Customs Amendment Regulations 2004 (No. 2) 2004 No. 165
EXPLANATORY STATEMENT
STATUTORY RULES 2004 NO. 165
Issued by the Authority of the Minister for Justice and Customs
Customs Act 1901
Customs Amendment Regulations 2004 (No. 2)
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 or as may be necessary or convenient to be prescribed for giving effect to this Act or for the conduct of any business relating to the Customs.
The purpose of the amending Regulations is to amend the Customs Regulations 1926 (the Principal Regulations) to better reflect Australia's obligations under Article 2 of the World Trade Organisation (WTO) Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the WTO Agreement).
Under Part XVB of the Act, antidumping measures may be taken in respect of goods whose exportation to Australia involve a dumping of those goods that injures, or threatens to injure, Australian industry. Goods are taken to have been dumped if the export price of those goods is less than the normal value of those goods.
Generally, the normal value of goods is the price paid or payable for like goods in the ordinary course of trade. One factor in determining whether goods are sold in the ordinary course of trade is whether the price at which the goods are sold is less than the cost of the goods.
Under subsection 269TAAD(4) of the Act, the cost of like goods in the country of export is equal to the sum of the cost of production or manufacture and administrative, selling and general costs (AS&G costs) of the goods.
Subsection 269TAAD(5) provides that the cost of production or manufacture and AS&G costs must be worked out in such manner, and taking account of such factors, as the regulations provide.
If the normal. value of goods cannot be determined using the price paid or payable for like goods, it may be constructed under paragraphs 269TAC(2)(c) and 269TAC(4)(e) of the Act. Under these provisions, the normal value is the sum of amounts determined to be the cost of production or manufacture, the AS&G costs of the goods and the profit on the sale of the goods.
Under subsection 269TAC(5B), the amount of profit under paragraphs 269TAC(2)(c) and 269TAC(4)(e) must be worked out in such manner, and taking account of such factors, as the regulations provide.
Previous regulation 180 of the Principal Regulations set out the manner of, and relevant factors to be taken into account in, determining the cost of production or manufacture and AS&G costs under subsection 269TAAD(4) of the Act.
Previous regulation 181 of the Principal Regulations set out the manner of, and relevant factors to be taken into account in, determining AS&G costs under subsection 269TAAD(4) of the Act and profit under paragraphs 269TAC(2)(c) and 269TAC(4)(e) of the Act.
Previous regulations 180 and 181 were originally drafted to implement Article 2 of the WTO Agreement. Article 2 sets out certain methods to follow in working out the cost of production or manufacture, the AS&G costs, and the profit on the sale of goods in relation to the determination of dumping.
However, over time, it became apparent that previous regulations 180 and 181 did not accurately reflect Article 2 of the WTO Agreement. Further, it was considered that it would be more effective to implement Article 2 by having three separate regulations, relating to the determination of the cost of production or manufacture, the AS&G costs, and the profit on the sale of goods respectively.
The purpose of new regulations 180, 181 and 181A is to ensure that the provisions relating to the determination of cost of production or manufacture, AS&G costs and profit are consistent with Article 2 of the WTO Agreement and are set out in a format that is clearer and more effective.
New regulations 180 and 181 set out the manner of, and factors to be taken into account in, working out the amounts for the cost of production or manufacture and AS&G costs respectively under subsection 269TAAD(4) of the Act. New regulation 181A sets out the manner of, and factors to be taken into account in working out the amount of profit under paragraphs 269TAC(2)(c) and 269TAC(4)(e) of the Act.
Details of the amendments are set out in the Attachment A.
The amending Regulations commenced on the date of their notification in the Gazette.
0302698A
ATTACHMENT A
CUSTOMS AMENDMENT REGULATIONS 2004 (No. 2)
Regulation 1 - Name of Regulations
Regulation 1 provides that the Regulations are the Customs Amendment Regulations 2004 (No. 2).
Regulation 2 - Commencement
Regulation 2 provides that the Regulations commence on the date of their notification in the Gazette.
Regulation 3 - Amendment of Customs Regulations 1926
Regulation 3 provides that Schedule 1 amends the Customs Regulations 1926.
SCHEDULE 1 - AMENDMENTS
Item 1 - Substitution of regulations 180 and 181
Item 1 substitutes previous regulations 180 and 181 with new regulations 180, 181 and 181A.
New regulation 180
New regulation 180 sets out, for subsection 269TAAD(5) of the Customs Act 1901 (the Act), the manner of, and factors to be taken into account in, working out the amount for the cost of production or manufacture of like goods in a country of export under paragraph 269TAAD(4)(a) of the Act.
New regulation 180 is same in substance in relation to costs of production or manufacture as previous regulation 180. However, it no longer includes administrative, selling and general costs (AS&G costs). These are worked out under new regulation 181.
