationally and that the industry was profitable during that time.
While prices were lower in 1990, (again both in Australia and internationally) the industry did manage to increase sales and remain profitable, albeit less so.
The Authority finds it difficult to conclude that the industry suffered material injury in 1990."
On the question of threat of material injury under s.269TAE of the Act, the ADA's report at paragraphs 7.1 and 7.2 noted:
"7.1 Introduction
Australia's anti-dumping legislation does not differentiate between the tests to be applied in determining the presence of material injury on the one hand, and on the threat of material injury on the other hand - either in terms of the type of issues to be addressed or in terms of the degree of proof or level of confidence required.
Section 269TAE sets out a number of factors which 'the Minister may, without limiting the generality of (the) section have regard to' when considering whether an Australian industry is threatened with material injury.
This section specifies that the 'likely' change in or effect on these factors may be examined.
In assessing threat to an Australian industry, the Authority therefore examines whether material injury will be caused by dumped imports given the likely trends in relevant factors. 7.2 The Authority's Assessment
As mentioned earlier, the Australian sodium cyanide industry has expanded since the inquiry began, with both ICI and Minproc starting to supply the domestic and export markets. The industry now has the capacity to supply a significant portion of the Australian market (around 80 per cent).
In examining threat, the Authority has considered the domestic sodium cyanide industry as composed of all three companies. The Authority has assessed the implications of the continued presence of dumped imports for the performance of the industry in the likely future Australian sodium cyanide market. Until early 1991, a number of factors restricted the ability of local producers to supply some segments of the domestic market. For example, it was necessary to install liquid receiving facilities at mine sites before miners could purchase sodium cyanide in liquid form; and both ICI and Minproc experienced commissioning difficulties. These restrictions have now been overcome and the local industry is capable of supplying any Australian mine with sodium cyanide.
As the Australian industry has the capacity to supply approximately 80 per cent of the market, it might be expected that the market share of imports would decline in the near future from the 76 per cent held in 1990.
Long term estimates, by the industry, of the Australian sodium cyanide market suggest that the market size will continue to fall, consistent with lower gold production. The amount of the gap between the size of the sodium cyanide market and the production capacity of the local industry may therefore reduce in the longer term.
Competition for sales is therefore likely to increase in intensity. The Authority found that dumping margins for the countries under inquiry ranged from zero per cent to 54 per cent. Du Pont is the largest exporter of sodium cyanide to Australia. The prices and market share of sodium cyanide imported from Du Pont have been stable since 1988. A dumping margin of 2 per cent was found to have applied during one month in 1990. However, there is no evidence that dumping by Du Pont will occur again. Further Du Pont has assured the Authority that its future exports will not be at dumped prices.
While imports from other sources were individually smaller, the Authority notes that collectively they held a large part of the market in 1990. The market shares and dumping margins of those sources are set out in Confidential Attachment 7. The Authority notes that the dumping margins assessed for imports from these sources are significant. The Authority also notes that the prices of the dumped imports from these sources undercut industry prices in 1990 and that the industry's prices were suppressed and depressed in 1990.
The Authority is aware that the price of sodium cyanide in some overseas markets has fallen and that dumping margins may now be lower.
However, as noted earlier, the Authority is concerned that recent reductions in normal values in some overseas markets may reflect the fact that an anti-dumping inquiry was in process in Australia. The Authority is therefore concerned that in the absence of anti-dumping action significant dumping margins may continue or recur.
The Authority considers that imports with significant dumping margins could be expected to have a major influence on the future performance of the Australian industry.
This influence is most likely to be apparent in the Australian prices of sodium cyanide.
If dumped imports from these sources continue to depress and suppress prices, as occurred in 1990, then it is likely that the Australian industry will record substantial losses. The Authority is thus satisfied that there is a threat of material injury from dumped imports of sodium cyanide. The Authority will therefore recommend to the Minister that anti-dumping action be taken against exporters of sodium cyanide from all the countries under inquiry, with the exception of the USA."
In relation to non-injurious free-on-board prices ("NIFOB's") the ADA indicated its general approach in these terms at paragraph 8.1 of its Report:
"As anti-dumping duties are based on free-on-board (FOB) prices from the country of export, a non-injurious free-on-board (NIFOB) price is calculated for each country of export. The usual method is first to determine an 'unsuppressed selling price' (USP) for the goods in Australia - i.e. an estimate of what the price of the goods would be in the absence of dumping - and then to work back to a FOB price by deducting all relevant costs which would be incurred by an importer.
To determine an USP, the Authority's first preference is to look to the market place for guidance. Initially, the Authority will look for prices of the locally produced product at a time when the market was not affected by dumping. If this avenue cannot be used, the Authority will instead look at the Australian industry's cost to make and sell (CTMS), and add an estimate of the profit (if any) which could be achieved by the industry in a market not affected by dumping. In estimating this profit the Authority will again look to the market for guidance."
That general approach was applied to sodium cyanide in these terms in paragraph 8.2 of the Report:
"To establish the USP, the Authority first sought advice from the industry. However, as the industry had only recently commenced operation, the Authority could not identify an established industry price.
