FEDERAL COURT OF AUSTRALIA

 

 

CUSTOMS AND EXCISE – imposition of anti-dumping duty – alleged failure to follow statutory procedure – whether Minister considered whether material injury was being caused or threatened to the Australian industry prior to making declarations.

Acts Interpretation Act 1901 (Cth) s 33(1)

Administrative Decisions (Judicial Review) Act 1977 (Cth) s 13

Anti-Dumping Authority Act 1988 (Cth) s 7

Customs Act 1901 (Cth) ss 269T, 269TAB, 269TAC, 269TACA, 269TAE, 269TB, 269TC, 269TD, 269TG, 269Z, 269ZC

Customs Tariff (Anti Dumping Act) 1975 (Cth) s 8

Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, cited

ICI Australia Operations Pty Ltd v Fraser (1992) 34 FCR 564, cited

Minister for Small Business, Construction & Customs v La Doria Di Diodata Ferraiolli SPA (1994) 33 ALD 35, cited

SPP NEMO S.A. COMERCIAL EXPORTADORA v MINISTER OF STATE FOR SMALL BUSINESS AND CONSUMER AFFAIRS

No ACT AG 13 of 1998

 

 

 

JUDGES:       DRUMMOND, NORTH and MANSFIELD JJ

DATE:            15 DECEMBER 1998

PLACE:          CANBERRA

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACT AG 13  of   1998

On appeal from his Honour Justice Finn

of the Federal Court of Australia

BETWEEN	SPP NEMO S.A. COMERCIAL EXPORTADORA First Applicant   RIPASA S.A. CELULOSE E PAPEL Second Applicant   CHAMPION PAPEL E CELULOSE LTDA Third Applicant
AND:	MINISTER OF STATE FOR SMALL BUSINESS AND CONSUMER AFFAIRS Respondent
JUDGE(S):		DRUMMOND, NORTH and mansfield JJ
DATE OF ORDER:		15 DECEMBER 1998
WHERE MADE:		CANBERRA

 

 

 

THE COURT ORDERS THAT:

 

1.         The appeal is allowed.

2.         The orders made by Finn J on 19 December 1997 are set aside.

3.         There be no order as to the costs of the trial before Finn J.

4.         The decisions of the respondent in relation to the appellants, including the decisions made on 18 December 1996 to publish declarations under s 269TG (2) of the Customs Act 1901 in respect of the appellants, are set aside.

5.         The matters to which the respondent’s said decisions relate are referred to the respondent to be further considered in accordance with law.

6.         The respondent pay the appellants’ costs of the appeal.

 

 

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
AUSTRALIAN CAPITAL TERRITORY DISTRICT REGISTRY	ACT AG 13 of 1998

On appeal from his Honour Justice Finn

of the Federal Court of Australia

BETWEEN	SPP NEMO S.A. COMERCIAL EXPORTADORA First Applicant   RIPASA S.A. CELULOSE E PAPEL Second Applicant   CHAMPION PAPEL E CELULOSE LTDA Third Applicant
AND:	MINISTER OF STATE FOR SMALL BUSINESS AND CONSUMER AFFAIRS Respondent

 

JUDGE(S):	DRUMMOND, NORTH and MANSFIELD JJ
DATE:	15 DECEMBER 1998
PLACE:	CANBERRA

REASONS FOR JUDGMENT

 

This is an appeal against a decision of a Judge of this Court given on 19 December 1997, by which he dismissed a challenge by the appellants, SPP Nemo SA Comercial Exportadora (Nemo), Ripasa SA Celulose E Papel (Ripasa) and Champion Papel E Celulose Ltda (Champion), under the Administrative Decisions (Judicial Review) Act 1977 (Cth) to a number of decisions made by the respondent, the Minister of State for Small Business and Consumer Affairs (the Minister), on 18 December 1996. The appellants import white A4 copy paper from Brazil to Australia. The decisions of the Minister had the effect of imposing interim dumping duty on imports of such paper into Australia by the appellants.

Central to the issue to be determined on this appeal are the provisions of s 269TG (2) and (3) (b) (c) (d) and (e) of the Customs Act 1901 (Cth) (the Act), which provided:

“269TG. …...

 

    (2)   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 proposes 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.

    (3)   Where:

……

(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 must, subject to subsection (3A), include a statement of the respective amounts that the Minister ascertained, at the time of publication of the notice:

(c)        was or would be the normal value of the goods to which the declaration relates; and

(d)       was or would be the export price of those goods; and

(e)        was or would be the non-injurious price of those goods.”

The Anti-Dumping Act referred to in the above section is the Customs Tariff (Anti-Dumping) Act 1975 (Cth) (the Anti-Dumping Act), which imposed certain customs duties consequent upon the Minister making a declaration under s 269TG(2) of the Act. Section 8 (3) (4) and (5) provided as follows:

“8. ……

(3)       Pending final assessment of the dumping duty payable on goods the subject of a notice under subsection 269TG(1) or (2) of the Customs Act, an interim dumping duty is payable on those goods.

(4)       Subject to subsection (5), the interim dumping duty payable on goods the subject of a notice under subsection 269TG(1) or (2) of the Customs Act is an amount equal to the sum of:

(a)       the difference between the export price of goods of that kind as ascertained, or last ascertained, by the Minister for the purpose of the notice and the normal value of goods of that kind as so ascertained, or last so ascertained; and

(b)       if the export price of those particular goods is lower than the export price of goods of that kind as ascertained, or last ascertained, by the Minister for the purpose of the notice – the amount by which the latter export price exceeds the former.

(5)       The Minister must, by signed notice, direct that the element of interim dumping duty referred to in paragraph (4)(a) in respect of particular goods be ascertained:

(a)       as a proportion of the export price of those particular goods or of the export price of goods of that kind as ascertained, or last ascertained, by the Minister for the purpose of the dumping duty notice, whichever is the greater; or

(b)       by reference to a measure of the quantity of those particular goods; or

(c)        by reference to a combination of a proportion of the kind referred to in paragraph (a) and a measure of the quantity of those particular goods;

and the notice has effect accordingly.”

