PUBLIC RECORD 1

Exemption Inquiry Report: EX0038

Certain aluminium extrusions exported to Australia from the People’s Republic of China Applicant: SRB Systems Pty Ltd February 2016

PUBLIC RECORD 2

Table of contents Abbreviations ...................................................................................................................3

1. Summary and recommendations ......................................................................4 1.1 Findings and recommendations ..............................................................4 1.2 Authority to make the decision ................................................................5 1.3 Initiation of inquiry ...................................................................................5

2. Background to measures ..................................................................................6 2.1 History of measures applying to certain aluminium extrusions ................6 2.2 The goods subject to measures ..............................................................7 2.3 Tariff classification ..................................................................................8

3. Exemption inquiry ..............................................................................................9 3.1 Exemption application .............................................................................9 3.2 Exemption inquiry ...................................................................................9 3.3 Goods subject to the application for exemption .....................................10 3.4 Assessment of the relevant exemption criteria in this report .................10

4. Like goods criterion .........................................................................................11 4.1 Claims made in the application .............................................................11 4.2 Legislative requirements for an exemption under the like goods

criterion.................................................................................................11 4.3 Definition of “like or directly competitive goods” ....................................12 4.4 Definition of “custom and usage of trade” .............................................13 4.5 Offer for sale in Australia of ‘like’ or ‘directly competitive’ goods ...........14 4.6 The Commission’s assessment – like or directly competitive goods

offered for sale in Australia ...................................................................15 4.7 To all purchasers on equal terms under like conditions having regard to

the custom and usage of trade .............................................................16 4.8 The Commission’s assessment - to all purchasers on equal terms under

like conditions having regard to the custom and usage of trade ............17

5. Samples criterion .............................................................................................19 5.1 Claims made in the application .............................................................19 5.2 Legislative requirements for an exemption under the samples criterion 19 5.3 Interpretation of “the goods, being articles of merchandise, are for use

as samples for the sale of similar goods” ..............................................19 5.4 Articles of merchandise, for use as samples for the sale of similar

goods ...................................................................................................20 5.5 The Commission’s assessment – articles of merchandise, for use as

samples for the sale of similar goods ....................................................21

6. Recommendation .............................................................................................23 6.1 Effective date of exemption ...................................................................23

7. Attachments .....................................................................................................24

PUBLIC RECORD 3

Abbreviations

Abbreviations / short form Full reference

ADN Anti-Dumping Notice

the applicant, or SRB SRB Systems Pty Ltd

Capral Capral Limited

the Commission the Anti-Dumping Commission

the Commissioner the Commissioner of the Anti-Dumping Commission

China the People’s Republic of China

Customs Act Customs Act 1901

Dumping Duty Act Customs Tariff (Anti-Dumping) Act 1975

the duties interim dumping duty, dumping duty, interim countervailing duty and countervailing duty

exemption goods the goods subject of the application as described in section 3

GJE G James Extrusion Co Pty Ltd

INEX Independent Extrusions Ltd

ITW ITW Australia Pty Ltd

like goods criterion the criterion for granting and exemption contained in subsections 8(7)(a) and 10(8)(a) of the Dumping Duty Act

the Parliamentary Secretary the Assistant Minister for Industry, Innovation and Science and the Parliamentary Secretary to the Minister for Industry, Innovation and Science

questionnaire “Response to Exemption Application” questionnaire

REP 148 Trade Remedies Branch Report No. 148

samples criterion the criterion for exempting goods from the duties contained in subsections 8(7)(e) and 10(8)(d) of the Dumping Duty Act

PUBLIC RECORD 4

1. Summary and recommendations

This report sets out the findings of the Anti-Dumping Commission (the Commission) in response to an application by SRB Systems Pty Ltd (SRB, the applicant) requesting an exemption from interim dumping duty, dumping duty, interim countervailing duty and countervailing duty (the duties) under:

• subsections 8(7)(a) and 10(8)(a) of the Customs Tariff (Anti-Dumping) Act 1975 (Dumping Duty Act);1 and

• subsections 8(7)(e) and 10(8)(d) of the Dumping Duty Act. The exemption is sought in relation to certain aluminium extrusions (which are described in section 3.3 and hereafter referred to as the exemption goods) exported to Australia from the People’s Republic of China (China). This report sets out the Commission’s findings on which the Commissioner of the Anti-Dumping Commission (the Commissioner) relied to make a recommendation to the Assistant Minister for Industry, Innovation and Science and Parliamentary Secretary to the Minister for Industry, Innovation and Science (Parliamentary Secretary)2 on whether one or more of the exemption criteria in subsections 8(7) and 10(8) are satisfied and, if any of the exemption criteria are satisfied, how the Parliamentary Secretary should exercise the discretion arising. 1.1 Findings and recommendations

Like or directly competitive goods offered for sale in Australia The Commission finds that:

• like or directly competitive goods are offered for sale in Australia; and

• there is no basis to be satisfied that such goods are not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade.

