EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 265
Issued by the Authority of the Minister for Justice and Customs
Customs Act 1901
Customs Amendment Regulations 2005 (No. 8)
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 the Act or for the conduct of any business relating to the Customs.
The purpose of the amending Regulations is to:
- amend the prescribed information that the Minister for Justice and Customs (the Minister) must take into account when determining the costs of production or manufacture of certain goods; and
- add to the list of countries that are not treated as having economies in transition and amend the names of some of the countries already listed.
Prescribed information
Under Part XVB of the Act, anti-dumping measures may be taken in respect of goods whose exportation to Australia involves 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.
Section 269TAAD of the Act, in part, provides that the cost of goods is worked out by adding:
− the amount determined by the Minister to be the cost of production or manufacture of those goods in the country of export; and
− the amount determined by the Minister to be the administrative, selling and general costs associated with the sale of those goods.
Subsection 269TAAD(5) provides that those amounts must be worked out in such manner, and taking account of such factors, as the regulations provide in respect of those purposes.
Regulation 180 of the Customs Regulations 1926 (the Principal Regulations) sets out the manner in which the Minister must work out the amount to be the cost of production or manufacture of like goods in a country of export and factors that the Minister must take into account for that purpose. In particular, paragraph 180(2)(b) previously provided that if an exporter or producer of like goods keeps records relating to the like goods and the records:
(i) are in accordance with generally accepted accounting principles in the country of export; and
(ii) reasonably reflect the costs associated with the production or manufacture of the like goods;
the Minister must work out the cost of production or manufacture of like goods by using the information set out in the records.
However, mandating that the Minister use only the costs associated with the production or manufacture of the like goods narrowed the scope of goods that may be examined in assessing the cost of production or manufacture.
The amending Regulations substitute paragraph 180(2)(b)(ii) to prescribe that the Minister only has to use the records relating to the like goods if they reasonably reflect competitive market costs associated with the production or manufacture of like goods. This ensures that the relevant records are only taken into account if they reasonably reflect competitive market costs and not just actual costs.
Economies in transition
Section 269TAC of the Act sets out how the normal value of goods exported to Australia is to be calculated. Where the country of export has an economy in transition, that is, a formerly centrally-planned economy moving towards a market economy, subsection 269TAC(5D) sets out a different basis for determining the normal value of goods.
Subsection 269TAC(5J) provides that the regulations may disapply subsection (5D) to a country and Schedule 1B to the Principal Regulations lists those countries that are recognised as full market economies.
The amending Regulations add to Schedule 1B those countries have become World Trade Organisation (WTO) members since 1999 when the Schedule was introduced and those countries that became EU members in May 2004. The amending Regulations also change the names of six countries and two regions to reflect the names by which they are known in the WTO.
No consultation was undertaken in relation to the amending Regulations as they are of a minor or machinery nature and do not substantially alter existing arrangements.
The amending Regulations commence on the day after they are registered on the Federal Register of Legislative Instruments.
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Overview
The Customs Amendment Regulations 2005 (No. 8) were enacted to refine the procedures under the Customs Act 1901 for determining the cost of production or manufacture of certain imported goods, as well as to update the list of countries that are not treated as having economies in transition. These regulations were issued under the authority of the Minister for Justice and Customs and aim to ensure that the prescribed information the Minister must consider when assessing the costs of production or manufacture reflects competitive market costs rather than just actual costs. This change is intended to broaden the scope of goods that may be examined in the cost assessment process. Additionally, the regulations update the list of countries that are recognised as full market economies, adding countries that have become World Trade Organisation (WTO) members since 1999 and those that became EU members in May 2004. This amendment aligns the regulatory framework with current international economic statuses and nomenclature.
Scope and Application
The Customs Amendment Regulations 2005 (No. 8) modify the Customs Regulations 1926 under the Customs Act 1901. These regulations apply to the Minister for Justice and Customs when determining the costs of production or manufacture of goods imported into Australia, particularly in the context of anti-dumping measures. The regulations ensure that the costs taken into account reflect competitive market costs rather than just actual costs, thereby broadening the scope of goods examined in assessing production costs. Additionally, the regulations update the list of countries recognised as full market economies, excluding them from special transitional economy provisions, and align country names with those used by the World Trade Organisation. These changes are intended to refine the administrative processes for handling anti-dumping duties and do not require consultation due to their minor nature. The regulations come into effect upon registration on the Federal Register of Legislative Instruments.
Key Provisions
The Customs Amendment Regulations 2005 (No. 8) introduce two primary changes under the Customs Act 1901, primarily impacting the prescribed information used in determining the cost of production or manufacture of certain goods and modifying the list of countries not treated as having economies in transition. These changes are designed to refine the process of assessing the costs associated with the production and manufacture of goods imported into Australia, ensuring that the evaluation of these costs is as accurate and comprehensive as possible.
The main operative section, Regulation 180 of the Customs Regulations 1926, is amended to specify that the Minister for Justice and Customs must consider records kept by exporters or producers of goods. These records must adhere to generally accepted accounting principles in the country of export and reasonably reflect the competitive market costs associated with the production or manufacture of like goods. This amendment ensures that only records that accurately reflect competitive market costs are used in determining production or manufacturing costs. Such a change ensures that the evaluation process is robust and considers the broader market dynamics rather than merely the actual costs incurred by the producer or exporter.
The Regulations impose specific obligations on the Minister for Justice and Customs. These obligations include determining the cost of production or manufacture of imported goods by using records that reflect competitive market costs. This involves a careful review and analysis of the exporter's or producer's records to ensure they meet the prescribed criteria. Additionally, the Regulations require the Minister to add new countries to the list of those not treated as having economies in transition and to update the names of existing countries on this list. These changes reflect the evolving geopolitical landscape, including new World Trade Organisation members and countries that have joined the European Union.
Failure to comply with the requirements set out in the amending Regulations may result in civil or criminal consequences. The specific penalties for breaches are not detailed in the explanatory statement; however, the Customs Act 1901 provides for a range of penalties for non-compliance with customs regulations. These may include fines, imprisonment, or both, depending on the severity of the breach and the specific provisions of the Act that are contravened. The precise penalties would be determined in accordance with the relevant sections of the Act and any applicable sentencing guidelines.