NORMAL VALUE, EXPORT PRICE, NON-INJURIOUS PRICE AND MATERIAL INJURY

 

In order to publish a notice that has the effect of imposing anti-dumping duty (a dumping duty notice), the scheme of s 269TG(2) requires the Minister to be satisfied concerning three elements. The three elements are the export price of goods, the normal value of goods, and material injury to the Australian industry. The dumping duty notice must specify the normal value of the goods, the export price of like goods and also the non-injurious price of such goods. We will examine each of these concepts.

EXPORT PRICE

In broad terms, the export price of goods is the price paid by an importer for goods exported to Australia (s 269TAB).

NORMAL VALUE

The normal value of goods exported to Australia is the price paid for the goods for home consumption in the country of export (s 269TAC (1)).

MATERIAL INJURY

Where the export price is less than the normal value of goods, the Minister may make a declaration under s 269TG (2) only where, “because of that”, material injury to an Australian industry producing like goods has been, or is being caused or is threatened. While the concept of material injury is not defined, it is relevantly dealt with in s 269TAE (1) (a) to (g) in a way which gives an indication of its meaning. Prior to amendments effective on 1 January 1995, the subsection set out matters which the Minister could take into account but was not bound to take into account. Section 269TAE (3) elaborated the “relevant economic factors” referred to in s 269TAE (1) (g). Section 269TAE (1) (a) to (g) and (3) provided:

“269TAE. (1) In determining, for the purposes of section 269TG or 269TJ, whether material injury to an Australian industry has been or is being caused or is threatened or would or might have been caused, or whether the establishment of an Australian industry has been materially hindered, by reason of any circumstances in relation to the exportation of goods to Australia from another country (in this subsection called the ‘country of export’), the Minister may, without limiting the generality of that section have regard to:

(a)       the quantity of goods of that kind that, during a particular period, have been or are likely to be exported to Australia from the country of export; and

(b)       any increase or likely increase, during a particular period, in the quantity of goods of that kind exported to Australia from the country of export; and

(c)        any change or likely change, during a particular period, in the proportion that:

(i)         the quantity of goods of that kind exported to Australia from the country of export and sold or consumed in Australia; or

(ii)        the quantity of goods of that kind, or like goods, produced or manufactured in the Australian industry and sold or consumed in Australia;

            bears to the quantity of goods of that kind, or like goods, sold or consumed in Australia; and

(d)        the export price that has been or is likely to be paid by importers for goods of that kind exported to Australia from the country of export; and

(e)        the difference between:

(i)         the price that has been or is likely to be paid for goods of that kind, or like goods, produced or manufactured in the Australian industry and sold in Australia; and

(ii)        the price that has been or is likely to be paid for goods of that kind exported to Australia from the country of export and sold in Australia; and

(f)        the effect that the exportation of goods of that kind to Australia from the country of export in those circumstances has had or is likely to have on the price paid for goods of that kind, or like goods, produced or manufactured in the Australian industry and sold in Australia; and

(g)        the effect that the exportation of goods of that kind to Australia from the country of export in those circumstances has had or is likely to have on the relevant economic factors in relation to the Australian industry; and

……

   (3)     A reference in subsection (1) or (2) to the relevant economic factors in relation to an Australian industry, or in relation to a producer or manufacturer in a third country, in relation to goods of a particular kind exported to Australia is a reference to:

(a)        the quantity of goods of that kind, or like goods, produced or manufactured in the industry or by the producer or manufacturer; and

(b)        the degree of utilization of the capacity of the industry, producer or manufacturer to produce or manufacture goods of that kind, or like goods; and

(c)        the quantity of goods of that kind, or like goods, produced or manufactured in the industry or by the producer or manufacturer;

(i)         for which there are sales or forward orders; or

(ii)        which are held as stocks; and

(d)        the value of sales of, or forward orders for, goods of that kind, or like goods, produced or manufactured in the industry or by the producer or manufacturer; and

(e)        the level of profits earned in the industry, or by the producer or manufacturer, that are attributable to the production or manufacture of goods of that kind, or like goods; and

(f)        the level of return on investment in the industry or in the business of the producer or manufacturer; and

(g)        cash flow in the industry or in the business of the producer or manufacturer; and

(h)        the number of persons employed, and the level of wages paid to persons employed, in the industry or by the producer or manufacturer in relation to the production or manufacture of goods of that kind, or like goods; and

(j)        the share of the market in Australia for goods of that kind, or like goods, that is held by goods of that kind, or like goods, produced or manufactured in the industry or by the producer or manufacturer; and

(k)        the ability of persons engaged in the industry or of the producer or manufacturer to raise capital in relation to the production or manufacture of goods of that kind, or like goods; and

(m)       investment in the industry or in the business of the producer or manufacturer.”

The amendments, which were effective from 1 January 1995, included a new subsection (2A), the effect of which will be considered later in these reasons, and which provided as follows[BB1] :

“(2A)  In making a determination in relation to the exportation of goods to Australia for the purposes referred to in subsection (1) or (2), the Minister must consider whether any injury to an industry, or hindrance to the establishment of an industry, is being caused or threatened by a factor other than the exportation of those goods such as:

(a)       the volume and prices of imported like goods that are not dumped; or

(b)       the volume and prices of importations of like goods that are not subsidised; or

(c)        contractions in demand or changes in patterns of consumption; or

(d)       restrictive trade practices of, and competition between, foreign and Australian producers of like goods; or

(e)        developments in technology; or

(f)        the export performance and productivity of the Australian industry;

and any such injury or hindrance must not be attributed to the exportation of those goods.”