The Authority therefore constructed an USP using normalised values for cost to make and sell and an amount for profit. To determine an appropriate level of profit for the industry, the Authority analysed Australian stock exchange data and the results of surveys on profitability of relevant manufacturing activities, such as chemicals, as a guide to the profit the industry could reasonably expect to earn in a sodium cyanide market unaffected by dumping.
Having established an USP, the Authority then deducted costs incurred by immporters to derive a NIFOB. These costs included: selling and administration, freight, insurance, port handling charges, agent and statutory government fees, and cartage. The Authority considered that a profit for importers should also be deducted from the USP. As profits achieved by importers may have been distorted by dumping, the Authority examined the results of surveys of companies and other data to determine the amount of profit to be ascribed to importers.
The Authority's consideration of NIFOBs is set out at Confidential Attachment 10.
Confidential Attachment 11 sets out the comparison between NIFOBs and normal values, as calculated by the Authority. The comparison indicates that NIFOBs were substantially lower than the normal values except for the USA where the NIFOB was above the normal value."
An examination of Confidential Attachments 10 and 11 reveals that a NIFOB for each of the exporters to Australia was calculated using a uniform USP, and margin of profit from which were deducted differential costs incurred by the exporters including selling and administration costs, "on costs" (apparently being agents' and statutory government fees), overseas freight and insurance. The NIFOB calculated for Degussa was then deducted from the normal value imputed to that company based on the price charged by it to German domestic users before the institution of the anti-dumping inquiry to arrive at a dumping margin of between 25 and 34% as indicated at para 5.7 of the ADA's report. That range is attributable to the adoption of two different invoice prices, the lower of which was charged to Bayer on 4 April 1990 and the higher of which was charged to another German domestic purchaser, Knoll, on 21 September 1990.
The respondent Minister adopted the ADA's recommendations and on 8 July 1991 published legal instruments having application to Degussa. The instrument pursuant to s.269TAC(8) of the Customs Act directed that:
"...in respect of sodium cyanide shown in Column 1 of the Table attached, hereinafter referred to as the "goods", exported from Degussa AG of the Federal Republic of Germany, the price paid in Deutsch marks shown in Column 2 of the Table attached, opposite the description of the goods shown in Column 1 of the Table, is to be adjusted to ensure that it is properly comparable with the export price of the goods, by:
. the addition of the amounts shown in Columns 6, 7 and 8 of the Table being an adjustment for credit terms, export packing and export inland freight and handling charges; and . the subtraction of the amounts shown in Columns 3, 4 and 5 of the Table being an adjustment for domestic inland freight, environmental laboratory costs and level of trade."
The instrument pursuant to s.269TG(1) recited that:
"I, .... am satisfied in respect of sodium cyanide, hereinafter referred to as the "goods", exported from Degussa AG of the Federal Republic of Germany, Enimont Anic SRL of Italy, Mitsui and Co Ltd of Japan, Tong Suh Petrochemical Corp Ltd from the Republic of Korea and ICI Chemicals and Polymers Ltd of the United Kingdom:
(a) the amount of the export price of the goods is less than the amount of the normal value of those goods; and
(b) by reason thereof:
material injury to an Australian industry would or might have been caused if the security had not been taken under section 42 of the Customs Act 1901 in respect of any duty that may become payable on those goods, and therefore, hereby DECLARE that section 8 of the Customs Tariff
(Anti-Dumping) Act 1975 applies to those goods."
The instrument pursuant to s.269TG(2) recited that:
"I, .... am satisfied in respect of sodium cyanide, hereinafter referred to as the "goods", exported from Degussa A.G. of the Federal Republic of Germany, Enimont Anic SRL of Italy, Mitsui and Co Ltd of Japan, Tong Suh Petrochemical Corp Ltd from the Republic of Korea and ICI Chemicals and Polymers Ltd of the United Kingdom:
(a) the amount of the export price of the goods is less than the amount of the normal value of those goods; and
(b) because of that material injury to an Australian industry producing like goods is being caused
and therefore, hereby DECLARE that section 8 of the Customs Tariff
(Anti-Dumping) Act 1975 applies to like goods
(c) that are exported to Australia after the date of publication of this Notice; and
(d) the amount of the export price of which is less than the amount of their normal value."
Fourthly, the Minister on the same date pursuant to s.8(5) of the Customs Tariff (Anti-Dumping) Act 1975 ("the Anti-Dumping Act") directed that:
"...in respect of sodium cyanide shown in Column 1 of the Table attached, exported from Degussa A.G. of the Federal Republic of Germany, Enimont Anic SRL of Italy, Mitsui and Co Ltd of Japan, Tong Suh Petrochemical Corp Ltd from the Republic of Korea and ICI Chemicals and Polymers Ltd of the United Kingdom (the interim dumping duty) is the amount, if any, by which the export price is less than the amount per kilogram FOB, port of shipment, packed, cash, as set out in Column 3 of the Table attached, less the amount, if any, by which the amount in Column 3 exceeds the dumping duty that would be payable in respect of the goods under subsection 8(4) of the Act."
The first attack made by Degussa on the decisions which led to the publication of those instruments and directions is that they proceeded from an erroneous interpretation of certain provisions of the Customs Act. Sub-sections 269TAC(1) and (2) of that Act provide:
"(1) Subject to this section, for the purposes of this Part, the normal value of any goods exported to Australia is the price paid for like goods sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter or, if like goods are not so sold by the exporter, by other sellers of like goods.