On that basis the Commission considers that the criterion for granting an exemption under subsections 8(7)(a) and 10(8)(a) is not satisfied. Accordingly, the Commissioner recommends to the Parliamentary Secretary that there is no discretion to exempt the exemption goods from the duties under subsections 8(7)(a) and 10(8)(a). Are for use as samples for the sale of similar goods

The Commission finds that the exemption goods, being articles of merchandise, are for use as samples for the sale of similar goods. On that basis the Commission considers that the criterion for granting an exemption in subsections 8(7)(e) and 10(8)(d) is satisfied. The Commissioner recommends that the Parliamentary Secretary exercise the discretion arising under subsections 8(7)(e) and 10(8)(d) to exempt the exemption goods from the duties.

1 A reference to a section, subsection, paragraph or subparagraph in this report is a reference to a provision of the Dumping Duty Act, unless otherwise specified. 2 On 19 July 2016, the Prime Minister appointed the Parliamentary Secretary to the Minister for Industry, Innovation and Science as the Assistant Minister for Industry, Innovation and Science. For the purposes of this inquiry the Minister is the Parliamentary Secretary to the Minister for Industry, Innovation and Science.

PUBLIC RECORD 5

1.2 Authority to make the decision

Subsections 8(7) and 10(8) of the Dumping Duty Act set out, amongst other things, the matters to be considered by the Parliamentary Secretary in deciding whether to exercise their discretion to exempt goods from the duties.

1.3 Initiation of inquiry

After examining the application, the Commission initiated an inquiry on 11 June 2015.

PUBLIC RECORD 6

2. Background to measures 2.1 History of measures applying to certain aluminium extrusions On 28 October 2010, a dumping duty notice and a countervailing duty notice were published and duties were imposed on aluminium extrusions exported to Australia from China. A history of anti-dumping measures relating to aluminium extrusions is summarised below.

24 June 2009

The then Australian Customs and Border Protection Service initiated an investigation (No. 148) into the alleged dumping and subsidisation of aluminium extrusions exported to Australia from China following an application by Capral Limited (Capral).

28 October 2010

The then Attorney-General published a dumping duty notice and a countervailing duty notice applying to aluminium extrusions exported from China. Trade Remedies Branch Report No. 148 (REP 148) refers.

27 August 2011

The then Attorney-General published new notices as a result of a reinvestigation of certain findings made in Trade Remedies Branch Report No. 148 following a review by the former Trade Measures Review Officer. International Trade Remedies Report No. 175 refers.

21 November 2012

Publication of the outcome of a review of the anti-dumping measures as they apply to Wuxi Xisha Photoelectric Aluminium Products Co., Ltd. The anti-dumping measures were altered as if different variable factors applied. International Trade Remedies Report No. 186 refers.

4 September 2013 The Federal Court ruled that dumping duty and countervailing duty notices cannot impose different variable factors for each finish of aluminium extrusion.3

8 May 2014 Publication of the outcome of a review of anti-dumping measures as they apply to Alnan Aluminium Co., Ltd. The anti-dumping measures remained unaltered. Final Report No. 229 refers.

19 February 2015

Publication of the outcome of an anti-circumvention inquiry into the avoidance of the intended effect of duty concerning certain aluminium extrusions exported to Australia by PanAsia Aluminium (China) Co., Ltd. Final Report No. 241 refers.

19 August 2015

Publication of the outcome of a review of anti-dumping measures applying generally to certain aluminium extrusions exported to Australia from China. The anti-dumping measures were altered as if different variable factors had been ascertained. Final Report No. 248 and its corrigendum refer.4

28 October 2015 The then Parliamentary Secretary declared that the anti-dumping measures should continue in force after 28 October 2015. Anti-Dumping Notice (ADN) No. 2015/125 refers.

9 February 2016

Publication of the outcome of a review of anti-dumping measures as they apply to Press Metal International Ltd. The anti-dumping measures were altered as if different variable factors had been ascertained. Final Report No. 304 refers.

Table 1: History of anti-dumping measures applying to aluminium extrusions

3 PanAsia Aluminium (China) Limited v Attorney-General of the Commonwealth [2013] FCA 870. 4 The corrigendum relates to the treatment of certain residual exporters.

PUBLIC RECORD 7

2.2 The goods subject to measures

The goods exported from China and covered by the current dumping duty and countervailing duty notices are:

Aluminium extrusions produced via an extrusion process, of alloys having metallic elements falling within the alloy designations published by The Aluminium Association commencing with 1, 2, 3, 5, 6 or 7 (or proprietary or other certifying body equivalents), with the finish being as extruded (mill), mechanical, anodized or painted or otherwise coated, whether or not worked, having a wall thickness or diameter greater than 0.5 mm., with a maximum weight per metre of 27 kilograms and a profile or cross-section which fits within a circle having a diameter of 421 mm.

The goods subject to measures include aluminium extrusion products that have been further processed or fabricated to a limited extent. For example, aluminium extrusion products that have been painted, anodised, or otherwise coated, or worked (e.g. precision cut, machined, punched or drilled) fall within the scope of the goods subject to measures. The goods subject to measures do not extend to intermediate or finished products that are processed or fabricated to such an extent that they no longer possess the nature and physical characteristics of an aluminium extrusion, but have become a different product. Further detail regarding this description (including products that are not the goods subject to measures) can be found in the final reports of the original investigation.5 The table below, taken from REP 148, provides guidance to assist the categorisation of aluminium extrusions into the types covered by the duties (types 1-4) and those that are not covered (types 5-7).