NON-INJURIOUS PRICE

The non-injurious price is relevantly defined in s 269TACA(a), as follows[BB2] :

“269TACA.  The non-injurious price of goods exported to Australia is the minimum price necessary:

(a)       if the goods are the subject of, or of an application for, a dumping duty notice under subsection 26TG(1) or (2) – to prevent the injury, or a recurrence of the injury …”.

The interim duty imposed by s 8(4) of the Anti-Dumping Act is the difference between the export price and the normal value of the goods. The concept of non-injurious price is relevant to the fixing of the quantum of duty. Where the non-injurious price is less than the normal value, the Minister must, under s 8(5A) of the Anti-Dumping Act:

“... have regard to[BB3]  the desirability of fixing a lesser amount of duty such that the sum of:

(a)       the export price of goods of that kind as so ascertained or last so ascertained; and

(b)       that lesser duty;

does not exceed that non-injurious price.”

The central question in this appeal is whether the Minister, in making declarations under s 269TG (2) applicable to the applicants, gave consideration to the material injury element required by s 269TG (2) (b). In order to address the arguments of the parties, it is necessary for us to set out some background.

BACKGROUND

 

PROCEDURE

A person who believes that there are grounds for the Minister to publish a dumping duty notice may lodge an application with the Australian Customs Service (Customs), requesting that the Minister publish such a notice (s 269TB (1)). Ordinarily, a successful application passed through four stages, as follows:

(a)        Prima facie case

            The first stage was an examination by Customs to establish whether the application disclosed a prima facie case for a dumping duty notice (s 269TC).

(b)        Preliminary finding

            The second stage was a consideration of submissions and any other matters by Customs leading to a preliminary finding that there were grounds for a dumping duty notice (s 269TD). Such a finding had to be published in the Government Gazette and Customs had to refer to the Anti-dumping Authority (the Authority) the question whether publication of a dumping duty notice sought in the application was justified.

(c)        Inquiry by the Authority

            The third stage was an inquiry by the Authority leading to a report to the Minister recommending that a dumping duty notice be published and the extent of duties payable as a consequence (s 7 of the Anti-dumping Authority Act 1988 (Cth) (the Authority Act)).

(d)        Decision by the Minister

            The fourth stage was a decision by the Minister under s 269TG (1) or (2) to publish a dumping duty notice.

THE MAY 1993 APPLICATION

On 10 May 1993, Associated Pulp & Paper Mills (Paper Division) (APPM), an Australian paper producer, applied for publication of a dumping duty notice in respect of the exports of certain A4 copy paper from Austria, Brazil, Finland, France, Germany, Indonesia, South Africa and the United States of America. Customs were satisfied that the application established prima facie grounds for publication of a dumping duty notice, and a preliminary finding inquiry was undertaken.

CUSTOMS PRELIMINARY FINDING REPORT No 16, SEPTEMBER 1993

The inquiry resulted in the publication of a report on 15 September 1993. Submissions were received from the Australian industry, from importers, exporters, the government of Indonesia and the Construction, Forestry & Mining Employees Union. The exporters who made submissions included Nemo and Champion. The report examined various issues but we will deal particularly with the treatment of the material injury question, as it is instructive on how that matter should be approached.

The report examined extensive data and, after analysis and explanations, drew conclusions on a wide range of issues relevant to material injury. We refer to a number of these conclusions, to give a picture of the scope and detail of the examination. The report found that the Australian industry had lost market share to imports, that the Australian industry had lost sales to imports, that the Australian industry prices were undercut by the price of imports, that the Australian industry suffered price depression, that is to say, it reduced prices to compete against prices of imports, that the Australian industry suffered price suppression, that is to say, it was unable to raise prices in line with cost increases, that the Australian industry had suffered a decline in profits and profitability, that there was an under-utilisation of capacity, that no effect on employment was evident, that the return on investment in the Australian industry declined, and that there was an abnormal build-up in stocks.

The report then made a detailed examination of the question whether the material injury was linked to the dumping of imported paper. It analysed the volume and price of imports from each of the subject countries and found that the principal cause of injury was imports from Indonesia. Imports from Brazil, Finland, Germany, South Africa and the USA contributed to the injury, but the report found that imports from Austria and France were not continuing to cause injury to Australian industry. In the case of imports from Austria, the report found that the importers had developed a niche market for the Austrian paper and it competed on factors other than price. In the case of imports from France, the report found that the price, although at dumped levels, was at the high end of the range and, taking into account the low volume of imports, imports from France did not contribute to the injury of the Australian industry. The report also addressed submissions from importers and exporters that the material injury arose from other factors. Thus, the report considered whether the injury was a result of the new domestic entrant, Australian Paper Manufacturers Ltd (APM), into the local market, the fall in world prices of paper, the independent import operations of companies associated with APPM and APM, industrial action at APPM’s Burnie mill, the alleged inefficiency of APPM as a paper producer and the higher quality of imported paper. Finally, on this issue, the report examined whether there was a threat of further material injury. This involved an evaluation of the price and quantity of forward orders in light of the prior trading history of the companies importing paper to Australia.

The report concluded with the preliminary finding that sufficient grounds existed for the publication of a dumping duty notice in respect of A4 copy paper exported from Brazil, Finland, Germany, Indonesia, South Africa and the USA. As a result of this positive preliminary finding, on 28 September 1993 Customs referred to the Authority, under s 7 of the Anti-Dumping Act, the question whether anti-dumping action was justified in respect of A4 copy paper imported from Brazil, Finland, Germany, Indonesia, South Africa and the USA.

REPORT OF THE AUTHORITY No 119, JANUARY 1994

The Authority reported on 7 January 1994. There is an immediately obvious difference between the Customs report No 16 and the Authority report No 119. The former resulted in a preliminary finding that sufficient grounds existed for the publication of a dumping duty notice, the latter resulted in recommendations to the Minister to take anti-dumping action and various other steps. While the Authority’s report considered many of the same issues as the Customs report, including the issue of material injury to the Australian industry, the Authority’s report considered the ascertainment of normal value, export price, and non-injurious price for the purpose of recommending to the Minister particular prices to be included in the dumping duty notice. The approach to the ascertainment of the non-injurious price is of particular relevance in the present case.

