EXPLANATORY STATEMENT
Select Legislative Instrument No. 15, 2015
Subject: Customs Act 1901 and Customs Amendment (Anti-Dumping Improvements) Regulation 2015
Authority
Subsection 270(1) of the Customs Act 1901 (the Act) provides in part that the Governor‑General may make Regulations not inconsistent with the Act prescribing all matters which by the Act are required or permitted to be prescribed.
Subsection 269ZDBB of the Act provides in part that circumvention activities are to be prescribed by regulation.
Background
The Customs Act 1901 (the Customs Act) provides that circumstances may be prescribed in regulation that will be ‘circumvention activity’ in relation to a notice for the purposes of subsection 269ZDBB(6).
Purpose and operation
The purpose of the Customs Amendment (Anti-Dumping Improvements) Regulation 2015 (the Regulation) is to specify a new type of circumvention activity in Australia’s anti-dumping system to address the practice of slightly modifying goods in order to avoid payment of anti‑dumping and countervailing duties already imposed.
‘Circumvention activity’ means certain practices of exporters and importers of dumped goods which aim to avoid the payment (or effect) of anti-dumping duties that have been imposed in Australia. The Regulation prescribes a new circumvention activity in which goods that would have been the subject of a dumping or countervailing notice (and liable to pay duties) are slightly modified, prior to the export of the goods to Australia, to avoid the anti-dumping duty. This activity may result in reducing the effectiveness of anti-dumping measures as a trade remedy for Australian industry. The new circumvention activity may be used in an anti-circumvention inquiry resulting in the notice which imposes duties being affirmed or altered in order to give effect to the dumping duty measures imposed under that notice. Details of the Regulation are set out in the Attachment.
An application or request by the Minister for an anti-circumvention inquiry in relation to goods that would be covered by this Regulation will be dealt with in accordance with the requirements set out in Division 5A of the Customs Act.
This Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Consultation
The Government has undertaken consultation with a limited number of key anti-dumping industry stakeholders in considering the amendment to introduce the new circumvention activity. The industry stakeholders that have been consulted are supportive of the new ‘slight modification’ circumvention activity.
Authority: Section 270 of the Customs Act 1901.
ATTACHMENT
Detailed explanation of the Regulation’s provisions
Section 1 – Name of Regulation
This section provides the title of the Regulation, Customs Amendment (Anti-Dumping Improvements) Regulation 2015.
Section 2 – Commencement
This section provides that the Regulation commences 30 days after registration.
Section 3 – Authority
This section provides that the Regulation is made under the Customs Act 1901.
Section 4 – Schedule(s)
This section provides that each instrument specified in a Schedule to the Regulation is amended or repealed as provided for in the applicable Schedule and that any other item in a Schedule will have effect according to its terms.
Schedule 1
Item 1 – After regulation 183
This item inserts Regulation 183A after Regulation 183 in the Customs Regulations 1926.
Regulation 183A
Sub-clause (1) prescribes the circumstances set out at sub-clause (2) as a ‘circumvention activity’ for the purposes of section 269ZDBB(6) of the Customs Act 1901.
Sub-clause (2) provides that where the circumstances specified at paragraphs (a) through to and including (e) are present, then ‘circumvention activity’ in relation to the notice for the purposes of section 269ZDBB(6) of the Customs Act 1901 has occurred. The intention is that where goods, the subject of a notice, have been slightly modified, in order to avoid the payment of duties specified in the notice by an exporter of the goods then ‘circumvention activity’ will have occurred.
Sub-clause (3) provides that in deciding if goods have been slightly modified for the purposes of sub-clause (2), the Commissioner may have regard to any factors considered relevant. These factors may include the non-exhaustive and non-mandatory list of factors set out at paragraphs (a) through to (m). No single factor will necessarily provide definitive guidance as to whether the circumvention activity has occurred or not.
