Customs Regulations (Amendment)

Administered by Attorney-General's Department

Legislation au F1996B04113 Regulations Not in force Legislative Instrument

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Customs Regulations (Amendment) 1994 No. 435

EXPLANATORY STATEMENT

STATUTORY RULES 1994 No. 435

Issued by the Authority of the Minister for Small Business, Customs and Construction

Customs Act 1901

Customs Regulations (Amendment)

Section 270 of the Customs Act 1901 (the Act) provides in part that:

"(1)       The Governor-General may make regulations not inconsistent with this Act prescribing all matters which by this Act are required or permitted to be prescribed ... for giving effect to this Act or for the conduct of business relating to the Customs . ..."

The purpose of these regulations is to amend the Customs Regulations (the Regulations) as a result of amendments to Australia's anti-dumping and countervailing regimes effected by the Customs Legislation (World Trade Organization Amendments) Act 1994 (Customs WTO Act). This Act is one of a package of acts that amend Australian law to enable Australia to meet its obligations under agreements negotiated in the Uruguay Round of the General Agreement on Tariffs and Trade.

Section 8 of the Customs WTO Act introduces a new section 269TAAD into the Act which sets out the circumstances under which the price paid for like goods is not to be taken to have been paid in the ordinary course of trade. This is one element relevant to the assessment of the normal value of goods exported to Australia for the purposes of a dumping inquiry. This occurs if the goods are sold in the country of export at a price that is less than the cost of such goods and it is unlikely that the seller would be able to recover the cost of such goods in a reasonable period.

New subsection 269TAAD(4) provides that the cost of goods is worked out by adding the amounts determined by the Minister to be the costs of production or manufacture of the goods and the administrative, selling and general costs associated with the sale of the goods in the country of export. New subsection 269TAAD(5) provides that the amounts determined for the purposes of subsection (4) must be worked out in such manner, and taking account of such factors, as the regulations provide.

Regulation 3 inserts new regulation 180 which sets out the manner of working out the amounts, and the factors to be taken into account, for the purposes of subsection 269TAAD(4) and reflects the provisions of Article 2.2.1.1. of the Agreement on Implementation of Article IV of the General Agreement on Tariffs and Trade 1994 (the Dumping Agreement).

Costs are to be calculated on the basis of records that are kept in accordance with generally accepted accounting principles of the country of export and that reasonably reflect costs associated with the production, or manufacture, and sale of the goods (new subregulation 180(2)). Information concerning the allocation of costs must also be taken into account, and where information on the allocation of costs is provided by the exporter or other seller of the goods, that allocation must have been historically used by the exporter or seller (new subregulation 180(3)). Costs are to be adjusted to take account of non-recurring items of costs that benefit current and/or future production and costs associated with start-up operations (new subregulations 180(4) and (5)).

New subregulation 180(6) provides that where the Minister is satisfied that the cost of production or manufacture is not able to be identified under subregulations 180(2) to (5) because sufficient information has not been furnished or is not available, the cost is the amount determined by the Minister having regard to all relevant information. A similar provision with respect to administration, selling and general costs associated with the sale of the goods is contained in new regulation 181.

Regulation 3 also inserts new regulation 181 which reflects the provisions of Article 2.2.2 of the Dumping Agreement. New regulation 181 contains additional factors and methods that are relevant to the calculation of administrative, selling and general costs associated with the sale of the goods. These costs are to be calculated using data relating to the production, or manufacture, and sale of like goods by the exporter or other seller in the ordinary course of trade (new subregulation 181(2)). If this method is unable to be used, alternative methods of calculation are prescribed (new subregulation 181(3)). New subregulation 181(4) provides that where the Minister is satisfied that the costs associated with the sale of the goods is not able to be identified under new subregulations 181(2) and (3) because sufficient information has not been furnished or is not available, the cost is the amount determined by the Minister having regard to all relevant information.

Section 10 of the Customs WTO Act also amends section 269TAC of the Act which governs the calculation of the normal value of goods for the purposes of a dumping inquiry. One method of calculating normal value is to construct a value based on specified amounts, which includes the profit on the sale of goods. Section 10 inserts new subsection 269TAC(5B) into the Act which provides that the amount determined to be the profit of the sale under these subparagraphs must be worked out in such manner, and taking into account such factors, as the regulations provide for that purpose.

The provisions of new subregulations 18 1 (1) to (4) are also expressed to apply to the calculation of profit under new subsection 269TAC(5B). In addition, new subregulation 181(5) limits the amount of profit calculated under new subregulation 181(4) 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.

The Minister may disregard any information that he considers unreliable for the purposes of new regulations 180 and 181 (new subregulations 180(8) and 181(6) respectively).

Words or expressions that are defined in Part XVB of the Act and used in the new regulations 180 and 181 have the same meaning given by that Part (new subregulations 180(8) and 181(7) respectively).

Proposed regulation 4 effects a technical amendment to regulation 183AB of the Regulations to reflect the amendment to subsection 269TC(4) of the Act by paragraph 16(d) of the Customs WTO Act. When the Comptroller does not reject a dumping application, subsection 269TC(4) requires the Comptroller to publish a notice in the Gazette setting out, amongst other things, the prescribed time within which the Comptroller will make a preliminary finding. Regulation 183AB of the Regulations prescribes the time within which a preliminary finding must be made. The Customs WTO Act changes the point from when this time period commences from the time when the notice is published to the time when an investigation is initiated. Proposed regulation 4 effects a corresponding amendment to regulation 183AB to provide that the prescribed time limit now commences upon the initiation of the investigation.