In determining the non-injurious price, the report referred to the principle contained in s 8 (5A) of the Anti-Dumping Act, namely, that the non-injurious price should be no greater than necessary to prevent injury to local industry. The report described the methodology thus[BB4] :

“The usual method is first to determine an ‘unsuppressed selling price’ (USP) for the goods in Australia – i.e., what the price would be in the absence of dumping – and then to work back to an FOB price by deducting all relevant costs which would be incurred by an importer. If this price is less than the ascertained normal value then it would be the non-injurious price as defined in subsection 269TACA. Otherwise, the NIP [non-injurious price] would be equivalent to the ascertained normal value.

In determining a USP, the Authority’s first preference is to look to the market place for guidance: the Authority looks for prices of the locally produced goods at a time when the market was not affected by dumping. If this procedure is not possible, the Authority looks at the Australian industry’s current cost to make and sell, and adds an estimate of the profit (if any) which would be achieved by the industry in a market not affected by dumping. In estimating this profit, the Authority looks again to the market for guidance.”

The report then proceeded to apply the methodology to the data collected to arrive at a non-injurious price.

Consideration of the question of material injury to Australian industry was also comprehensive. The report dealt with the issues in three consecutive chapters. The first was chapter 6, which commenced:

“... the central question before the Authority is whether dumping has caused or threatens to cause material injury to the Australian industry”.

After detailed analysis, the Authority concluded that, in 1990-91 to 1992-93[BB5] :

·        “sales by the local industry increased but its market share fell;

·        the industry’s prices were suppressed and depressed;

·        profits and profitability declined; and

·        employment in the production of A4 copy paper fell”

and that imports from all sources under inquiry contributed to the injury suffered by the Australian industry and that the contribution was material. The Authority then examined the threat of future injury and determined that there was a threat of material injury from imports from Brazil, Germany, Indonesia, South Africa and the USA.

The Authority recommended, inter alia, that, pursuant to s 269TG (2), the Minister declare, by notice in the Gazette, that s 8 of the Anti-Dumping Act apply to A4 copy paper that is exported to Australia by Champion and Nemo of Brazil after the date of publication of the notice where the amount of the export price of the goods is less than the amount of their normal value. The Authority also recommended that anti-dumping measures be taken against another exporter from Brazil, and against specified companies from Finland, Germany, Indonesia, South Africa and the USA.

THE AUTHORITY’S RECONSIDERATION REPORT No 132, JULY 1994

Acting on the Authority’s report No 119, in February 1994, the Minister imposed dumping duties on Nemo and Champion. They challenged this decision in the Federal Court. In formulating a defence to the challenge, the Minister and the Authority discovered that there had been errors in the report. The most significant was the failure to take proper account of hyper-inflation in Brazil, leading to an over-estimation of the dumping margin, that is, the difference between the normal value and the export price. Consequently, they agreed to orders remitting the question back to the Authority for reconsideration.

 

The reconsideration was made in report No 132, forwarded to the Minister on 12 July 1994. Although only six months had passed since the publication of the original report No 119, the Authority revisited the question of material injury, albeit against the background of the finding of the original inquiry. The conclusion was expressed thus[BB6] :

“Anti-dumping action is possible only if dumping has caused or threatens to cause material injury to the Australian industry producing like goods. Given that the dumping margins now assessed are smaller, the Authority has re‑examined its earlier conclusion that anti-dumping action was warranted. Having done so, it is still satisfied that dumping of A4 copy paper by Nemo and Champion, when cumulated with dumped exports from other sources under inquiry, has caused, and threatens to cause, material injury to the Australian industry producing A4 copy paper.”

This conclusion was reached, again, after detailed examination of the factors relevant to material injury and the link between the dumping and the injury.

In the course of the reconsideration inquiry, Nemo and Champion offered to enter into price undertakings in the following form[BB7] :

“UNDERTAKING FOR THE PURPOSE OF

SECTION 269TG OF THE ACT 1901

Acknowledging that you are considering whether or not a declaration under Section 269TG of the Customs Act 1901 should be made in regard to the export to Australia of A4 copy paper from Brazil, [Champion/Nemo], being the exporter of such goods, hereby undertakes that [Champion/Nemo] will conduct its future export trade to Australia in like goods so as to avoid causing or threatening material injury to the Australian industry producing like goods.

For this purpose, future consignments of the goods as are described in the following table (‘The Table’) will be made at export prices which are not less than those specified in the table.

[Champion/Nemo] acknowledges that such export prices may be subject to review from time to time.

[Champion/Nemo] also acknowledges that this undertaking shall take effect from the date of your acceptance thereof, but will lapse should you decide not to issue a notice declaring that Section 8 of the Customs Tariff (Anti-Dumping) Act 1975 applies to like goods exported from Brazil.”

The Minister’s power to accept such undertakings was relevantly provided for in s 269TG (4) (b) and (4A), as follows:

    “(4)  Where the export of a consignment of goods to Australia by an exporter has been under consideration by the Minister with a view to determining whether or not a declaration should be made under this section in relation to the goods in the consignment or to like goods, the Minister may:

…...

(b)        … suspend his or her consideration of the export of that consignment if he or she is given and accepts an undertaking by the exporter, in terms that are satisfactory to the Minister, that the exporter will so conduct future export trade to Australia in like goods so as to avoid causing or threatening material injury to an Australian industry producing like goods or hindering the establishment of such an industry.

    (4A)  The suspending by the Minister of his or her consideration of the export of a consignment of goods to Australia on the acceptance of an undertaking continues only until such time as the Minister considers that such consideration should be resumed.”

