Australia's trade defense measures

Trade defense measures (including anti-dumping, anti-subsidy and safeguard) are tools that can create barriers to the flow of imported goods (through anti-dumping, anti-subsidy, safeguard investigations and then applying additional tariffs/import restrictions). These are measures that the WTO allows importing countries to use to deal with the situation of foreign imports being dumped, subsidized or imported massively into their country, causing significant or serious damage to the domestic industry. However, the WTO requires importing countries to comply with certain conditions, requirements and procedures when investigating and applying these measures.

Australia is a country that quite commonly uses trade defense tools. Currently, the trade defense measures that Australia has been using are: anti-dumping measures, anti-subsidy measures, safeguard measures and measures against circumvention of trade defense measures for imported goods into this country.In international trade, "trade defense measures" is a general term to refer to a group of measures used with the aim of protecting domestic production from imported goods from foreign countries, including:

- Anti-dumping measures: defense against the phenomenon of foreign goods being dumped, causing significant damage to the domestic production industry of the importing country;

- Anti-subsidy measures: defense against the phenomenon of foreign goods being subsidized, causing significant damage to the domestic production industry of the importing country;

- Safeguard measures: defense against the phenomenon of sudden increase in imported goods causing serious damage to the domestic production industry of the importing country.

The WTO Agreements on Anti-dumping (ADA), Countervailing Duty (SCM) and Safeguards (SG) provide uniform principles that are mandatory for all member countries in the development of legislation and the practical application of these safeguards.

Australia's legislation on trade remedies is contained in the Tariff Act 1901. The agency that investigates trade remedy cases in Australia is the Australian Anti-Dumping Commission (ADC).

Australia is a member of the World Trade Organization (WTO), so it is obliged to ensure that Australia's anti-dumping, countervailing duty and safeguard regulations and enforcement are consistent with the principles of the relevant WTO Agreements. In the event that Australia's laws or investigation agencies are found to be inconsistent with WTO rules, WTO member countries can file a complaint against Australia with the WTO Dispute Settlement Body (under the WTO dispute settlement procedure). The WTO has four agreements that provide for the basic principles of trade defence measures, including:

- General Agreement on Tariffs and Trade (GATT 1994): This agreement on trade in goods contains a number of provisions on trade defence measures;

- Antidumping Agreement (ADA): Specific and specialized provisions on antidumping measures;

- Subsidy and Countervailing Measures Agreement (SCM): An important part of this Agreement regulates countervailing measures;

- Safeguards Agreement (SG): Specific and specialized provisions on safeguard measures.

The provisions of these Agreements are mandatory for all WTO member countries. In other words, each WTO member country has the right to promulgate and apply its own trade remedies laws but must fully comply with the mandatory provisions on content and procedures in the WTO's ADA, SCM and SG Agreements. Each country's domestic laws can be specified but must not be contrary to the relevant provisions of these WTO Agreements.

In Australia, anti-dumping and countervailing measures are considered two pillars of the system of trade defense measures in international trade and are used as a safety valve to protect the domestic market from the penetration of foreign goods. In essence, anti-dumping and countervailing measures are applied to deal with unfair or unfair competition from imported goods. While anti-dumping measures are to deal with the act of selling products at low prices to dominate the market and gradually eliminate competitors, countervailing measures are applied to eliminate the negative impact caused to the domestic production of goods originating from the subsidy policies of the exporting country's government. Specifically:

Dumping is determined when goods are exported to importers in Australia at a price lower than the selling price of those goods in the exporting country or when goods are sold to Australia at a price that is not beneficial to the domestic production industry. The amount of dumping on imported goods can be offset by applying "anti-dumping" duties.

Meanwhile, subsidization occurs when goods imported into Australia benefit from financial support from the exporting country's government. The amount of subsidy on imported goods can be offset by applying "countervailing" duties. Examples of subsidies: preferential loans, subsidies, tax incentives, etc.

When imported goods into Australia are considered to have unfair competition, if these goods cause serious injury or are threatened with causing significant injury or preventing the establishment of a domestic industry, anti-dumping and countervailing measures will be applied.