(2) Subject to this section, where the Minister:
(a) is satisfied that:
(i) by reason of the absence of sales that would be relevant for the purpose of determining a price under subsection (1); or
(ii) by reason that the situation in the relevant market is such that sales in that market that would otherwise be relevant for the purpose of determining a price under subsection (1) are not suitable for use in determining such a price; the normal value of goods exported to Australia cannot be ascertained under subsection (1); or
(b) is satisfied, in a case where like goods are not sold in the ordinary course of trade for home consumption in the country of export in sales that are arms length transactions by the exporter, that it is not practicable to obtain, within a reasonable time, information in relation to sales by other sellers of like goods that would be relevant for the purpose of determining a price under subsection (1); the normal value of the goods for the purposes of this Part is:
(c) except where paragraph (d) applies, the sum of:
(i) such amount as the Minister determines to be the cost of production or manufacture of the goods in the country of export; and
(ii) on the assumption that the goods, instead of being exported, had been sold for home consumption in the ordinary course of trade in the country of export:
(A) such amounts as the Minister determines would be the delivery charges and other costs necessarily incurred in that sale; and
(B) subject to subsection (13), an amount calculated in accordance with such rate, if any, as the Minister determines would be the rate of profit on that sale; or
(d) where the Minister so directs, the price determined by the Minister to be representative of the price paid for like goods sold in the ordinary course of trade in the country of export for export to a third country, being sales that are arms length transactions."
It is not easy to construe those sub-sections. For one thing, sub-s.(1) equates normal value with "the price" paid in "sales" by the exporter or other sellers of like goods. That reference to "sales" in the plural clearly contemplates that there may be several relevant sales, all satisfying the criteria of being in the ordinary course of trade and arms length transactions. Clearly such a plurality of sales may yield more than one price. However, a single price must be arrived at for the ascertainment of "the normal value". This suggests to my mind that some function of imputing a single price is to be performed by the Minister, a suggestion which is confirmed by the references to "determining a price" in s.269TAC2(a)(i) and (ii).
It has been argued on behalf of Degussa that the ADA considered only whether the German domestic price was relevant for the ascertainment of a normal value and did not address itself to the second question raised by the words "are not suitable for use in determining such a price" in sub-s.(2). That second question was said to be whether certain sales establishing the German domestic price were "suitable" for the determination of a price on which to base the normal value under sub-s.(1). Several significant factors were pointed to as supporting the conclusion that sales to German consumers before January 1991 were not suitable in that sense, including the fact that German domestic consumers purchased sodium cyanide to use in the chemicals industry and electroplating and not for use in gold extraction. A related consequence was that German consumers purchased in much smaller quantities than Australian gold-mining importers who called for tenders from suppliers to meet their requirements. As well, German consumers required a higher level of technical advice, sales support and provision of environmentally safe packaging and transport. There was also evidence before the ADA that, at least before January 1991, Degussa had "a firm hold on the (domestic German) market and is able to obtain virtually whatever price it seeks."
The passage from the ADA Report which is said to embody the erroneous interpretation to which I have just referred is in these terms:
"Some parties suggested that such sales (in domestic markets for use in the chemicals industry and electroplating) are not relevant for the purposes of subsection 269TAC(1) and that other approaches to assessing normal values should be used.
The Authority notes that subsection 269TAC(1) does not include a test concerning differences in the domestic and export marketing of the product. Rather the tests focus on whether sales are in the ordinary course of trade and at arms length. Where the terms and circumstances of domestic and export sales differ and prices are affected, subsection 269TAC(8) requires adjustments to be made to account for these differences. Therefore, where the Authority is satisfied that domestic sales meet the tests imposed in subsection 269TAC(1), it has used this subsection together with adjustments under subsection 269TAC(8) to assess normal values."
That part of the ADA's report was reproduced without adverse comment by Hill J (with whom Gummow and O'Connor JJ agreed) in Enichem v Anti-Dumping Authority (1992) 111 ALR 178 at 185. His Honour went on to discuss the structure of s.269TAC, saying at 188:
"When one turns to s.269TAC it is evident that the general principle for determining the normal value of goods is to be found in subs (1) of that section. The assumption upon which that subsection is framed is that sales made by the exporter (if there be such sales) in its home country, if arms length, will be the best indication of the normal value of goods. However, as subs
(2) makes clear, there will be cases where the prima facie position as set out in subs (1) will not give a true normal value of goods. One such reason, as dealt with in para (a) of subs (2) is the absence of sales in the country of export that are arms length sales. Obviously if there are no sales at all, no figure could be arrived at under subs (1). Similarly, if there were sales but there were no arms length sales, the same difficulty would arise.
Another case where subs (1) is not to be applied is where there is something about the situation in the relevant market which brings about the conclusion that arms length sales in that market are nevertheless "not suitable for use" in determining the price. An obvious example is where there is some factor which so distorts the market that arms length transactions made in the ordinary course of trade are rendered unsuitable to give the true normal value in the country of export. Two examples of such a case are to be found in subs (4) of s.269TAC, namely the existence of a government monopoly of the trade, or the existence of government control of the domestic price of the goods. Counsel for the respondents submitted that s.269TAC established a hierarchy of measures of normal value of which the primary measure was s.269TAC(1). With this there can be little dispute."