The Authority recommended that the Minister be satisfied that[BB8] :

“the amount of the export price of A4 copy paper that has already been exported to Australia by Nemo and Champion of Brazil is less than the normal value of those goods, and the amount of the export price of A4 copy paper that may be exported to Australia in the future may be less than the normal value of the goods and, because of that, material injury to the Australian industry producing A4 copy paper has been caused and is threatened”,

and that the Minister:

“accept the price undertakings offered by Nemo and Champion of Brazil”.

The Minister accepted these recommendations.

THE APL APPLICATION, AUGUST 1996

It will be recalled that, in its May 1993 application, APPM sought anti-dumping measures against specified countries, namely, Austria, Brazil, Finland, France, Germany, Indonesia, South Africa and the USA. In the event, the Minister published dumping duty notices against some individual exporters from those countries and accepted undertakings from others. He did not take anti-dumping measures against all exports from the subject countries.

On 28 August 1996, Australian Paper Ltd (APL), an Australian paper producing company formed by the amalgamation of APM and APPM, requested a review of the existing anti-dumping measures. It contended that there was a need to take measures against all exports from certain countries, namely, Brazil, Finland, Germany and the USA, rather than against specific exporting companies. It stated that thirty per cent of imports over the previous 12 months came from exporters from the subject countries who were not subject to anti-dumping measures. This would not have happened if the anti-dumping measures had been taken against all exports from the specified countries. Their request continued: “This has had the effect of causing further material injury to the Australian industry.” In particular, fifty per cent of imports from Brazil were not subject to anti-dumping measures, and ninety-five per cent of imports from the USA were not subject to anti-dumping measures.        

The request also sought the recalculation of normal value and export prices, based on alleged changes which had occurred in both between June 1994 and July 1996. For instance, normal values had increased as a result of some recovery in the international paper market and, further, it was asserted that the selling prices previously used to calculate the normal value were based on inferior quality paper and should be increased to reflect a comparison with the imported paper sold in Australia.

CUSTOMS REPORT 96/016, DECEMBER 1996

On 12 December 1996, Customs forwarded to the Minister a report in response to the APL request.

In chapter 3, the introductory chapter, Customs recognised that it had different functions in respect of different issues. In relation to exporters from Brazil, Finland, Germany and the USA already subject to dumping notices, it saw its function as conducting a review of variable factors under s 269Z (1) of the Act. The section provided:

“269Z. (1)  If:

(a)       a dumping duty notice or a countervailing duty notice has been published in respect of goods; and

(b)       an affected party considers that it is appropriate to review the rate of interim duty imposed on goods of that kind because one or more of the variable factors relevant to the determination of interim duty has changed;

the affected party may, by application lodged with the CEO [of Customs], request a review of the rate of interim duty.”

The variable factors were defined in s 269T (4E) (a), as follows:

    “(4E)  In this Act, a reference to variable factors relevant to the determination of interim duty payable on goods the subject of a dumping duty notice or a countervailing duty notice is a reference:

(a)       if the goods are the subject of a dumping duty notice – to the normal value, export price and non-injurious price of goods of that kind as ascertained, or last ascertained, by the Minister for the purpose of the notice”.

Within a limited time, Customs had to report to the Minister recommending that the rate of interim duty remain as originally calculated or that it be altered, and Customs had to give reasons for the recommendation (s 269ZC (4)). The Minister had to consider the recommendation and determine to publish a notice declaring that[BB9] :

“(a)     … with effect from the day of publication of the notice, this Act and the Anti-Dumping Act are taken to have had effect as if the Minister had, in the dumping duty notice or countervailing duty notice, as the case requires, fixed each of the variable factors relevant to the determination of interim duty at the respective amounts specified in the notice; or

(b)       ... for the purposes of this Act and the Anti-Dumping Act, each of the variable factors relevant to the determination of interim duty is to remain unchanged” (s 269ZC (1)).

Also in chapter 3, Customs outlined the basis of the inquiry in respect of the exporters who had given price undertakings in July 1994, including Nemo and Champion, as follows[BB10] :

“As price undertakings are the operative anti-dumping measure for exports of A4 copy paper for two exporters from Brazil and one exporter from Finland (i.e. no dumping notices have been published by the Minister), the review, in relation to these exporters, is being conducted under the provisions of section 33 of the Acts Interpretation Act 1901.”

Section 33 (1) of the Acts Interpretation Act 1901 provides[BB11] :

“Where an Act confers a power or imposes a duty, then, unless the contrary intention appears, the power may be exercised and the duty shall be performed from time to time as occasion requires.”

Reference to the Acts Interpretation Act betrayed a certain confusion by Customs. It was accepted by the parties that the Minister was entitled to resume consideration of whether to make a declaration under s 269TG (2) after accepting a price undertaking. There was no need to rely on the Acts Interpretation Act.

 

Then the report described a further aspect of the inquiry, as follows:

“The Australian industry also sought to extend the coverage of the current company specific measures on exports of A4 copy paper to include new exporters that had emerged since the introduction of the existing measures. As these new exporters are not subject to the anti-dumping measures, this review considered recommendations to change from the existing company specific measures to country measures.”

In the following three chapters, Customs considered each of the three variable factors in detail. In chapter 4, export price was considered. In chapter 5, normal value was considered and, in chapter 6, non-injurious price was considered. In chapters 4 and 5, export price and normal value were considered, respectively, in relation to the companies already subject to dumping duty notices, but also in relation to Ripasa, which was not subject to pre-existing dumping duty notices.

The discussion of non-injurious price in chapter 6 is important in the consideration of the reasoning of the primary judge and of the arguments on appeal. Although the chapter is lengthy, it needs to be reproduced in full, as follows[BB12] :

“6.1     The ADA’s Findings

The ADA examines the NIP as part of reaching the final finding and making recommendations to the Minister. To calculate a NIP, it is necessary to first establish a USPfor the goods in Australia. The USP is what the Australian industry’s selling price would be in a market unaffected by dumping. Deductions are made from the USP to work back to an FOB level. Such deductions include all the relevant costs that would be incurred by an importer.