Covered by Measures Not Covered by Measures

1 2 3 4 5 6 7

Aluminium extrusions

Aluminium extrusions with minor working

Aluminium extrusions that are parts intended for use in intermediate or finished products

Aluminium extrusions that are themselves finished products

Unassembled products containing aluminium extrusions, e.g. ‘kits’ that at time of import comprise all necessary parts to assemble finished goods

Intermediate or partly assembled products containing aluminium extrusions

Fully assembled finished products containing aluminium extrusions

Examples

Mill finish, painted, powder coated, anodised, or otherwise coated aluminium extrusions

Precision cut, machined, punched or drilled aluminium extrusions

Aluminium extrusions designed for use in a door or window

Carpet liner, fence posts, heat sinks

Shower frame kits, window kits, unassembled unitised curtain walls

Unglazed window or door frames

Windows, doors

Table 2: Types of aluminium extrusions subject to measures

5 Refer to Trade Measures Issues Paper - Goods Under Consideration (www.adcommission.gov.au/cases/Documents/IssuesPaper2009-148.pdf) and International Trade Remedies Branch Report No. 148.

PUBLIC RECORD 8

2.3 Tariff classification

The goods subject to measures may be classified under the following subheadings in Schedule 3 of the Customs Tariff Act 1995:

7604.10.00/06 non alloyed aluminium bars, rods and profiles

7604.21.00/07 aluminium alloy hollow angles and other shapes

7604.21.00/08 aluminium alloy hollow profiles

7604.29.00/09 aluminium alloy non hollow angles and other shapes

7604.29.00/10 aluminium alloy non hollow profiles

7608.10.00/09 non alloyed aluminium tubes and pipes

7608.20.00/10 aluminium alloy tubes and pipes

7610.10.00/12 doors, windows and their frames and thresholds for doors

7610.90.00/13 other

Table 3: Aluminium extrusions tariff classifications

The rate of Customs duty for the goods subject to measures is in transition as a result of the China-Australia Free Trade Agreement. The duty rate applicable to each relevant tariff classification is as follows:

Tariff code Base Rate 20 December 2015 1 January 2016 1 January 2017

7604.10 5% 4% 3% 2%

7604.21 5% 3.3% 1.7% 0%

7604.29 5% 3.3% 1.7% 0%

7608.10 / 7608.20 5% 4% 3% 2%

7610.10 5% 3.3% 1.7% 0%

7610.90 5% 3.3% 1.7% 0%

Table 4: Aluminium extrusions imported from China – transitional Customs duty6

6 Current rates can be obtained via https://ftaportal.dfat.gov.au/.

PUBLIC RECORD 9

3. Exemption inquiry 3.1 Exemption application

On 2 March 2015, SRB wrote to the Commission requesting an exemption from the duties in relation to its imports of the exemption goods (Attachment 1). SRB has applied for an exemption under subsections 8(7)(a), 10(8)(a), 8(7)(e) and 10(8)(d) of the Dumping Duty Act. SRB’s application outlined the following grounds in support of its application for exemption from the duties:

• For the criterion in subsections 8(7)(a) and 10(8)(a) (the like goods criterion): SRB does not sell any of its products in Australia, only overseas.

• For the criterion in subsections 8(7)(e) and 10(8)(d) (the samples criterion): SRB sells aluminium extrusions only in countries other than Australia. The exemption goods that it imports to Australia are samples for its non-Australian customers and are not sold in Australia.

3.2 Exemption inquiry

The Commission sought further information from SRB concerning the grounds raised in its letter of 2 March 2015, in order to be satisfied that the grounds for initiation had been met. The additional information was accepted, along with SRB’s letter, as together comprising an application for an exemption from the duties. On 11 June 2015, the Commissioner initiated this exemption inquiry EX0038 by publishing ADN 2015/65. ADN 2015/65 outlined the procedures to be followed during the exemption inquiry. The Commission invited interested parties to make submissions to the inquiry by 1 July 2015. Australian industry members were also asked to respond to SRB’s application by completing the ‘Response to Exemption Application’ questionnaire (the questionnaire). Completed responses to the questionnaire were received from the following industry members:

• Capral Limited (Capral), response dated 7 July 2015;

• G James Extrusion Co Pty Ltd (GJE), response dated 11 August 2015;

• Independent Extrusions Ltd (INEX), response dated 9 July 2015.

SRB responded in a submission dated 20 August 2015 to issues raised by Australian industry members in their completed responses. Capral made a separate submission dated 6 September 2015. Copies of all relevant non-confidential documents associated with this exemption inquiry EX0038 can be found on the public record on the Commission’s website at www.adcommission.gov.au.

PUBLIC RECORD 10

3.3 Goods subject to the application for exemption

The goods subject to the application for exemption are (the exemption goods):

• Spartan Sideform Extrusions with a length of no greater than 1 metre; and

• Spartan Sideform Extensions (an extruded aluminium accessory that can be used with Spartan Sideform Extrusions).

Further information concerning the exemption goods

The Commission understands that the exemption goods are used to produce precast concrete panels for use in construction. The exemption goods are the subject of Australian and international patents. The applicant provided the documentation for the relevant Australian patent (PCT/AU2005/000738) which describes the exemption goods in the following terms:7

Factory casting, or precasting, of concrete panels usually takes place on a large steel platform (casting bed) in a precast yard. The sizes and shapes of the panels are determined by sideforms that are arranged on the platform, and concrete is poured into the space defined by the sideforms. When the concrete is dry the panels are transported for installation.