In that case, the Full Court declined to interfere with the decisions of the ADA and the Minister as far as they affected an Italian importer of sodium cyanide which had asserted that it enjoyed a "natural monopoly" in the domestic Italian market. Davies J, whose judgment at first instance in Enichem (unreported 9 April 1992) was affirmed on appeal, considered that, despite that assertion, there was material before the ADA sufficient to prevent the Minister from being satisfied, in terms of s.269TAC(2), that sales in the Italian domestic market were not suitable for use in determining a price for the purpose of s.269TAC(1).
His Honour observed, at p 14, that:
"Sales in the country of origin are unsuitable unless they reflect a situation of normal value, a situation against which the export prices can be judged so that a proper comparison is made. However, there was material before the Anti-Dumping Authority that the domestic sales in Italy were suitable for this purpose. Whether or not the quantum of sales in Italy was sufficient for the purpose was a matter of fact for the judgment of the decision-makers of fact."
Davies J also reproduced the extract from the ADA's Report from which I have just quoted and went on to say, at p 19:
"As can be seen, the Anti-Dumping Authority did not discuss whether there was any aspect of the facts which pointed to the pharmaceutical and electroplating industries being unsuitable for use in the determination of normal value. The Anti-Dumping Authority took the view that s.269TAC(1) did not include a test concerning differences in the domestic and export markets of a product. In my opinion, any such difference could provide a reason as to why sales in the country of origin were not suitable for use in the determination of normal value. Thus, if it were shown that the prices to the pharmaceutical and electrical industries were different from the prices of the sodium cyanide sold to the gold mining industry, that could be a factor to be taken into account, for it could provide a reason why the sales in the country of origin did not provide a guide to normal value. However, although it seems to me that the reasoning in the report of the Anti-Dumping Authority was not correct, I could not draw from the report the conclusion that the Anti-Dumping Authority did not consider that the Italian sales were suitable for use or the conclusion that it was not open to the Anti-Dumping Authority on the material before it to conclude that they were."
By contrast there have been put before the Court in the present case confidential attachments to the ADA's Report which supply some of the evidentiary deficiencies noted by his Honour there and in an earlier passage, at p 15, where he observed:
"The material before the Court disclosing what matters were taken into account by the respondents is so limited that I cannot conclude that it was not open to the respondents to proceed as they did. If the domestic prices of the various countries which the respondents considered had shown a general level of price and it could be seen that the Italian domestic price was substantially higher, then that would be an indication that the Italian domestic price was not suitable for the purposes of s.269TAC. Or if the prices considered by the respondents did, in fact, show a substantial difference between the price of sodium cyanide sold to the electroplating and pharmaceutical industries on the one hand and to the gold mining industry on the other, then that would also provide a reason for adopting a basis other than that provided by s.269TAC(1) and (8). But there is no material before the Court which shows that any such circumstance was disclosed by the material before the decision-makers. In the light of the report prepared by Ms Fisher, it has not been established that the respondents committed an error in law by adopting the Italian domestic price under s.269TAC(1) and adjusting it in accordance with s.269TAC(8). See Australian Broadcasting Tribunal v Bond
(1990) 170 CLR 321 at 355-60.
An aspect of the matter which limits the consideration of this matter is that neither the copy of the report of the Anti-Dumping Authority which is in evidence nor the declarations of the Minister have disclosed what, for each of the countries found to have dumped, was the normal value determined by the decision-makers. Thus, it is not shown whether the normal values adopted by the decision-makers were consistent one with another or whether they or some of them were disparate and inconsistent with the general level. The confidential attachments to the report of the Anti-Dumping Authority which disclosed these matters are not before the Court. See s.269TC(3).
In the context that the exports from several countries were being considered, one would have expected the decision-makers to have had in mind consistent normal values, values consistent in the world context. But the copy of the report of the Anti-Dumping Authority which is in evidence does not disclose whether or not this was so. Thus, eg., although the report found that the dumping margins of Enimont ranged from 34% to 54% and that the dumping margins of the exporters from the USA were minimal, the copy of the report in evidence does not show whether Enimont sold into Australia at prices lower than the USA sales to Australia or, indeed, whether Enimont's sales to the USA, which I assume were greater than those within Italy, were made at prices consistent with the prices at which the USA exporters sold to Australia. In the absence of any information on such matters, I find it difficult to arrive at an informed view as to the challenged decisions."
Some of the observations of his Honour were challenged by Mr Jolson QC, who appeared with Mr Gageler for the respondents, as being based on a concept of "normal price" or "normal value in world terms" for which no warrant can be found in the language of the legislation properly understood. His Honour's development of that concept commenced at p 15 where he suggested:
"However, normal value must, in an appropriate case, be determined otherwise, as by reference to the price at which goods in the country of export are sold to a third country, not the country of import. The adoption of such a comparison may be particularly appropriate and required when the transaction, the sale to the third country, appears to reflect normal value in world terms i.e. a normal competitive world price. The Agreement on Implementation so provides in paras. 3 and 4 of Article 2. Paragraph 4 uses the expression "a proper comparison" which conveys the concept."