To establish a USP, the ADA’s preference is to look to the market place for prices of locally produced goods at a time when the market was not affected by dumping. An often used alternative method is to examine the local industry’s cost to make and sell, adding an amount for profit that would be achieved by the local industry in a market unaffected by dumping. However, difficulties may be encountered in identifying the appropriate level of profit to be used in applying this particular method.

The ADA held that the Australian A4 copy paper market was unaffected by dumping in 1990-91, and it calculated the USP using the net average selling price achieved by the local industry in that year. The price was adjusted to the September quarter of 1993 by an amount equivalent to  the movement in an index of prices for paper, paper products, printing and publishing which is published by the Australian Bureau of Statistics.

From that USP the ADA deducted relevant costs incurred in Australia by a representative importer of A4 copy paper and the costs incurred in shipping the goods to Australia, to arrive at a NIP. The ADA did not deduct an amount for importers’ profit from the USP. Noting that most imports were by merchants who purchased A4 copy paper from either Australian Paper or from exporters, the ADA considered the USP should be regarded as the equivalent of the landed, duty paid, into store costs incurred by merchants. In that situation, it was not appropriate to deduct an amount for profit from the USP.

6.2       Customs’ Assessment

It is Customs practice to follow the method used by the ADA to calculate the USP unless there has been a change in circumstance or additional information comes to light. In these situations, Customs will recommend a change in method where it is considered appropriate and reasonable.

Customs examined the structure of the index used by the ADA to adjust the Australian industry’s average 1990-91 selling price and found that A4 copy paper prices comprised less than 5 per cent of the total prices under consideration. On this basis, Customs considers that the overall index has limited value as an indicator of price movements for A4 copy paper.

The Australian manufacturer, Australian Paper, provided an update of its revenue, production cost and sales data for A4 copy paper by quarter over 1994-95 and 1995-96. Customs visited the company on 30 September 1996 to verify the data.

Australian Paper nominated the weighted average selling price in a specific quarter in 1995-96 as being suitable for use as a USP. The company stated that the Australian market in that quarter was competitive from a global perspective and any injury from imports was at its lowest point.

In assessing a USP, it is Customs preference to base it on market prices where possible. The data provided by Australian Paper indicated that the Australian market price in a recent period was appropriate for USP purposes.

Customs examined the Australian Paper weighted average net selling prices over 1995-96 and concluded that (except for the last quarter) the revenue and profit for the Australian industry were above that in 1990-91. As the Australian industry suffered a downturn in sales in the last quarter of 1995-96, the resulting weighted average contribution by that quarter’s results to the annual average was accordingly lessened.

From the data available, Custom recommends that the USP be based on the weighted average net selling price for A4 copy paper by Australian Paper in 1995-96.

From this USP Customs has deducted the relevant costs incurred in Australia and the costs incurred in shipping the goods to Australia. Customs visited the major Australian importers of A4 copy paper from Brazil, Finland, Germany and the USA during the period under review to establish importation costs. Customs also examined export costs after the FOB point during its visits to the exporters in Finland and Brazil.

In order to produce a NIP at the FOB level, the following elements were deducted from the USP:

·        import costs;

·        Into-Store costs;

·        Overseas freight; marine insurance; and

·        Customs duty.

The method used to calculate import costs was the same as adopted by the ADA during the original investigation. This amount was calculated by reference to the typical commission achieved by selling agents for undertaking such tasks as handling purchasing and associated documentation. While the rate used during the original investigation was  %, Customs found that during this review the typical commission received by agents is  %.

Customs deducted post importation costs and overseas freight and insurance for the goods using the weighted average cost for the most efficient importer of A4 copy paper from each country under review.”

Having concluded consideration of the matters apparently relevant to a review of the variable factors under s 269Z (1), the report then, in chapter 7 entitled “Price Undertakings”, considered the position of the three exporters, including Nemo and Champion, who had given price undertakings. The chapter comprised just over half a page. Half of that was taken up with a description of the background facts. As to Nemo and Champion, the conclusion was then expressed thus:

[BB13] [BB14] 

“Advice was received from Nemo and Champion of Brazil stating that they did not wish to renew the price undertakings at the revised levels. Accordingly, it is recommended that the Minister resume consideration of this matter from the earlier deferral and publish a dumping duty notice under s.269TG(2) covering future exports of A4 copy paper from Brazil from these companies.”

Chapter 8 set out the conclusions and recommendations. Customs found that the variable factors had altered and, consequently[BB15] :

“For those exporters subject to the existing anti-dumping measures in each of the countries concerned, Customs recommends that the variable factors be revised to reflect current levels.”

The report then dealt with new exporters not subject to existing anti-dumping measures. As to Ripasa, it concluded[BB16] :

“Based on the evidence obtained during this review, exports by Ripasa (a new exporter) from Brazil are at dumped prices. During the original investigation exports of like goods at dumped prices from Brazil were found to be causing material injury to the Australian industry. Accordingly, Customs recommends that anti-dumping measures be imposed on future exports of A4 copy paper to Australia by Ripasa.”

It also concluded that the country-wide measures should apply to Brazil, Finland and the USA because of the emergence of new exporters since the 1994 measures were applied.

And finally, the report said that Nemo and Champion:

“… were aware that Customs would recommend that the Minister resume consideration of the matter from the earlier deferral and publish new dumping notices covering these companies.”

As a result of these conclusions, the report made a number of recommendations, including[BB17]      that the Minister make a declaration, under s 269TG (2), in respect of Champion and Nemo as a result of the resumed consideration of APPM’s 1994 application. It also recommended that the Minister make a declaration, under s 269TG (2), upon the 1996 application for country-wide cover in respect of exports from Brazil, except for exports by Nemo and Champion, presumably because they were included in the other recommended declaration.