…

The present invention [i.e. the exemption goods] is a composite concrete sideform system comprising a substantially rigid longitudinally extending wall. The wall has a first face to define the edge profile of a concrete panel poured onto a casting bed bounded by the wall. A second face opposite the first face has formations to enable the wall to be secured to the casting bed. The wall comprises a longitudinally extending frame having formations along at least one of its edges to removably receive a removable longitudinal insert to provide a shape along an edge of the concrete panel.

…

3.4 Assessment of the relevant exemption criteria in this report

SRB seeks an exemption under two separate exemption criteria, the like goods criterion in subsections 8(7)(a) and 10(8)(a) and the samples criterion in subsections 8(7)(e) and 10(8)(d). The Commission’s assessment of the application under the like goods criterion is set out in section 4 of this report and the Commission’s assessment of the application under the samples criterion is set out in section 5.

7 Australian Patent PCT/AU2005/000738 at pages 1 and 3 refers.

PUBLIC RECORD 11

4. Like goods criterion 4.1 Claims made in the application

In support of its claim that like or directly competitive goods are not offered for sale in Australia, SRB provided the following evidence and information:

• SRB would not offer the exemption goods in Australia because it is precluded from doing so under the terms of the Australian patent for the exemption goods.

In support of its claim that like goods offered for sale in Australia are not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade, the applicant provided the following evidence and information:

• The Australian producer of like goods produces those like goods for supply only to the holder of the Australian patent rights, hence the Australian producer does not offer those like goods to all purchasers on equal terms under like conditions having regard to the custom and usage of trade.

4.2 Legislative requirements for an exemption under the like goods criterion

SRB has applied for an exemption under subsections 8(7)(a) and 10(8)(a) of the Dumping Duty Act. Subsection 8(7) provides:

The Minister may, by notice in writing, exempt goods from interim dumping duty and dumping duty if he or she is satisfied:

(a) that like or directly competitive goods are not offered for sale in Australia to all purchasers on equal terms under like conditions having regard to the custom and usage of trade;

…

Subsection 10(8) provides: The Minister may, by notice in writing, exempt goods from interim countervailing duty or countervailing duty if he or she is satisfied:

(a) that like or directly competitive goods are not offered for sale in Australia to all purchasers on equal terms under like conditions having regard to the custom and usage of trade;

…

SRB claims that the like goods criterion is satisfied, namely that like or directly competitive goods are not offered for sale in Australia to all purchasers on equal terms under like conditions having regard to the custom and usage of trade. SRB requests that the Parliamentary Secretary exercise the discretion arising from satisfaction of the like goods criterion to exempt the exemption goods from the duties.

PUBLIC RECORD 12

4.3 Definition of “like or directly competitive goods”

Like goods

The term “like goods” is defined in subsection 269T(1) of the Customs Act 1901 (the Customs Act). Section 6 of the Dumping Duty Act provides that the Customs Act is incorporated and shall be read as one with the Dumping Duty Act. Accordingly, the definition of “like goods” in the Customs Act is applicable to the Commission’s assessment of whether goods offered for sale in Australia are ‘like goods’ to the exemption goods under subsections 8(7)(a) and 10(8)(a) of the Dumping Duty Act.

Subsection 269T(1) of the Customs Act defines “like goods” as: Goods that are identical in all respects to the goods under consideration or that, although not alike in all respects to the goods under consideration, have characteristics closely resembling those of the goods under consideration.

Chapter 2 of the Commission’s Dumping and Subsidy Manual8 embodies the Commission’s established policy and practice in relation to like goods. Where two goods are identical they are automatically like goods, but where two goods are not alike in all respects the Commission will assess whether they have characteristics closely resembling each other including assessing their physical likeness, commercial likeness, functional likeness and production likeness.

Directly competitive goods

The term “directly competitive” is not defined in the Dumping Duty Act or the Customs Act and has not been the subject of judicial consideration by Australian courts. Accordingly, assistance in understanding this term can be derived by having recourse to relevant dictionary definitions and case law. Case law suggests an assessment of a “direct” relationship is a question of fact and degree.9 Drawing on the Macquarie Dictionary and case law, the Commission defines “directly” as:

excluding that which is indirect or remote;10 absolutely; exactly; precisely.

The Macquarie Dictionary also defines “competitive” as: of, relating to, involving, or decided by competition; and having a feature comparable or superior to that of a commercial rival.

The phrase “directly competitive” can therefore be taken to refer to goods with comparable features that rival each other in a commercial market. The assessment will be one of fact and degree, and the goods will not merely remotely or indirectly compete.

8 Available on the Commission’s website at www.adcommission.gov.au. 9 Adelaide Development Co Pty Ltd v Corporation of the City of Adelaide and Anor (1991) 56 SASR 497 at [45]. 10 ibid.