In addition, safeguard measures are only applied after a full investigation by the competent authority, the Productivity Commission. The procedures for Australian safeguard investigations are set out in the Commonwealth Gazette S 297 of 25 June 1998 (notified in the WTO as G/SG/1/AUS/2 of 2 July 1998) and amended by Gazette GN 39 of 5 October 2005). The Australian industry wishing to use this measure must apply to the Minister for the relevant product or the Minister for Trade, Tourism and Investment.

If the Australian Government decides to initiate an investigation, the Treasurer may refer the matter to the Productivity Commission for consideration, and may request an early report on the issuance of the provisional measure. Public notice of the initiation of the investigation will be given by the Productivity Commission and the investigation will include a hearing or other proceedings as may be necessary to provide interested parties with an opportunity to make their views known.

In 2021, the total two-way trade turnover between Vietnam and Australia exceeded 12.4 billion USD for the first time, an increase of 49.45% compared to 2020.

The above figures mark a new positive milestone in the economic and trade relationship between the two countries, especially in the context of Vietnam and Australia completing the signing of the Enhanced Economic Engagement Strategy, aiming to support the common ambition of making the two countries each other's leading trade partners and doubling two-way investment.

Regarding the export turnover of goods from Vietnam to Australia, the report of the Vietnam Trade Office in Australia shows that, although the supply of goods and international transportation activities have encountered many difficulties due to the impact of the COVID-19 pandemic, after 12 months of 2021, most of the export items to the Australian market have had good growth compared to 2020.

The turnover of groups of raw materials, fuels, and input materials for production has increased sharply, with an average of two to three digits compared to the previous year. Industrial goods, including textiles, garments, footwear, machinery, equipment, spare parts, means of transport and spare parts, continued to increase impressively, especially textiles and garments with a growth rate of more than 42.23%. The turnover of Vietnam's key products such as agriculture, aquaculture, etc. also surpassed the previous year. Specifically, aquaculture increased by 16.03%, rice increased by 34.36%; vegetables and fruits increased by 28.15%; pepper increased by 41.98%...

Vietnam-Australia bilateral trade turnover reached nearly 12 billion USD, up 33.4%, a very significant increase as the turnover increased to a record level in 2021.

Overall, bilateral trade goals were achieved quickly under the direction of senior leaders of the two countries.

The above positive results were partly contributed by the Vietnam Trade Office in Australia in evenly implementing the action plan, balancing market research and trade promotion solutions.

In the period from January to September 2022, exports from Vietnam to Australia reached more than 4.2 billion USD, up nearly 34%.

Australia is the 13th largest economy in the world with an import turnover of nearly 250 billion USD/year. Although the population is quite small, only 25.7 million people, this is a very potential market because people are willing to pay high prices for quality products and are also open to imported goods.

The advantage of Vietnamese enterprises when exporting to Australia is that the commodity structure of the two countries is very complementary. Vietnam exports to Australia many agricultural products, seafood, wood and wood products, machinery, means of transport and iron and steel of all kinds. In contrast, Vietnam imports from Australia textile and garment raw materials, leather and footwear raw materials, coal, iron ore, milk and dairy products, chemicals and chemical products. According to the Vietnam Trade Office in Australia, the export turnover of Vietnamese goods to Australia reached more than 2.78 billion USD, an increase of more than 691.35 million USD. In the groups of goods with large export value are: phones of all kinds and components, up 22.92%; computers, electronic products and components increased by 14.12%; other machinery, equipment, tools and spare parts increased by 91.47%.

According to statistics from the General Department of Vietnam Customs, in the first 6 months of 2022, two-way trade turnover between Vietnam and Australia reached more than 8.01 billion USD, up 38.45% over the same period last year, of which: Vietnam's exports to Australia reached more than 2.78 billion USD, up 33.07%; Vietnam's imports from Australia reached more than 5.23 billion USD, up 41.50%.

Third, cooperate with parties with similar interests.

Enterprises should not work alone, but need to coordinate with relevant parties. In response work as well as coordination with parties, enterprises can monitor recommendations at specific investigation stages. The relevant parties that enterprises need to coordinate with in the investigation include: the Department of Trade Remedies (Ministry of Industry and Trade) is the focal point for information, legal advice, and support for enterprises in the process of participating in the investigation of trade remedies; Associations and enterprises in the same industry will create solidarity, share costs as well as experience in the process of responding to the case.

Fourth, proactively improve the capacity of enterprises themselves.