New regulation 180 also corrects some minor inaccuracies in reflecting Article 2 of the World Trade Organisation (WTO) Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the WTO Agreement).
Under subregulation 180(2), the Minister has to work out the amount representing the cost of production or manufacture of like goods by using information set out in records kept by an exporter or producer of like goods relating to the like goods, provided that the records:
(a) are in accordance with generally accepted accounting principles in the country of export; and
(b) reasonably reflect the costs associated with the production or manufacture of the like goods.
Under subregulations 180(3), (4) and (5), the Minister has to also take into account certain factors including:
(a) information regarding the allocation of costs by the exporter or producer, including information that demonstrates the exporter or producer has historically used the method of allocation;
(b) any non-recurring item of cost that benefits the production of the like goods at any time that is not identified in the information regarding the allocation of costs; and
(c) circumstances in which costs are affected by start-up operations that are not identified in the information regarding the allocation of costs.
New regulation 181
New regulation 181 sets out, for subsection 269TAAD(5) of the Act, the manner of, and factors to be taken into account in, working out the amount for the AS&G costs associated with the sale of like goods in a country of export under paragraph 269TAAD(4)(b) of the Act.
New regulation 181 is a combination of the parts of previous regulations 180 and 181 relevant to the calculation of AS&G costs, with amendments to ensure consistency with the WTO Agreement. The separation of the determination of AS&G costs from the determination of the costs of production or manufacture and the determination of profit makes the determination of these amounts clearer and more effective. In addition, new regulation 181 corrects minor inaccuracies in reflecting Article 2 of the WTO Agreement.
Under subregulation 181(2), the Minister has to work out the amount representing the AS&G costs by using information set out in records kept by an exporter or producer of like goods relating to the like goods, provided that the records:
(a) are in accordance with generally accepted accounting principles in the country of export; and
(b) reasonably reflect the costs associated with the AS&G costs associated with the sale of the like goods.
Under new subregulation 181(3), if the Minister is unable to work out the amount using information referred to in new subregulation 181(2), he or she has to work out the amount by:
(a) identifying the actual amounts of AS&G costs incurred by the exporter or producer in the production and sale of the same general category of goods in the domestic market of the country of export;
(b) identifying the weighted average of the actual amounts of AS&G costs incurred by other exporters or producers in the production and sale of like goods in the domestic market of the country of export; or
(c) using any other reasonable method and having regard to all relevant information.
These methods reflects those set out in paragraph 2.2.2 of Article 2 of the WTO Agreement. The Minister may choose to use whichever of the methods he or she considers appropriate.
In particular, new paragraph 181(3)(c) allows the Minister to use any other reasonable method and have regard to all relevant information to work out the amount. This third method clearly reflects the requirement in Article 2.2.2 (iii) of the WTO Agreement.
In addition, new regulation 181 removes all inappropriate references to subsection 269TAC(6) of the Act. This regulation is not intended to prescribe a methodology for the purposes of subsection 269TAC(6).
Whether the Minister is working out an amount under subregulation 181(2) or 181(3), he or she has to take into account the factors set out in subregulations 181(4), (5), and (6). These factors are the same in substance as those set out in subregulations 180(3), 180(4), and 180(5).
New regulation 181A
New regulation 181A sets out, for subsection 269TAC(5B) of the Act, the manner of, and factors to be taken into account in, working out the amount of profit on the sale of goods under paragraphs 269TAC(2)(c) and 269TAC(4)(e) of the Act. It is based on the parts of previous regulation 181 that were relevant to the determination of profit, but for clarity, these parts are presented in a separate regulation. Amendments have also been made to ensure consistency with Article 2 of the WTO Agreement.
Under new subregulation 181A(2), the Minister has to work out the amount of profit, if reasonably possible, by using data relating to the production and sale of like goods in the ordinary course of trade. The phrase `in the ordinary course of trade' is inserted to more accurately reflect the terms of Article 2.2.2 of the WTO Agreement.
As with new regulation 181(3), new regulation 181A(3) provides that, if the Minister is unable to work out the amount using information referred to in new subregulation 181A(2), he or she has to work out the amount of profit by:
(a) identifying the actual amounts realised by the exporter or producer from the sale of the same general category of goods in the domestic market of the country of export;
(b) identifying the weighted average of the actual amounts realised by other exporters or producers from the sale of like goods in the domestic market of the country of export; or
(c) subject to subregulation 181A(4), using any other reasonable method and having regard to all relevant information.
New subsection 181A(4) is substantially the same as previous subsection 181(5) and limits the amount of profit determined under new paragraph 181A(3)(c) to the amount normally realised by other exporters or producers on sales of goods of the same general category in the domestic market of the country of export.
For each of the new regulations 180, 181 and 181A, the Minister is able to disregard any information that he or she considers to be unreliable. Further, any words or expressions used in these regulations that are defined in Part XVB of the Act have the meaning given by that Part.