PUBLIC RECORD 13

Alternatives to satisfying subsections 8(7)(a) and 10(8)(a) of the Dumping Duty Act The exemption provisions in subsections 8(7)(a) and 10(8)(a) specifically provide for exemptions where either like goods or directly competitive goods are not offered for sale in Australia. It is not necessary to be satisfied that there are both like goods and directly competitive goods for sale in Australia in order to deny the application for an exemption. It is sufficient for there to be either like goods or directly competitive goods for sale in Australia for the requirements of the exemption not to be met. If there are no like or directly competitive goods offered for sale in Australia then the like goods criterion will be satisfied. If there are like or directly competitive goods offered for sale in Australia, then it is necessary to consider whether the like or directly competitive goods offered for sale in Australia are offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade.

4.4 Definition of “custom and usage of trade”

Although domestically produced goods may be “like or directly competitive goods”, the Parliamentary Secretary may still grant an exemption from the duties in circumstances where the “like or directly competitive goods” offered for sale in Australia are not offered to all purchasers on equal terms under like conditions having regard to the “custom and usage of trade”. The term “custom and usage of trade” is not defined in the Dumping Duty Act or the Customs Act. The Macquarie Dictionary defines “custom” as:

a habitual practice; the usual way of acting in given circumstance; and habits or usages collectively; convention.

The Macquarie Dictionary defines “usage” as: customary way of doing; a custom or practice; the body of rules or customs followed by a particular set of people; usual conduct or behaviour.

As custom can only be inferred from a large number of individual acts, the existence of a custom and usage of trade must involve:

the multiplication or aggregation of a great number of particular instances; but these instances must not be miscellaneous in character, but must have a principle of unity running through their variety, and that unity must show a certain course of business and an established understanding respecting it.11

Custom or usage of trade is a term used in common law in the interpretation of implied terms in contracts within a particular trade or industry.12 When considering what is “custom or trade usage”, the courts have concluded that custom or usage was established mercantile usage or professional practice.13 Evidence of actual market practices was crucial to the existence of a custom or usage however universal acceptance was not necessary.14

11 Anderson v Wadey (1899) 20 N.S.W.R. 412 at p. 417. 12 Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd (1987) 10 NSWLR 468. 13 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 440. 14 Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Ltd (1986) 160 CLR 226.

PUBLIC RECORD 14

4.5 Offer for sale in Australia of ‘like’ or ‘directly competitive’ goods

SRB’s claims SRB asserted that ‘like’ or ‘directly competitive’ goods are not offered for sale in Australia for the following reasons:

• The like goods criterion was met because SRB did not and would not offer the exemption goods for sale in Australia. SRB did not and would not offer the exemption goods for sale in Australia because it was not able to do so under current patent arrangements in Australia (application at page 2 refers).

• The exemption goods could not be purchased from any Australian producers because they are subject to a patent (application at page 3 refers).

• There are no similar or competing products to the exemption goods in Australia because any party that supplied such goods would infringe current Australian patent rights (SRB submission, page 4 refers).

• Any Australian production of the exemption goods would be an exercise in futility because the exemption goods are a single component of a composite product (SRB submission, pages 4-5 refer).

Australian industry’s response Capral advised that it is the existing Australian manufacturer of Spartan formwork, indicating that it recently sold these to ITW Australia Pty Ltd (ITW). Capral confirmed that ITW has exclusive manufacturing and distribution rights for Spartan formwork in Australia. Capral provided the Commission with a copy of several invoices for its sales of Spartan formwork to ITW within the previous 12 months to support this claim.15 Capral indicated that it owns the physical dies used to produce Spartan formwork. Capral explained that ITW owns the rights to the shape that is able to be extruded from those dies, and that Capral is unable to sell the finished extrusions to anyone other than ITW. Capral indicated that this is not unusual, stating that the majority of extrusion profiles are proprietary shapes. Capral observed that ITW subsequently sell the finished extrusions to third parties, and that therefore the exemption goods are offered for sale in Australia by ITW to all purchasers on equal terms under like conditions, having regard to the custom and usage of trade. INEX opposes the exemption request. INEX claimed that the goods it produces bear a close resemblance to the imported product and compete in the domestic Australian market. INEX also stated that it has the technology and equipment to produce goods that are like to the exemption goods. GJE opposes the exemption application. It indicated that it supplies a similarly designed product with similar shape and function to one of its own customers. GJE stated that it is capable of extruding aluminium profiles to the required dimensions, standards and tolerances required for goods that are like to the exemption goods.

15 Confidential Attachment 4 refers.

PUBLIC RECORD 15

4.6 The Commission’s assessment – like or directly competitive goods offered for sale in Australia

4.6.1 Finding

The Commission finds that goods that are like to the exemption goods are offered for sale in Australia.

4.6.2 Patents and the like goods test

SRB made a number of claims in support of its application that concerned Australian patent rights to the exemption goods. These claims included that: Australian producers could not produce like goods because to do so would infringe the rights of Australian patent holders; and SRB could not supply in Australia any of the exemption goods it imported because it does not currently hold rights to do so under current Australian patent arrangements. The Commission considers that patent rights have limited relevance to an assessment under the like goods criterion.