Enterprises need to diversify markets, avoid over-expanding exports in a specific market; increase competition through quality and limit competition through price; carefully consider risks when building trade and production strategies. Enterprises also need to consider trade defense measures as part of their production and export business strategies. On the other hand, enterprises also request competent authorities to step up the fight to force importing countries to remove regulations classifying Vietnam as a special market - one of the factors that makes it difficult for Vietnamese enterprises to win trade defense lawsuits.

For export markets, enterprises need to review and warn early about the risk of being investigated for trade defense cases. Currently, the Ministry of Industry and Trade is implementing the construction of an Early Warning System for Trade Defense Cases so that enterprises can access information and effective warning advice. The Ministry of Industry and Trade still posts the List of warnings for products at risk of being investigated for trade defense and investigation of tax evasion for trade defense on the website of the Department of Trade Defense (www.pvtm.gov.vn). Enterprises need to closely monitor these warnings to consider appropriate adjustments for production and business activities.

Along with referring to the warnings of the Department of Trade Defense, enterprises can also proactively monitor some aspects to issue their own warnings:

Research on export markets as well as monitor the import volume of exported goods to have their own analysis and warnings. According to practical experience, a sudden increase in imported goods is also a criterion for assessing the ability of the exporting country to consider investigating and applying trade defense measures. Therefore, monitoring the import situation of key export markets will be an important basis for early warning for enterprises.

Monitor the trend of investigation and application of trade defense measures of the exporting country. For markets that frequently use trade remedies such as Australia, businesses need to have preparation plans right from the market access stage to ensure successful results after access.

Monitor the world's trade remedies applied to the goods they export. The application of trade remedies by some markets to a specific type of goods may lead to other members also considering investigating and applying trade remedies to that product.

Participating in responding to a trade defense case, especially an anti-dumping investigation and an anti-subsidy investigation, businesses need to invest a lot of resources. Most of the business's key personnel (production, sales, accounting) will have to spend time and resources preparing documents and participating in responding to the case over a period of about 01 year. Along with that, a significant source of cost will need to be prepared in case of hiring a consulting lawyer to accompany the appeal stage. Therefore, in order to effectively respond to the incident and not affect production and business activities, enterprises need to consider the scale and benefits of the market to come up with an appropriate response plan.

Enterprises need to consider a number of issues as follows when deciding on the level of resource expenditure for the incident response process:

Calculate the costs of accessing the market as well as the expected benefits achieved in the export market.

Calculate the costs and resources needed to respond to the incident.

Estimate the level of damage when PVTM measures are applied.

With specific calculations, businesses can consult the PVTM Department to get optimal recommendations for the appeal process. However, it should be emphasized that the failure of businesses to participate in the investigation or to participate incompletely not only directly affects the business but also affects the national tax rate (the tax rate applied to businesses that are not sampled). Therefore, businesses always need to consult with the PVTM Department to have a suitable plan for the common benefit of the industry.

In the process of participating in a PVTM case, businesses need to note that they should not work alone. Coordination with other relevant parties is extremely important. In response work as well as coordination with other parties, businesses can monitor recommendations at specific investigation stages. Related parties that businesses need to coordinate with during the investigation phase: Trade Defense Department - Ministry of Industry and Trade, this is the focal point for information, legal advice, and support for businesses during the process of participating in the PVTM investigation case. For the anti-subsidy investigation case, the PVTM Department is also the focal point for synthesizing the questionnaire responses for the Government. Businesses need to regularly exchange, coordinate, and cooperate with the PVTM Department to ensure effective and consistent responses to the questionnaires. With consultations and arguments sent to the investigation agency, businesses can also consult and request the PVTM Department to support the transfer of these opinions to the investigation agency in the capacity of the Government.

Associations and businesses in the same industry: when businesses in the same industry coordinate with each other during the process of participating in the PVTM investigation case, it will create solidarity, share costs as well as experience in the process of responding to the case.

In addition, the Ministry of Industry and Trade has also promoted coordination between ministries, branches, and central and local government agencies in handling trade defense cases as well as guiding and supporting Vietnamese enterprises to handle trade defense cases effectively, comply with the rules of origin, and take advantage of the benefits of the FTAs ​​between Vietnam and Canada.

However, in addition to the efforts of the Government and the Ministry of Industry and Trade, effectively responding to foreign trade defense measures on exported goods requires the active and proactive participation of the business community.