Overview
The Customs Amendment (Anti-Dumping Improvements) Regulation 2015 was enacted to address a gap in Australia’s anti-dumping system related to the practice of exporters and importers slightly modifying goods to evade the payment of anti-dumping and countervailing duties. The Customs Act 1901 allows the Governor-General to make regulations regarding matters required or permitted by the Act, including the prescription of circumvention activities under section 269ZDBB. The primary policy objective of this regulation is to enhance the effectiveness of anti-dumping measures by specifically identifying and addressing the practice of slight modifications to goods intended to avoid duty payments. This regulatory measure aims to ensure that the integrity of the anti-dumping system is maintained by curbing activities that undermine its intended trade remedy purposes.
The regulation was formulated under the authority of section 270 of the Customs Act 1901, and consultation was conducted with key industry stakeholders who expressed support for the new circumvention activity. The regulation specifies that slightly modifying goods to avoid anti-dumping duties constitutes a circumvention activity, which may lead to the affirmation or alteration of duties in anti-circumvention inquiries. This legislative instrument is designed to strengthen the enforcement mechanisms within the anti-dumping framework, ensuring that the duties imposed are effectively applied and not circumvented through minor alterations to the goods.
Scope and Application
The Customs Amendment (Anti-Dumping Improvements) Regulation 2015 applies to the Commonwealth of Australia and pertains to the Customs Act 1901. This legislation specifically targets the conduct of exporters and importers of goods in relation to anti-dumping duties, seeking to prevent activities that circumvent the payment of these duties. The Regulation is designed to address the practice where goods are slightly modified to avoid the imposition of anti-dumping and countervailing duties. This activity, if proven, is classified as a 'circumvention activity' and can lead to an inquiry under the Customs Act, potentially resulting in the affirmation or alteration of the duties imposed. The Regulation does not explicitly state any exclusions or exemptions, but the application of the Act and the Regulation is subject to the discretion of the Commissioner of Customs, who may consider a range of factors in determining whether a slight modification has occurred. The Regulation was made under the authority of subsection 270(1) of the Customs Act and came into effect 30 days after its registration. The scope of the Regulation is extended through the insertion of Regulation 183A in the Customs Regulations 1926, thereby amending existing regulations to include the new type of circumvention activity.
Key Provisions
The Customs Amendment (Anti-Dumping Improvements) Regulation 2015 (the Regulation) introduces significant changes to Australia's anti-dumping system by specifying a new type of circumvention activity (Schedule 1, Item 1). This regulation aims to tackle the practice of slightly modifying goods to evade the payment of anti-dumping and countervailing duties already imposed (Regulation 183A(2)). Essentially, if goods that were the subject of a dumping or countervailing notice and liable for duties are slightly altered prior to their export to Australia to avoid the anti-dumping duty, this constitutes a 'circumvention activity'. Such activities can undermine the effectiveness of anti-dumping measures as a trade remedy for Australian industry.
The Regulation imposes several obligations on parties involved in the importation and exportation of goods. Exporters and importers must ensure that any modifications made to goods do not constitute a circumvention activity as defined in Regulation 183A(2). They are required to provide any relevant information that the Commissioner may request to determine whether a slight modification has occurred (Regulation 183A(3)). The Commissioner has the authority to consider any factors deemed relevant in deciding whether a slight modification has taken place, including a non-exhaustive list of factors provided in Regulation 183A(3).
Breach of the provisions set out in the Regulation can lead to various consequences. If it is determined that a party has engaged in a circumvention activity, the notice imposing duties may be affirmed or altered to give effect to the dumping duty measures (Customs Act 1901, section 269ZDBB(6)). This can result in additional financial liabilities for the party involved. Further, the Regulation provides for potential civil or criminal penalties for non-compliance with the Customs Act and its regulations, although specific penalties are not detailed in the explanatory statement. Non-compliance may also lead to other enforcement actions as prescribed under the Customs Act.