4.6.3 Like or directly competitive goods offered for sale in Australia

The Commission has examined the evidence and information provided by the applicant and the Australian industry concerning whether like or directly competitive goods to the exemption goods are offered for sale in Australia. The Commission notes that the original investigation considered the various forms of aluminium extrusions which can be produced in the context of assessing whether the Australian industry produced goods which were “like” to the goods the subject of the investigation. Interested parties then argued that the Australian industry does not, or cannot, supply certain models of aluminium extrusion that would fit within the goods description. It was also noted that there are many thousands of potential individual models that can fall within the goods definition; these can be delineated on the basis of alloy, finish, shape, size, wall thickness, weight, quality, and combinations thereof. However section 3.6 of Trade Remedies Branch Report No. 148 ultimately concluded that:

the Australian produced products, while not identical, have characteristics closely resembling the imported goods. These findings are not premised on a comparison of individual imported and domestically produced models, but rather represent a global consideration.

The Commission observes that the goods sold by ITW and the exemption goods are almost identical in every respect – but for the commercial arrangements in place that prevent the exemption goods being sold in Australia, they would be sold in the same shapes for the same purposes to the same types of customers. The production process is likely to be very similar, subject to the availability of the relevant die through which the aluminium is extruded. However, the exemption goods are specifically identified as being short lengths (of no greater than 1 metre), whereas the goods sold by ITW are in commercial lengths (5.8 metres for the sideform extrusions). The Commission therefore considers the exemption goods to be like to the goods produced in Australia. SRB initially claimed that the like goods criterion was met because SRB did not and would not offer the exemption goods for sale in Australia (the application at page 2 refers). The Commission notes that this claim, even if correct, does not address the question as to whether goods that are like to the exemption goods are offered for sale in Australia, possibly by another party.

PUBLIC RECORD 16

SRB also claimed that, due to restrictions arising from current Australian patent rights, like goods cannot be purchased from any Australian producers (application at page 3 refers) and that there are no similar or competing products to the exemption goods in Australia (SRB submission, page 4 refers). In this respect the Commission notes the following supply of like goods in Australia:

• ITW, the holder of the Australian patent rights, offers goods that are like to the exemption goods for sale in Australia through a subsidiary, which the applicant admits (SRB submission, page 2).

• Capral produces and supplies goods to ITW in Australia (and these goods are like to the exemption goods).

• INEX and GJE produce and offer aluminium extrusions for sale in Australia. GJE advised that it supplies a product with a similar function to the exemption goods. The Commission considers that these are also like goods, notwithstanding that such goods have not taken all of the essential features of the exemption goods (so as to not infringe the Australian patent rights held by ITW).

The Commission does not accept SRB’s claim that any Australian production of the exemption goods would be an exercise in futility because the exemption goods are a single component of a composite product (SRB submission, pages 4-5). The Commission notes that ITW have the goods made and also supply the composite product. In any event, as set out in REP 148, the measures are intended to apply to aluminium extrusions that are parts intended for use in intermediate or finished products (Table 2 above refers).

4.6.4 Conclusion

On the basis of the above, the Commission finds that goods that are like to the exemption goods are offered for sale in Australia. Accordingly, it is necessary to assess whether the like goods offered for sale in Australia are offered for sale to all purchasers under like conditions having regard to the custom and usage of trade (see following sections 4.7 and 4.8).

4.7 To all purchasers on equal terms under like conditions having regard to the custom and usage of trade

SRB’s claims SRB submitted that like goods cannot be offered on competitive terms in Australia because the patent confers a monopoly on goods that are like to the exemption goods. SRB submitted that Capral cannot offer like goods to all purchasers on equal (or indeed any) terms having regard to the custom and usage of trade. Capral can only offer like goods to the patent holder, ITW, because it would be an infringement of patent rights if Capral offered like goods to others (on any terms). On those bases, SRB claims that like or directly competitive goods are not offered for sale in Australia to all purchasers on equal terms under like conditions. Australian industry’s response In its questionnaire response Capral provided several invoices that Capral claimed demonstrated that like goods are available to all purchasers on equal terms under like conditions (Capral questionnaire response, Confidential Attachment D).

PUBLIC RECORD 17

In its 6 September 2015 submission Capral observed that the terms of the Dumping Duty Act do not specify that the producer of the like goods must sell them to all purchasers, only that the like goods are offered to all purchasers. ITW purchases the like goods from Capral and sells them into the Australian market through its subsidiary, Reid Pty Ltd. Capral observed that ITW advertises the like goods on the internet and that SRB had not claimed that the like goods produced by Capral and subsequently sold through Reid Pty Ltd are not freely available in Australia.

4.8 The Commission’s assessment - to all purchasers on equal terms under like conditions having regard to the custom and usage of trade

4.8.1 Finding

The Commission finds that there is no basis to be satisfied that the like goods offered for sale in Australia are not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade.