Davies J then went on to observe, at p 12:
"I would therefore agree with the submissions put on behalf of the applicants that, in this circumstance, if it were established that the sales in Italy did not reflect the normal value in world terms of sodium cyanide in the form and in the quantities in which it was sold to Australia, then another value which did so may have been more appropriate.
Section 269TAC(2) is not to be read in an unduly technical sense. It is one of a series of provisions that seeks to determine a normal value against which the price to Australia can be compared. Therefore the words in para. (2)(a)(i) "the absence of sales" should not be read as referring to a total absence of sales but to an absence of sufficient sales on which a comparison can be based. When para. (2)(a)(ii) refers to the situation where the sales in the domestic market are not suitable for use in determining such a price, it permits any reason that shows that they are not suitable for use in a comparison to be adopted. And finally, it must be kept in mind that "the normal value" is looking to just that, namely the normal value of the goods and therefore, if the price in the market of origin is for any reason out of line with the normal price in world terms, then sales in that market may not be suitable for use. The word "cannot", which appears at the end of sub-section 2(a) should not be given any emphasised meaning. If the sales in the country of origin are not suitable for establishing normal value, then the normal value cannot be ascertained by using them."
It is unnecessary for me, with respect, to resolve whether disparity between the domestic price determined by reference to sales meeting the criteria in s.269TAC(1) and some normal value in world terms is capable of rendering the domestic sales unsuitable so as to compel the Minister to resort to s.269TAC(2). That is because the ADA, and through it, the Minister, has determined a price, under s.269TAC(1), for German sodium cyanide after excluding from consideration sales, being those made on and after 19 January 1991, which were concededly "relevant" in the sense that they were made in the ordinary course of trade for home consumption and were arms length transactions. As indicated in the extract from its Report quoted at p 11 of these reasons, the ADA "confined its examination of normal values to the period before the initiation of the inquiry by Customs".
That explanation of what it did itself betrays the ADA's misunderstanding of the processes of evaluation and determination ordained by s.269TAC in order to ascertain a "normal value" which, once ascertained, may be reascertained in accordance with s.269TAD to take account of changed circumstances. A similar misunderstanding underlies the ADA's statement in para. 7.2 of its Report quoted at p 16 above that it "is concerned that recent reductions in normal values in some overseas markets may reflect the fact that an anti-dumping inquiry was in process in Australia". Mr Shaw QC, who appeared with Mr P.J. Cosgrave, for Degussa argued that the passage which I have just quoted indicated an acceptance that the 1991 reductions truly represented new normal values. However, I am inclined to regard the ADA's formulation as manifesting the same confusion of thought earlier identified, and to read it as a reference only to domestic sales at new, reduced, prices.
Practical necessity dictates that an investigation by the ADA must be confined to domestic sales occurring within some defined period. However, that necessity does not entitle the ADA to confine its whole investigation to sales occurring before the announcement of an anti-dumping inquiry. As Mason J indicated in Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 45, there is a
"... general principle that an administrative decision-maker is required to make his decision on the basis of material available to him at the time the decision is made. But that principle is itself a reflection of the fact that there may be found in the subject-matter, scope and purpose of nearly every statute conferring power to make an administrative decision an implication that the decision is to be made on the basis of the most current material available to the decision-maker."
The principle thus identified was applied by Burchett J in Edelsten v Wilcox (1988) 83 ALR 99 at 108.
Some temporal limit on the sales by reference to which normal value is ascertained may be imported from s.269TG(1) of the Act which provides:
"Subject to section 269TN, where the Minister is satisfied, as to any goods that have been exported to Australia, that:
(a) the amount of the export price of the goods is less than the amount of the normal value of those goods; and
(b) because of that:
(i) material injury to an Australian industry producing like goods has been or is being caused or is threatened, or the establishment of an Australian industry producing like goods has been or may be materially hindered; or
(ii) in a case where security has been taken under section 42 in respect of any duty that may become payable on the goods under section 8 of the Anti-Dumping Act - material injury to an Australian industry producing like goods would or might have been caused if the security had not been taken;
the Minister may, by notice published in the Gazette, declare the section 8 of that Act applies to those goods."
Because that sub-section envisages the making of a declaration applying to goods that "have been exported to Australia" and requires an ascertainment of the normal value of those goods, it would be appropriate in quantifying the normal value to have regard only to prices achieved on domestic sales reasonably close in time to the sales of the goods that have been exported. However, a different approach is required in the application of s.269TG(2) which provides:
"Where the Minister is satisfied, as to goods of any kind, that:
(a) the amount of the export price of like goods that have already been exported to Australia is less than the amount of the normal value of those goods, and the amount of the export price of like goods that may be exported to Australia in the future may be less than the normal value of the goods; and
(b) because of that, material injury to an Australian industry producing like goods has been or is being caused or is threatened, or the establishment of an Australian industry producing like goods has been or may be materially hindered;
the Minister may, by notice published in the Gazette (whether or not he or she has made, or proposed to make, a declaration under subsection (1) in respect of like goods that have been exported to Australia), declare that section 8 of the Anti-Dumping Act applies to like goods:
(c) that are exported to Australia after the date of publication of the notice or such later date as is specified in the notice; and
(d) the amount of the export price of which is less than the amount of their normal value."