THE MINISTER’S DECISION AND REASONS

On 18 December 1996, the Minister accepted the recommendations of Customs and made a declaration, under s 269TG (2), in respect of Nemo and Champion, and a declaration under the same section in respect of exports from Brazil other than by Nemo and Champion, which therefore applied to Ripasa.

On 10 March 1997, the Minister gave reasons for his decision as requested under s 13 of the Administrative Decisions (Judicial Review) Act. In those reasons, he stated that the evidence upon which he relied in making the decisions was the Customs report 96/016 and that he adopted the findings, conclusions and recommendations of the report.

THE REASONS OF THE PRIMARY JUDGE

His Honour’s conclusion was expressed as follows[BB18] :

“The applicants’ complaint is not with the adequacy of the minister’s (hence the ACS’s [Customs]) reasons for the decisions made. It is that the minister failed to follow the procedures required by s 269TG(2)(b) in that he was not satisfied that in 1996 material injury was being caused or threatened to the Australian industry.

It is the case that separate and explicit findings on that matter were not made against Nemo, Champion and Ripasa in Report 96/016. However, when one has regard to the scope and purpose of the 1996 inquiry, to its conduct in a setting in which a company specific dumping notice was already in place (with the findings that that presupposed) and to the reasons of the Report, that omission, if unfortunate, is of no particular moment.

While it is the case that the minister must have the requisite s 269TG(2)(b) ‘material injury’ satisfaction before issuing a dumping notice, his decision, based as it was on Report 96/016, was redolent of his having been so satisfied. That Report clearly manifested an awareness of the need for such satisfaction. What it found (especially in relation to non-injurious price) and what it recommended were obviously premissed [sic]upon that satisfaction. In my view, in the particular circumstances of this case, so clearly were the requirements of s 269TG(2) found to be satisfied in 1996 that it went without saying.

Decision making is a function of the real world – cf Enichem Anic SrL v Anti-Dumping Authority (1992) 39 FCR 458 at 469. Where there can be no reasonable basis for misapprehending how a decision was arrived at and the foundations of it, and where these bespeak a lawful and regular decision, it is both unreasonable and unrealistic to require the decision maker to resort to statements of the obvious so as to dispel any possible doubt that he or she might have misunderstood his or her statutory responsibilities.

I do not consider that Nemo, Champion or Ripasa have made out their challenge to the minister’s decision.”

ARGUMENTS ON THE APPEAL

 

APPELLANTS’ SUBMISSIONS

It is common ground that the Minister had to be satisfied that the subject imports had caused, or were causing or threatening to cause, material injury to the Australian industry in order to justify the declarations against the appellants. The contentious question is whether the Minister considered the question.

The appellants contended that the only material relied upon by the Minister was Customs report No 96/016. No express findings of material injury were made in the report. In respect of Ripasa, there was a passing reference to the “original investigation” in 1993 and 1994.

The appellants contended that the Minister’s approach was revealed by correspondence between him and the appellants’ trade consultant, Mr Fisher. Mr Fisher anticipated the imminent release of Customs report No 96/016 and, on 10 December 1996, he wrote to the Minister asking the Minister to delay making a decision. One reason urged was that the report was expected to wrongly reject the findings of Customs investigators that dumping margins on Brazilian exports were negligible. In relation to this ground, the letter stated[BB19] :

“Brazil is far from being the major exporter of this paper to Australia and is also a long way from being the lowest cost supplier.”

The second ground for seeking a delay was stated as follows[BB20] :

“The Brazilian Paper Association on behalf of its members would even go so far as to request that you review the material injury aspects.

Circumstances have changed considerably since the 1993 investigation and imposition of the 1994 measures. The two Australian producers at that time, APPM and APM, have become one i.e. Australian Paper. Production has been transferred from Burnie in Tasmania to Maryvale in Victoria with attendant economies. Brazil, at current volumes and pricing, can in no way impinge on the operations of Australian Paper or their profitability and simply help fill the void caused by Australian Paper’s ability to only satisfy some 50 per cent of the market.”

After making the declarations on 18 December 1996, the Minister replied by letter dated 4 February 1997. As to the second ground, he said[BB21] :

“Although the review process closely parallels the investigation of a new case, it does not cover material injury aspects. The review addresses the level of measures only.”

It was contended that this passage demonstrated that the Minister determined that the material injury question did not have to be addressed. The appellants also argued that the way in which the Minister approached the fixing of the non-injurious price in the circumstances of this case did not suggest that the Minister had assumed the existence of material injury but, rather, that he had simply not considered the question.

Finally, the appellants argued that, if the Minister relied upon the January and July 1994 findings of material injury by the Authority, without further consideration, then those findings were stale and did not provide a basis for the declarations actually made.

RESPONDENT’S SUBMISSIONS

The respondent submitted that “the Court should not be concerned with looseness in the language ... nor with unhappy phrasing” and ought not to construe the Customs report No 96/016 “minutely ... with an eye keenly attuned to error”: Minister for Immigration & Ethnic Affairs v Wu Shan Liang[BB22] (1996) 185 CLR 259 at 272-272. The respondent also argued that the establishment of a causal link between dumping and material injury is a practical exercise requiring a broad judgment of fact by the decision-maker: ICI Australia Operations Pty Ltd v Fraser (1992) 34 FCR 564 at 572, 577; Minister for Small Business, Construction & Customs v La Doria Di Diodata Ferraiolli SPA (1994) 33 ALD 35 at 45.

The respondent contended that the Customs report No 96/016 was written against the background of the Customs Preliminary Finding Report No 16 and the Authority’s report No 119, and the imposition of anti-dumping measures in 1994, in accordance with the recommendations in those reports. The reports were public documents and were referred to in Customs report No 96/016, upon which the Minister relied. Chapter 2 of the Customs report No 96/016, dealing with and entitled “Background” stated[BB23] :

“Anti-dumping action is justified where it is established that dumped imports have caused, or threaten to cause, material injury to the Australian industry producing like goods.