4.8.2 To purchasers on equal terms under like conditions having regard to the custom and usage of trade

The Commission has examined the evidence and information provided by the applicant and the Australian industry, and considers that there is no basis to be satisfied that the like goods offered for sale in Australia are not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade. The Commission does not consider that the invoices provided by Capral in Confidential Attachment D to its questionnaire response demonstrate that the like goods offered in Australia are available to all purchasers on equal terms under like conditions. The invoices demonstrate that the goods produced by Capral are sold to ITW, and provide no evidence concerning how ITW subsequently treats the goods. The Commission does not accept SRB’s claim that the like goods criterion is satisfied because the Australian producer, Capral, cannot offer like goods to all purchasers on equal terms having regard to the custom and usage of trade. Capral is correct in its submission that the like goods criterion does not specify that the producer (or any other particular entity) does not offer like goods to all purchasers on equal terms under like conditions having regard to the custom and usage of trade. It is clear that ITW (through a subsidiary) subsequently sells the like goods that Capral has extruded on its behalf in the Australian market. SRB has not claimed or provided any basis to be satisfied that the like goods sold by ITW are not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade. ITW advertises the like goods on an internet site16 and there is no suggestion, and no basis to be satisfied, that these are not available to all purchasers on equal terms under like conditions having regard to the custom and usage of trade. In any event, SRB has not claimed or provided any evidence demonstrating that like goods offered by other Australian producers of aluminium extrusions were not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade.

16 www.reid.com.au refers.

PUBLIC RECORD 18

4.8.3 Conclusion

The Commission finds that there is no basis to be satisfied that the like goods offered for sale in Australia are not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade. Accordingly the like goods criterion for granting an exemption is not satisfied.

PUBLIC RECORD 19

5. Samples criterion 5.1 Claims made in the application

In support of its claim that the exemption goods are articles of merchandise, to be used as samples for the sale of similar goods, SRB provided the following evidence and information:

• SRB pointed to patents concerning the exemption goods and noted that SRB is constrained from selling the exemption goods in Australia under the terms of those patents.

• SRB provided documentation relating to a recent shipment of the exemption goods that expressly referred to samples of the exemption goods.

5.2 Legislative requirements for an exemption under the samples criterion

SRB has applied for an exemption under subsections 8(7)(e) and 10(8)(d) of the Dumping Duty Act. Subsection 8(7) provides:

The Minister may, by notice in writing, exempt goods from interim dumping duty and dumping duty if he or she is satisfied:

. . .

(e) that the goods, being articles of merchandise, are for use as samples for the sale of similar goods.

Subsection 10(8) provides:

The Minister may, by notice in writing, exempt goods from interim countervailing duty or countervailing duty if he or she is satisfied:

...

(d) that the goods, being articles of merchandise, are for use as samples for the sale of similar goods.

SRB claims that the samples criterion is satisfied, namely that the exemption goods, being articles of merchandise, are for use as samples for the sale of similar goods. SRB requests that the Parliamentary Secretary exercise the discretion arising from satisfaction of the samples criterion to exempt the exemption goods from the duties.

5.3 Interpretation of “the goods, being articles of merchandise, are for use as samples for the sale of similar goods”

Articles of Merchandise The term “merchandise” is not defined in the Dumping Duty Act and has not been the subject of judicial consideration by Australian courts in this context. Nor is it defined in the General Agreement on Tariffs and Trade 1994 or the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994. The Macquarie Dictionary defines “merchandise” as:

goods; commodities; especially manufactured goods.

PUBLIC RECORD 20

The phrase “articles of merchandise” can therefore be taken to refer to items of goods or commodities, especially manufactured goods.

For use as samples for the sale of similar goods The term “samples” is not defined in the Dumping Duty Act and has not been judicially considered by Australian courts in this context. It also does not appear in the General Agreement on Tariffs and Trade 1994 or the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994. The Macquarie Dictionary defines “sample” as:

a small part of anything or one of a number, intended to show the quality, style, etc., of the whole; a specimen.

Applying this definition, if the individual items of goods or commodities are being imported into Australia for the purpose of showing to a purchaser the quality or style of those goods for the sale of similar goods, then such goods are articles of merchandise that are for use as samples. The Commission’s policy is to interpret “sample” consistently with this definition. Chapter 27 of the Commission’s Dumping and Subsidy Manual, which provides that goods may be exempt from interim dumping duty and dumping duty if the goods are samples for the purposes of promotion, embodies the Commission’s established policy and practice in relation to sampling.

5.4 Articles of merchandise, for use as samples for the sale of similar goods

SRB’s claims SRB noted that it is based in South Australia but it only holds patent rights to supply, and does supply, the exemption goods and similar goods to parties outside Australia. The Commission understands that SRB wishes to import 1 metre samples of Spartan Sideform Extrusions into Australia to provide to prospective customers outside Australia with a view to selling those offshore prospective customers full-length sideforms. Full-length sideforms sold to SRB’s customers would be supplied directly from a Chinese producer. SRB argued that current Australian patent arrangements for the exemption goods meant that it was not able to supply the exemption goods in Australia. SRB noted that the Spartan Sideform Extrusions are sold in 5.8 metre lengths due to the size and scale of precast concrete panels (being typically 3 metres wide and in heights of 7 to 12 metres). The Spartan Sideform Extensions are sold as an accessory and in much shorter lengths again (typically no wider than 150 millimetres). SRB clarified that the Spartan Sideform Extrusions that it wishes to be exempted from the measures are those with a length of no greater than 1 metre. As there is no practical commercial means of using such short lengths to produce precast panels, SRB argues that these short lengths could have no purpose other than for use as samples.