That sub-section appears to me to be designed to accommodate an ascertainment, or re-ascertainment of normal value of goods after like goods have been exported to Australia. If that normal value exceeds the export price of the goods already exported to Australia, the Minister is then required to consider whether the export price of like goods that may be exported in the future may be less than the normal value of the goods; ie the normal value ascertained or reascertained after the export of the goods that have already been exported to Australia. That exercise, on application of the principle just discussed, requires the Minister to have regard to relevant domestic sales available at the time when the judgment is made as to the export price of like goods presumptively to be exported in the future.
This view of the operation of sub-ss (1) and (2) of s.269TG is confirmed by the language of sub-s. (3) which is in these terms:,
"(3) Where:
(a) a notice under subsection (1) declares particular goods to be goods to which section 8 of the Anti-Dumping Act applies; or
(b) a notice under subsection (2) declares like goods in relation to goods of a particular kind to be goods to which that section applies;
the notice shall include a statement of the amount that the Minister has ascertained is or would be the normal value of the goods to which the declaration relates at the time of publication of the notice unless, in the opinion of the Minister, the inclusion of that statement would adversely affect the business or commercial interests of any person."
The requirement there imposed, to specify as "at the time of publication of the notice" an existing normal value if the notice is given under sub-s. (1) or a future normal value if the notice is given under sub-s. (2) "at the time of publication of the notice" imports, I consider, a correlative obligation to ascertain the normal value, if that is to be done under s.269TAC(1), having regard to domestic sales as close as practicable to the time of publication.
In the present case the ADA and the Minister have ascertained a single normal value by reference to sales all occurring before January 1991. That single normal value has been used for the purposes of both sub-ss 269TG(1) and (2) as is made clear by the identification in para. 5.2 of the ADA's Report of two "purposes of normal values" and the terms of the Minister's declaration under s.269TG(2). Accordingly, in my view, there has been an error of law constituted by ascertaining, for the purposes of that sub-section, a normal value pursuant to s.269TAC(1) without having regard to domestic sales as close as practicable to the date of publication of the Minister's declaration on 8 July 1991.
Counsel for the respondents sought to avoid the conclusion which I have just reached by referring to the discussion by Gummow J of the same ADA Report in ICI Australia Operations Pty Ltd v Anti-Dumping Authority (1991) 104 ALR 474 where his Honour observed, at 481:
"Counsel for the applicants referred to the general precept that a decision-maker should act upon the most recently available information. As I have indicated, the inquiry by the ADA was initiated by the reference to it on 22 February 1991 and the ADA report was forwarded to the minister on 24 June 1991. Mr Evans, as part of his responsibilities in the management of the inquiry, determined that the period to be used in assessing the question of whether material injury had been caused or was being caused by dumped goods, should be the three calendar years ending 31 December 1990. That is to say, on this aspect he did not take into account information in respect of the period immediately preceding the commencement of the inquiry and during the conduct of the inquiry. The applicants complained of this as a failure to take relevant considerations into account.
Counsel for the applicants referred to Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24; 66 ALR 299. However, in that case, (at CLR 44; ALR 312) Mason J spoke of the exercise of the relevant discretion as based on "the most recent and accurate information that the minister has at hand" (emphasis supplied). Further, Brennan J (at CLR 61; ALR 325) spoke of the decision-maker acting on an impartial and reasonable view of the facts "without pursuing a fresh inquiry into what should on its face be rejected as unreliable information". In the present case, there was before the ADA abundant evidence from which it might be concluded that after the announcement in early February 1991 by the Comptroller-General of his preliminary finding, the behaviour of relevant parties had been influenced by the initiation of the inquiry by the ADA. Accordingly, in the ADA report (para 7.2), the ADA stated that while it was aware that the price of sodium cyanide in some overseas markets had fallen and that dumping margins might now be lower, it was concerned that reductions, since the end of the final 1990 quarter, in normal values in some overseas markets might reflect the fact that an anti-dumping inquiry was in progress in Australia. In my view, no ground is made out to impugn the process of decision-making conducted by the ADA in this fashion."
That passage is unexceptionable, with respect, when related to the application before his Honour which embodied a complaint by ICI, as an Australian producer, about the ADA's conclusion, at para. 6.7 of its report that it "finds it difficult to conclude that the industry suffered material injury in 1990". His Honour was saying no more than that the ADA had not misdirected itself by confining its examination to circumstances up to and of 1990 when considering, as required by s.269TG(1), whether goods that had been exported to Australia had been dumped and, because of that, material injury to Australian industry had been or was being caused. However, as I have endeavoured to explain above, different temporal limits may have to be applied when the inquiry is under s.269TG (2) into whether material injury may be caused to the Australian industry by a possible deficiency in the export prices of presumptive future exports compared with the normal value of like goods in the domestic market of their country of origin.
In view of the error of law which I have identified in the ADA's approach to the ascertainment of a single German normal value for all purposes, it is inappropriate for me consider whether the decision to issue the specific dumping duty notices in question in this case was unreasonable in the sense indicated, for example, in Associated Provincial Picture Houses Ltd v Wednesbury Corporation (1948) 1KB 223.
The same identification of an error of law also makes it strictly unnecessary for me to express a conclusion on each of the three remaining aspects of the respondents' decisions affecting Degussa which were agitated in the course of the present application. However, out of deference to the arguments which have been ably presented, and in the hope of affording some assistance to the reconsideration of those decisions, I shall indicate briefly my views on those issues.