Where satisfied as to the link between dumping and material injury, the Minister may sign a notice declaring that a dumping duty is to apply. This occurs under subsection 269TG(1) of the Act if past exports have caused injury and under subsection 269TG(2) if the injurious dumping is considered likely to continue.”

 

The review was stated to travel beyond the variable factors because it was to deal with the extension of anti-dumping measures on a countrywide basis. In any event, the calculation of non-injurious price logically presupposed that material injury would be caused by any exporter exporting at a lower price, that is to say, the exercise assumed the existence of

 material injury. In the case of Nemo and Champion, so it was argued, the acceptance of undertakings in 1994 carried with it the conclusion that material injury then existed and thereby provided the foundation for a declaration at a later time.

CONCLUSION

 

The reasons for decision of the Minister establish that the only report to which he had regard was the Customs report No 96/016: it was the only report he said he had before him when he made his decision. There is passing reference to the prior reports in the Customs report No 96/016 but they were referred to as a matter of history and were not adopted for their conclusions. In any event, the letter from the Minister to Mr Fisher establishes that the Minister did not regard consideration of material injury as a relevant part of the inquiry. No doubt the primary Judge would have been assisted by reference to this correspondence on the present question. While the letters were in evidence, they were not relied upon by counsel. The focus of the case was on other matters. The letter from the Minister confirms our own analysis of the Customs report No 96/016. The structure of the report discloses a concern with the assessment or reassessment of the variable factors. After a chapter entitled “Background” and a chapter entitled “Introduction”, the task of setting the level of the variable factors is undertaken in three chapters, each devoted to one of the variable factors. There is no consideration of the sorts of matters referred to in s 269TAE (1)and (3). There is no consideration of the question whether any material injury was caused or would in the future be caused by the imports under investigation. This is in marked contrast to the elaborate treatment of these questions in the Customs Preliminary Finding Report No 16 and the Authority’s report No 119. Even in the Authority’s reconsideration report No 132, published only six months after the Authority’s report No 119, the Authority stated that it was “still satisfied” that material injury had caused and threatened to cause material injury to the Australian industry. That mention gave assurance that the issue had been considered, although the consideration was not extensive or elaborate.

The fact that the process of setting the non-injurious price contemplated by the Act required the Minister to have considered the question of material injury does not mean that, by engaging in the process of setting the non-injurious price, the Minister did in fact consider the question of material injury. In this case, we are satisfied that he did not consider the question. His own correspondence and a fair reading of the Customs report No 96/016, upon which he based his decision, attests to the fact. Nothing in the method by which he set the non-injurious price indicates that he considered the question of material injury. Indeed, the contrary is the case. Paragraph 6.1 of the Customs report No 96/016, set out earlier in these reasons, outlined the approach the Authority normally took to the establishment of the non-injurious price, namely, first to ascertain what the Australian industry’s selling price would be in a market unaffected by dumping, then to deduct expenses to work back to the FOB level. Customs then adopted the same method in this instance. The error in this approach was that the stated approach of the Authority was adopted where the Authority also conducted an extensive examination of the material injury question. Whether the approach was appropriate, however, depended on consideration of the existence of material injury, an assessment of its extent, and the establishment of the causal link between dumping and the injury. The statutory scheme did not allow the non-injurious price to be determined by the approach adopted unless material injury was also considered and the conclusions on that subject justified the particular approach to the setting of the non-injurious price. To adopt the usual approach of the Authority, without an examination of the material injury question, excluded from consideration the matters to which the Minister could have regard under s 269TAE (1) and (3).

The respondent argued that the previous acceptance of undertakings from Nemo and Champion meant that the Minister had been satisfied on the material injury question in 1994 in respect of Nemo and Champion. He was entitled to rely upon that satisfaction to make the declarations in question in 1996. The short answer to this contention is that the Minister did not approach the matter in that way. As we have described, he proceeded as if the question of material injury did not require consideration. Had he relied upon the previous satisfaction, he would have said so. This was the procedure adopted in the Authority’s reconsideration report No 132, referred to earlier in these reasons. If it were necessary for decision, we would hold that acceptance of an undertaking did not necessarily involve a determination by the Minister that material injury had been caused or threatened. The power given to the Minister under s 269TG (4) (b) was to suspend consideration of the question whether a declaration should be made. The consideration could be suspended at any stage of the process, including at a stage before the Minister had considered the question of material injury. It is noteworthy that the undertakings required the exporters to adhere to a specified minimum export price and did not establish a non-injurious price for the purposes of the undertaking.

Finally, the appellants relied upon s 269TAE (2A), which has already been set out. The section applied relevantly in respect of applications for the publication of notices under s 269TG (2) made after 1 January 1995. The appellants contended that the APL letter dated 28 August 1996 was an application to which the subsection applied, that the subsection obliged the Minister to consider whether the injury to Australian industry had been caused or threatened by a factor other than the export of the goods in question, and that the Minister had not considered that question. In light of our other conclusions, it is not necessary to determine the issues raised by this argument. In the result, the appeal will be allowed with the necessary consequential orders.

COSTS

The appellants have succeeded in the appeal and there will be an order that the respondent pay their costs of the appeal. The appellants also sought the costs of the proceedings at first instance. Initially, the appellants’ case at first instance was that the decisions of the Minister were invalid because the appellants had been denied natural justice. But this case was abandoned in the course of the trial. Almost all of the evidence had been directed to this issue. In these circumstances, we accept the respondent’s argument that there should be no order as to the costs of the trial.

I certify that this and the preceding twenty-five (25) pages are a true copy of the Reasons for Judgment herein of the Court

Associate:

Dated:              15 December 1998

Counsel for the Applicant:	Mr C P Comans
Solicitor for the Applicant:	Colquhoun Murphy
Counsel for the Respondent:	Mr S Gageler
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	2 July 1998
Date of Judgment:	15 December 1998