The regulations commence on the day on which the principal amendments in Part 2 of the Customs WTO Act commence (proposed regulation 1 refers).

 

Overview

The Customs Regulations (Amendment) 1994 No. 435, issued under the authority of the Minister for Small Business, Customs and Construction, was enacted to align Australia's anti-dumping and countervailing duties with its obligations under agreements from the Uruguay Round of the General Agreement on Tariffs and Trade. This amendment package, including the Customs WTO Act, ensures that Australia's regulations reflect international standards and practices. Specifically, these regulations update the Customs Regulations to incorporate the new provisions introduced by the Customs WTO Act, which address the calculation of normal values and the treatment of certain sales prices in anti-dumping inquiries. The policy objective is to harmonise domestic legislation with global trade practices, thereby facilitating fair trade and protecting domestic industries from unfair trade practices. These amendments, particularly in regulations 180 and 181, detail the methods for calculating costs and profits in the context of dumping inquiries. They introduce a framework for determining costs based on generally accepted accounting principles and for adjusting those costs to reflect non-recurring items and start-up operations. This approach ensures that the costs and profits used in determining normal values are accurate and reflect true economic conditions. Additionally, the regulations allow for the Minister to disregard unreliable information and apply definitions consistent with those used in the Customs Act, thereby maintaining the integrity of the assessment process. The commencement of these regulations aligns with the implementation of the principal amendments in the Customs WTO Act, ensuring a cohesive transition to the new regulatory environment.

Scope and Application

The Customs Regulations (Amendment) 1994 No. 435 amends the Customs Regulations under the Customs Act 1901, reflecting changes made by the Customs Legislation (World Trade Organization Amendments) Act 1994. This amendment package is designed to align Australia's anti-dumping and countervailing regimes with obligations under the World Trade Organization agreements negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade. The regulations apply to all entities involved in the import of goods into Australia, including importers, exporters, and manufacturers, and they pertain to the calculation of normal value and costs associated with the sale of goods for anti-dumping and countervailing duty assessments. The amendments establish detailed methods for calculating costs and profit margins, ensuring that these calculations adhere to generally accepted accounting principles and consider factors such as non-recurring costs and start-up operations. Additionally, the Minister has the authority to disregard unreliable information and adjust calculations accordingly. These regulations extend the application of the Customs Act by detailing specific procedures and calculations required for compliance with anti-dumping and countervailing duties, thereby providing clarity and specificity to the enforcement of these measures.

Key Provisions

The Customs Regulations (Amendment) 1994 No. 435 amends the Customs Regulations (the Regulations) to align with the Customs Legislation (World Trade Organization Amendments) Act 1994 (Customs WTO Act). This amendment package is designed to ensure that Australia meets its obligations under agreements negotiated in the Uruguay Round of the General Agreement on Tariffs and Trade. Specifically, section 270 of the Customs Act 1901 (the Act) allows the Governor-General to make regulations to prescribe matters required or permitted by the Act. These regulations incorporate changes to Australia's anti-dumping and countervailing regimes. Section 8 of the Customs WTO Act introduces a new section 269TAAD into the Act, which addresses the circumstances under which the price paid for like goods is not considered to have been paid in the ordinary course of trade. This is crucial for determining the normal value of goods exported to Australia for dumping inquiries. New subsection 269TAAD(4) outlines how the cost of goods is calculated by adding production, administrative, selling, and general costs. New subsection 269TAAD(5) mandates that these costs must be calculated in the manner and taking into account the factors prescribed by the regulations. Regulation 3 inserts new regulation 180, which specifies how these costs are to be worked out and the factors to be considered, reflecting the provisions of Article 2.2.1.1 of the Agreement on Implementation of Article IV of the General Agreement on Tariffs and Trade 1994 (the Dumping Agreement). The obligations imposed by these regulations include the requirement for costs to be calculated based on records kept in accordance with generally accepted accounting principles in the country of export and that reasonably reflect costs associated with production, manufacture, and sale of the goods. Information on the allocation of costs must also be taken into account, and where provided by the exporter or seller, must have been historically used by them. Furthermore, costs must be adjusted to account for non-recurring items that benefit current and/or future production and costs associated with start-up operations. If the cost of production or manufacture cannot be identified due to insufficient information, the Minister determines the cost based on all relevant information. Similar provisions apply to administrative, selling, and general costs associated with the sale of the goods, as outlined in new regulation 181. The Customs WTO Act also amends section 269TAC of the Act, which governs the calculation of the normal value of goods for dumping inquiries. New subsection 269TAC(5B) requires that the amount determined to be the profit on the sale of goods must be calculated in the manner and taking into account the factors prescribed by the regulations. New subregulations 181(1) to (4) apply to the calculation of profit under new subsection 269TAC(5B), and new subregulation 181(5) limits the amount of profit to that normally realised by other exporters or producers on sales of similar goods in the domestic market of the country of export. The Minister may disregard any information considered unreliable for the purposes of new regulations 180 and 181. Words or expressions defined in Part XVB of the Act and used in the new regulations 180 and 181 have the same meaning given by that Part. Breach of these regulations may lead to civil or criminal consequences, although specific penalties are not detailed in the explanatory statement. Given that these regulations are designed to ensure compliance with international trade agreements and to prevent unfair trade practices, non-compliance could potentially lead to sanctions under both Australian law and international trade agreements, impacting the involved parties' ability to conduct business in the Australian market.

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