The ADA's finding of a threat of material injury to the Australian industry from dumped imports of sodium cyanide after 1990, including imports from Germany was said to be vitiated by a failure to take into account the new German price demonstrated by domestic sales in and after January 1991 and a failure to consider the impact on the Australian industry of non-dumped goods from the USA if anti-dumping measures were imposed on Degussa.
I have already outlined my reasons for concluding that the exclusion of German domestic sales in 1991 from the consideration of whether there was a threat of material injury to the Australian industry was an error. However, I am not persuaded that had the normal value of German exports been correctly ascertained, the ADA and the Minister would have committed a further error in taking account of the export prices and volume of sodium cyanide from the USA. It is clear that the ADA was aware that the American exporter, Du Pont, had a market share equal to about 50% of all imports and to about 38% of the total Australian market. Moreover, it had concluded that Du Pont's market share had been achieved without adopting, to any significant degree, dumped prices. The existence of a threat of material injury to the Austalian industry if a dumping duty were not imposed on Degussa, therefore depended on an assessment that the imposition of such a duty would allow the Australian industry perceptibly to increase its market share while maintaining an unsuppressed selling price. In other words, a judgment was required that the market share to be made available by the presumptive imposition of dumping duties on Degussa was not likely to be wholly taken up by Du Pont.
This analysis I consider to be consistent with that undertaken by Wilcox J in C.A. Ford Pty Ltd v Comptroller-General of Customs (unreported 8 March 1991) where his Honour observed, at 16 that:
"... injury is a matter of degree. The fact that an Australian industry suffers some loss, and therefore some injury to its business, in competing with non-dumped imports does not mean that it fails to suffer a material injury if, by reason of dumping, the loss is increased. In such a case the effect of the dumping is to increase the extent of the injury. If the additional loss is material, that loss is a material injury occasioned by the dumping."
In the light of the references, at para 7.2 of its Report, to an expected decline in the market share of imports, I am not able to conclude that it did not assess the impact of Du Pont free of anti-dumping measures on a market to be affected by dumping duties to be imposed on Degussa (and other foreign exporters).
The fact that specific reference was not made to a possible increase in Du Pont's market share, or that the reasoning of the ADA on the effect of that possible increase on its assessment of threat of future injury was not fully exposed in the way suggested above, does not entail a failure to take into account a relevant consideration. As Toohey J observed in Turner v Minister for Immigration Local Government and Ethnic Affairs (1981) 55 FLR 180 at 184:
"In many cases it will be clear whether or not the decision maker has taken a relevant consideration into account. That is not say that the mere assertion by the decision maker that he has done so will conclude the matter. It may be possible to demonstrate from a consideration of all the reasons leading to the decision, or indeed from the decision itself, that a consideration has not been taken into account in any real sense. Conversely the omission of an express reference to some consideration will not lead inevitably to a conclusion that it was not taken into account. An examination of the reasons for decision and of the decision itself may justify the inference that it was."
It was also argued on behalf of Degussa that it had been denied natural justice in that the ADA did not act promptly to verify the new German price, and did not afford Degussa an opportunity to assuage the ADA's doubts about the permanence of that price. However, this ground of attack cannot avail Degussa independently of the ground on which it has succeeded. Insofar as Degussa was precluded from elaborating on the amount and likely stability of the new German price, that was a consequence of what I have held to be the ADA's mistaken view that it was entitled, as a matter of law, to disregard, for all purposes, sales occurring after the institution of the anti-dumping inquiry. In all the circumstances, I do not consider that there was any denial of an opportunity to Degussa to put everything which could have assisted its case had the ADA's view been correct in law.
Finally, an attack was made on the form of the ADA's report when examined in the light of the content of the notices which it recommended should be issued by the Minister.
Sub-section 7(1) of the Anti-Dumping Authority Act 1988 provides:
"Where, in relation to an application under section 269TB of the Customs Act 1901:
(a) the Comptroller refers to the Authority under subsection 269TD (2) of the Customs Act 1901 the question whether the publication of a dumping duty notice or countervailing duty notice sought in respect of the goods the subject of the application is justified; or
(b) the Authority revokes, under subsection 8 (2), a negative preliminary finding relating to such goods and substitutes a preliminary finding to the effect that there are sufficient grounds for the publication of a dumping duty notice or countervailing duty notice in respect of the goods the subject of the application or that there will be sufficient grounds for such publication subsequent to the importation into Australia of such goods;
the Authority shall, after holding an inquiry into the matter and before the expiration of a period of 120 days, or, if another period is prescribed by the regulations for the purpose, before the expiration of that other period, after the reference, give to the Minister a report:
(c) recommending whether any such notice should be published and the extent of any duties that are or should be payable under the Anti-Dumping Act in consequence of such notice;
(d) in particular recommending whether the Minister ought to be satisfied as to the matters in respect of which the Minister is required to be satisfied before such a notice can be published;
(e) recommending (where applicable) whether the Minister ought to give to the exporter of the goods a notice under subsections 269TG (4) or 269TJ (3) of the Customs Act 1901; and
(f) which shall include all reasons for any recommendations."
