The Australian Anti-Dumping Commission's (ADC) recent investigation into kraft paperboard from the United States (kraft investigation) highlights and confirms the ADC's approach to the important element, "like goods", that must be proven to find actionable dumping. The kraft investigation was the first investigation terminated by the ADC for the reason that there was no Australian industry producing like goods.
Like goods - a necessary element of actionable dumping
The Australian trade remedies legislation (Part XVB of the Customs Act 1901 (the Act)) requires that, in order to impose dumping duties, the Minister must be satisfied that (among other things) there has been material injury to "an Australian industry producing like goods" (section 269TG). Further, if the Commissioner of the ADC is satisfied that injury caused to an Australian industry is negligible (because, for example, there is no Australian industry producing like goods) then the Commissioner must terminate the investigation (section 269TDA(13)).
If the like goods element is not proven then there is no actionable dumping. This is the case if there has been dumping (ie export price of the goods under consideration is less than their normal value) or that there has been injury to some other Australian industry (ie one that does not produce like goods).
The Manual - 4 likeness factors
Unless the imported goods and Australian produced goods are identical, the ADC must assess whether the Australian produced goods have characteristics "closely resembling" the imported goods (section 269T). The ADC assesses likeness according to 4 likeness factors (Dumping and Subsidy Manual (Manual) at chapter 2):
A likeness assessment in a trade remedies investigation has a superficial resemblance to an assessment of substitutability or market definition in a competition investigation. Substitutability has some relevance under the commercial likeness factor but its relevance should not be overstated - trade remedies and competition law are distinct spheres of policy and law.
ADC: microflute corrugated cardboard is not a like good to kraft paperboard from the United States
Visy (Australian industry) argument: end use should rule
From its application onwards, Visy (the Australian industry) emphasised the end use of the allegedly dumped goods (kraft paperboard) and how that end use was similar to the end use of Visy made microflute. Both imported kraft paperboard and microflute are used to produce packaging for drinks.
Visy's argument was, in effect, that the overall purpose of the legislation should trump a more detailed assessment of likeness. From that position, Visy argued that GPI (the primary exporter) had been dumping and that there was injury to an Australian industry; therefore dumping duties should be applied to kraft paperboard.
GPI (exporter) argument: the 4 likeness factors with an emphasis on physical likeness
Graphic Packaging International (GPI) argued that the ADC was not at liberty to change the basis on which it assessed like goods, at least not during the course of a live investigation. GPI advanced evidence of lack of likeness in terms of the 4 likeness factors. GPI emphasised the lack of physical likeness between Australian produced microflute and kraft paperboard exported from the US.
GPI retained paper and packaging expert, Charles Klass, concluded that (Report by Klass at page 2):
The very different physical and other characteristics come from the very substantial production differences. Kraft paperboard is made on a paper machine. Microflute is not a product made on a paper machine. Microflute is a converted product made by combining three layers of paperboard on a corrugator.
It was inconvenient to Visy's argument that kraft paperboard crossed the Australian docks in very large unprinted rolls before being converted to drink packaging by printing, cutting and gluing. In contrast, Visy's microflute came into existence already printed and in sheets.
ADC: microflute is not a like good to kraft paperboard
The ADC ultimately agreed with GPI, that there was not an Australian industry producing like goods to the goods under consideration and accordingly terminated the investigation. On review of the ADC's termination decision, the Anti-Dumping Review Panel agreed that Visy's microflute was not a like good to kraft paperboard and confirmed the termination.
Kinsman Legal's role in the kraft investigation
Kinsman Legal acted for exporter GPI in the kraft investigation.
Kinsman Legal is available to assist parties involved in Australian anti-dumping investigations. Please contact Kinsman Legal to discuss your matter and how Kinsman Legal might assist.
Like goods - a necessary element of actionable dumping
The Australian trade remedies legislation (Part XVB of the Customs Act 1901 (the Act)) requires that, in order to impose dumping duties, the Minister must be satisfied that (among other things) there has been material injury to "an Australian industry producing like goods" (section 269TG). Further, if the Commissioner of the ADC is satisfied that injury caused to an Australian industry is negligible (because, for example, there is no Australian industry producing like goods) then the Commissioner must terminate the investigation (section 269TDA(13)).
If the like goods element is not proven then there is no actionable dumping. This is the case if there has been dumping (ie export price of the goods under consideration is less than their normal value) or that there has been injury to some other Australian industry (ie one that does not produce like goods).
The Manual - 4 likeness factors
Unless the imported goods and Australian produced goods are identical, the ADC must assess whether the Australian produced goods have characteristics "closely resembling" the imported goods (section 269T). The ADC assesses likeness according to 4 likeness factors (Dumping and Subsidy Manual (Manual) at chapter 2):
- physical likeness including size, shape, weight and appearance
- commercial likeness including directness of competition, impacts of price competition and packaging
- functional likeness, ie the extent to which the goods have the same end use or perform similar functions
- production likeness including whether the goods are made of the same materials and have had a similar manufacturing process
A likeness assessment in a trade remedies investigation has a superficial resemblance to an assessment of substitutability or market definition in a competition investigation. Substitutability has some relevance under the commercial likeness factor but its relevance should not be overstated - trade remedies and competition law are distinct spheres of policy and law.
ADC: microflute corrugated cardboard is not a like good to kraft paperboard from the United States
Visy (Australian industry) argument: end use should rule
From its application onwards, Visy (the Australian industry) emphasised the end use of the allegedly dumped goods (kraft paperboard) and how that end use was similar to the end use of Visy made microflute. Both imported kraft paperboard and microflute are used to produce packaging for drinks.
Visy's argument was, in effect, that the overall purpose of the legislation should trump a more detailed assessment of likeness. From that position, Visy argued that GPI (the primary exporter) had been dumping and that there was injury to an Australian industry; therefore dumping duties should be applied to kraft paperboard.
GPI (exporter) argument: the 4 likeness factors with an emphasis on physical likeness
Graphic Packaging International (GPI) argued that the ADC was not at liberty to change the basis on which it assessed like goods, at least not during the course of a live investigation. GPI advanced evidence of lack of likeness in terms of the 4 likeness factors. GPI emphasised the lack of physical likeness between Australian produced microflute and kraft paperboard exported from the US.
GPI retained paper and packaging expert, Charles Klass, concluded that (Report by Klass at page 2):
The very different physical and other characteristics come from the very substantial production differences. Kraft paperboard is made on a paper machine. Microflute is not a product made on a paper machine. Microflute is a converted product made by combining three layers of paperboard on a corrugator.
It was inconvenient to Visy's argument that kraft paperboard crossed the Australian docks in very large unprinted rolls before being converted to drink packaging by printing, cutting and gluing. In contrast, Visy's microflute came into existence already printed and in sheets.
ADC: microflute is not a like good to kraft paperboard
The ADC ultimately agreed with GPI, that there was not an Australian industry producing like goods to the goods under consideration and accordingly terminated the investigation. On review of the ADC's termination decision, the Anti-Dumping Review Panel agreed that Visy's microflute was not a like good to kraft paperboard and confirmed the termination.
Kinsman Legal's role in the kraft investigation
Kinsman Legal acted for exporter GPI in the kraft investigation.
Kinsman Legal is available to assist parties involved in Australian anti-dumping investigations. Please contact Kinsman Legal to discuss your matter and how Kinsman Legal might assist.
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