Department of Foreign and Trade (PDF - 43 Kb) - Productivity ...

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4.6 Subsidies raise sensitive issues for many WTO Members and they have been the subject of previous and current high profile WTO disputes such as US/Canada – Softwood Lumber, US – Foreign Sales Corporations, EC/US – Airbus and Boeing and Canada/Brazil – Regional Aircraft. 4.7 Australia has been an active participant in the subsidies negotiations. We seek to preserve the overall structure and core principles of the existing WTO subsidies disciplines. However, there are some areas where we seek clarification and improvement of existing WTO rules. 4.8 Australia has submitted two subsidy proposals– on prohibited export subsidies and enforcement of their withdrawal. On prohibited export subsidies, Australia has suggested the current definition of prohibited export subsidies discriminates against small and medium-sized economies (such as Australia) in determining what is “export contingent”. The proposal seeks to clarify the facts or factors which must be considered in determining export contingency. Australia considers that WTO dispute panels have put too much emphasis on the export propensity of a product (that is, how much of domestic production is exported) in the range of factors which are examined to determine export contingency. This lends itself to discriminatory treatment of WTO Members which have small to medium sized markets in a product. 4.9. On ‘withdrawal of the subsidy’, Australia has proposed amendments to clarify what is required to achieve withdrawal of a subsidy, to ensure that the remedy is effective. 4.10 Other subsidy proposals cover definitional issues. These include the existence and amount of subsidization; whether subsidies are ‘specific’; whether the benefit of a subsidy to an input ‘passes through’ to a processed product; whether the benefit of a subsidy should be calculated over a period (for example, a grant for the purchase of capital equipment) rather than in the year a subsidy is provided; expansion of the prohibited subsidy and actionable subsidy categories; calculation rules for countervailing measures; and export credits and guarantees. 4.11 If adopted, these proposals could impact on Australia’s rights and obligations with respect to the administration and application of its anti-dumping and countervail systems. 4.12 The Australian Government regularly consults with industry on issues in the negotiations and is cooperating with partner governments to build support for Australia’s negotiating priorities.
5. Possible Implications of Negotiations for Current Practice 5.1 The various proposals for amendments to the Anti-Dumping and SCM Agreements remain under consideration by WTO Members in the Rules Negotiations Group (RNG). The RNG Chair has issued draft texts for both agreements but discussions are ongoing, including on proposals not incorporated into the draft text. Several proposals may have implications for the administration and implementation of Australia’s anti-dumping and countervail systems. These include: (i) Proposals on the practice of ‘zeroing’ 5.2 ‘Zeroing’ is an investigative methodology used by (primarily the United States’) anti-dumping authorities, which allegedly makes it easier for an authority to find dumping. It also results in findings of higher dumping margins. To determine whether dumping exists and its magnitude, authorities normally compare a ‘weighted average normal value’ of the product with a ‘weighted average of prices of all comparable export transactions’ 2 . When zeroing, authorities convert to zero value any negative dumping margins (ie where the export price is higher than the normal value) for the purpose of determining the average of prices of ‘all comparable export transactions’. 5.3 Opponents of zeroing say it is a ‘biased and partial method for calculating the margin of dumping and inflates anti-dumping duties’. 3 They seek to codify WTO dispute settlement findings outlawing zeroing in most circumstances. The United States argues it is a legitimate practice and that any Doha Rules outcome clarify the use of ‘zeroing’. Members on both sides of the debate have proposed amendments, with the United States calling for zeroing to be expressly permitted and several other Members calling for it to be expressly prohibited. Australia does not practice ‘zeroing’. In our view, ‘zeroing’ is not permitted under the Anti-Dumping Agreement and no amendments to the text are required to preserve this position. 5.4 Adoption of proposals to either prohibit or permit zeroing could have implications for both the practice of Australian authorities and the interests of Australian exporters. In particular, if zeroing were to be permitted, more WTO Members may adopt the practice, exposing Australian exporters to more and/or higher anti-dumping duties. Australian practice could be a factor considered by our trading partners in determining whether or not to use zeroing in investigations of dumping by Australian companies. The interests of Australian exporters should be taken into account in any consideration of possible changes to Australian investigating authorities’ approach to zeroing. 2 See Articles 2.4 and 2.4.2 of the Anti-Dumping Agreement. 3 TN/RL/W/215.
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