Therefore, to minimize the negative impacts of trade defense measures, the Ministry of Industry and Trade recommends that manufacturing and export industries and enterprises develop export strategies in the direction of market diversification, avoiding overheating in one market, enhancing competition through quality, and limiting competition through price. In addition, businesses should consider trade defense as part of their production and business strategies, especially export.

Not only that, businesses need to equip themselves with basic knowledge of trade defense laws and prepare resources to deal with the risks of trade defense lawsuits.

Australia is a CPTPP member that has developed detailed guidelines for investigating and applying trade defense measures before these measures were included in its commitments under the WTO. Of which, Australia maintains and completes 03 guidelines on investigating and applying anti-dumping and anti-subsidy measures and 02 guidelines on investigating and applying self-defense measures. Along with that, specific concepts and guidelines on investigating and applying trade defense measures have also been developed into a public handbook, helping businesses as well as related parties to easily follow the investigation process.

Regarding the investigation process, Australia has set out basic timeframes and regulations in line with its WTO commitments:

Anti-dumping/anti-subsidy investigation cases

To serve the anti-dumping/anti-subsidy investigation, Australia has developed detailed and unified contents related to the procedures as well as the investigation content. Accordingly, in the Australian investigation, the Investigation Agency will strictly adhere to the timelines related to the Preliminary Conclusion, the announcement of important information and the final conclusion.

The content of the legal provisions on anti-dumping and anti-subsidy investigations has some points of interest as follows:

Regulations on non-market economies: Australia has regulations on the use of normal value calculation methods for goods originating from countries with non-market economies. With these methods, the calculated dumping margin is very high, causing disadvantages for imported goods. In 2008, Vietnam was recognized by Australia as a market economy and will not be affected by this regulation of Australia. However, Australia may still consider applying separate calculations in cases where it determines that the relevant industry has a particular market economy or an economy in transition.

Investigation against circumvention of anti-dumping/anti-subsidy measures: Australia has early regulations on investigation against circumvention of anti-dumping and anti-subsidy measures, including (1) Assembled goods exported to Australia; (2) Assembled goods in a third country; (3) Export of goods through one or more third countries; (4) Agreements between exporters; (5) Evasion of the impact of measures and (6) Modification of goods.

Re-investigation: Based on the regulations on reviewing regulations on anti-dumping/anti-subsidy measures, investigation cases can be re-investigated and the decision of the re-investigation case will replace the original decision.

To date, Australia has conducted 37 anti-dumping investigations and 04 anti-subsidy investigations. Practice shows that Australia is very cautious in making decisions on applying trade remedies with 17 anti-dumping measures and 02 anti-subsidy measures.

Safeguard investigation

Australian law does not provide a specific document on investigating the application of safeguard measures. The investigation procedure is issued in the form of a notice attached to the Productivity Act. Accordingly, in the investigation case applying safeguard measures, it is necessary to ensure:

- Regarding investigation procedures: (1) Ensuring consultations and appropriate forms for relevant parties to provide evidence and arguments; (2) Publicizing the investigation results to ensure compliance with the law and practice; and (3) Securing confidential information provided by relevant parties.

- Regarding the conditions of application: (1) applied to imported goods into Australia with an increase in quantity (relative and absolute) causing serious damage to the domestic manufacturing industry; (2) excluded from application to imported goods from developing countries with the condition of import ratio as prescribed.

- Applied safeguard measures: (1) Quotas; (2) Tariff quotas and (Additional taxes).

- In practice, although being an active Member in using trade defense measures, Australia does not prioritize the application of safeguard measures. Up to now, Australia has only investigated and applied 04 safeguard cases. The most recent case that Australia investigated was conducted in 2013.

The authority to investigate and apply Australian trade defense measures is assigned to two agencies:

Anti-dumping Commission: This is a unit under the Australian Ministry of Industry - Science - Energy and Resources. The Commission is tasked with investigating the application of anti-dumping and/or countervailing measures. The Anti-Dumping Commission is responsible for conducting the investigation and making recommendations to the Ministry for the decision to apply the measures. The decisions of the Ministry and the Commission on anti-dumping measures will be reviewed by the Anti-Dumping Review Panel if requested by the interested parties within 30 days from the date of issuance of the relevant decision.