The ADA's Report clearly contained a recommendation at the end of para 7.2 that "anti-dumping action be taken against exporters of sodium cyanide from all the countries under inquiry, with the exception of the USA." As well the prefatory section of the Report concluded with these statements under the heading "Recommendation":
"The Authority recommends that the Minister: - publish a dumping duty legal instrument under subsection 269TG(2) of the Customs Act 1901 against exports of sodium cyanide from Degussa AG (Germany), Enimont Anic SRL (Italy), Tong Suh Petrochemicals Corp. Ltd. (Korea), Mitsui and Co
(Japan), and ICI Chemicals and Polymers (UK); - not take anti-dumping action against the export of sodium cyanide from E.I. Du Pont De Nemours and Co (Inc) USA; - publish a legal instrument, under subsection 269TG(1), to call up securities incurred since the imposition of provisional measures; and
- agree that, on the grounds of confidentiality, legal instruments relating to subsection 269TAC(8) of the Customs Act 1901 and to subsection 8(5) of the Customs Tariff
(Anti-Dumping) Act 1975 not be published.
To give effect to these recommendations, the Authority recommends that the Minister sign the legal instruments which are listed at Attachment 1 to this report."
The report does not contain a specific recommendation whether the Minister ought to be satisfied as to the matters in respect of which the Minister was required to be satisfied before a dumping duty notice could be published. However, there is appended to the Report a "List of Legal Instruments Recommended for Minister's Signature which included:
"Legal instruments under section 269TG of the Customs Act declaring that section 8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to exports of sodium cyanide from the Federal Republic of Germany, Italy, Japan, the Republic of Korea, and the United Kingdom."
Sub-sections 269TG(1) and (2) have been reproduced above at pp 28 and 29 of these reasons.
Hill J in Hyster Australia Pty Ltd v The Anti-Dumping Authority (unreported 17 February 1993) was inclined to doubt whether a recommendation for the giving of a notice under s.269TG carried with it a recommendation that the Minister ought to be satisfied of the matters which that section makes prerequisite to the publication of a notice. His Honour said, at p 28:
"Although I do not think the matter is free from doubt, I do not think that it can properly be said that the Authority has recommended that the Minister ought to be satisfied of the matters referred to in s.269TG merely because the Authority has recommended the giving of a notice under s.269TG. Indeed, ss.7(1)(c) and (d) of the Anti-Dumping Act appear to differentiate between recommending that a notice should be published, on the one hand, and recommending that the Minister ought to be satisfied on the other. The one recommendation is general, the other specific. In fact, the actual notice given by the Minister, after considering the Authority's Report, states the Minister's satisfaction. That statement is not a prerequisite to the validity of the notice, yet the existence of the satisfaction clearly is. I think that the result could have been different if the Authority had recommended not merely the giving of a s.269TG notice, but also that the notice be in a form stating the existence of the Minister's satisfaction. However, that is not what was done."
Likewise, in the present case there was no recommendation that the notice be in a form reciting the Minister's satisfaction. The recommendations, amongst others were simply that the Minister sign legal instruments under s.269TG.
The contrary view is that there can be taken to be implicit in the ADA's recommendation that legal instruments be published, a recommendation that the Minister ought to be satisfied as to the matters in respect of which he was required to be satisfied before those instruments could be issued. Even if that view is to be preferred, I consider that the ADA has failed to include in any identifiable way all the reasons for its express recommendations and the implicit recommendations which, pace Hill J are to be imputed to it.
It is not necessary, in my view, for the report required by s.7(1) of the Anti-Dumping Authority Act to gather together in some compendious passage all of the reasons for a particular recommendation. Reasons can be indicated by incorporating reference material contained in various parts of the report provided that some indication is given which permits the Minister, or any other reader of the report, to identify all of the reasons for a particular recommendation. In its Report No 40 the ADA fails to provide an indication of that kind of its reasons for the recommendations adverse to Degussa.
In accordance with these reasons, I shall order:
1. That the decisions of the first respondent to recommend that anti-dumping action be taken against exports of sodium cyanide from the Federal Republic of Germany and to recommend that legal instruments to give effect to such recommendation be signed by the second respondent be set aside and the matters the subject of those decisions be referred to the first respondent to be further considered and determined according to law.
2. That each of the decisions of the second respondent to issue:
(a) the direction dated 8th July 1991 for the adjustment of the normal value of sodium cyanide exported from Degussa AG of the Federal Republic of Germany pursuant to s.269TAC(8) of the Customs Act 1901;
(b) the declaration dated 8 July 1991 that s.8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to sodium cyanide exported from Degussa AC of the Federal Republic of Germany;
(c) the declaration dated 8 July 1991 that s.8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to like goods to sodium cyanide exported from Degussa AG of the Federal Republic of Germany that are exported to Australia after 8 July 1991;
(d) the direction dated 8 July 1991 pursuant to s.8(5) of the Customs Tariff (Anti-Dumping) Act 1975 for the ascertainment of dumping duty in respect of sodium cyanide exported from Degussa AG of the Federal Republic of Germany; be set aside and the matters the subject of each of those decisions be referred to the second respondent to be further considered and determined according to law.
The respondents must pay the applicants' costs of the application (including any reserved costs) to be taxed in default of agreement.
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