PUBLIC RECORD 21

Australian industry’s response Capral expressed concern that, as ITW has recently stopped purchasing Spartan sideforms from Capral, future shipments of the exemption goods are likely to be for commercial sale rather than as samples. Capral submitted that:

To grant a broad exemption for all goods on the basis of their use as samples opens the anti-dumping system to potential abuse, as it would be very difficult for the Department of Immigration and Border Protection to assess at the time of importation the intended use that particular goods will ultimately be put. It is our opinion that the samples exemption under the Dumping Duty Act should only be granted in relation to a particular shipment of goods prior to their importation, following an assessment by the Anti-Dumping Commission that it is satisfied that the goods in that particular shipment are only for use as samples for the sale of similar goods.17

5.5 The Commission’s assessment – articles of merchandise, for use as samples for the sale of similar goods

5.5.1 Finding

The Commission finds that the exemption goods are articles of merchandise, for use as samples for the sale of similar goods. Accordingly the criterion in subsections 8(7)(e) and 10(8)(d) of the Dumping Duty Act for granting an exemption is satisfied.

5.5.2 Articles of merchandise

The Commission considers that the exemption goods are articles of merchandise, namely they are manufactured goods. No interested party opposed the exemption on the basis that the exemption goods are not articles of merchandise.

5.5.3 For use as samples for the sale of similar goods

The Commission has examined the evidence and information provided by the applicant and the Australian industry and considers that the exemption goods are for use as samples for the sale of similar goods. Apart from their length, the exemption goods are identical to the commercial lengths of the goods which SRB proposes to sell to customers outside of Australia. The exemption goods would provide a prospective customer with an indication of the shape, purpose and functionality of the commercially available goods, and in this respect the Commission considers that the exemption goods are similar to the goods of which they are purportedly a sample. The Commission accepts that there is little prospect of short lengths of Spartan Sideform Extrusions (no greater than 1 metre) being used for commercial purposes other than as samples. Given that SRB supplies offshore customers from its Australian base, the Commission understands that SRB will wish to frequently import small volumes of the exemption goods as samples for subsequent export to its prospective customers outside Australia. The Commission also anticipates that those prospective customers may subsequently return the samples to SRB. Returning those samples will likely result in the same samples being subject to anti-dumping duties each time they are returned to SRB in Australia.

17 Capral submission, dated 6 September 2015.

PUBLIC RECORD 22

The Commission notes Capral’s concern that granting the exemption to SRB on the basis of the exemption goods’ use as samples has the potential to open the anti-dumping system to abuse, given the difficulties associated with examining the intended use of the exemption goods. The Commission also notes Capral’s view that the exemption under the samples criterion should only be granted in relation to a particular shipment of goods prior to its importation, and that the exemption should only be granted when the status of the shipment as a sample has been confirmed following an assessment by the Commission. The Commission observes that an exemption may be granted if the statutory criterion referred to above is satisfied. The Commission considers it likely that a party may reasonably anticipate regular importations of a small volume of sample goods as part of its normal operations. The intended use of the goods and the frequency with which they are imported are not relevant to the consideration of whether to exercise the discretion to grant an exemption. The Commission considers that drafting the exemption instrument narrowly should avoid the exemption being used to avoid the duties more generally. The Commission notes SRB’s statements concerning the current patent arrangements in Australia. However, as noted elsewhere in this report, the Commission does not accept that patent arrangements are a relevant substitute for anti-dumping measures.18 For completeness, while the Commission accepts that SRB may be able to come to a commercial agreement with ITW to purchase short lengths for use as samples, the Commission recognises that these short lengths would not be produced by the ultimate manufacturer of SRB’s commercial (i.e. 5.8 metre) lengths and may therefore not be true samples. The Commission notes that SRB’s commercial lengths are manufactured in China, and are shipped directly to the customer; it is therefore appropriate that the samples are produced by the same manufacturer. The Commission is therefore satisfied that it is appropriate to grant an exemption from the duties under subsections 8(7)(e) and 10(8)(d) for the exemption goods on the basis that they are for use as samples for the sale of similar goods. The Commission proposes that the exemption granted precisely defines the exemption goods by their trade name, is restricted to lengths of Spartan Sideform Extrusions no greater than 1 metre and be expressly restricted to samples imported by or on behalf of SRB. The Commission considers that this narrow exemption will ensure that the exemption is not applied to goods that are not for use as samples.

5.5.4 Conclusion

Accordingly, the Commission finds that the exemption goods are articles of merchandise, for use as samples for the sale of similar goods.

18 Section 4.6.2 refers.

PUBLIC RECORD 23

6. Recommendation Recommendation on the like goods criterion

Based on the Commission’s examination of the application and submissions made to the inquiry, the Commissioner considers that:

• like or directly competitive goods to the exemption goods are offered for sale in Australia; and

• there is no basis to be satisfied that such goods are not offered to all purchasers on equal terms under like conditions having regard to the custom and usage of trade.

Accordingly, the Commissioner recommends that the Parliamentary Secretary not exempt the exemption goods from the duties under subsections 8(7)(a) and 10(8)(a) of the Dumping Duty Act.

Recommendation on the samples criterion and exercise of the discretion

Based on the Commission’s examination of the applications and submissions made to the inquiry, the Commissioner considers that the exemption goods are articles of merchandise, for use as samples for the sale of similar goods. Accordingly, the Commissioner recommends that the Parliamentary Secretary exercise their discretion to exempt the exemption goods, being Spartan Sideform Extrusions with a length of no greater than 1 metre or Spartan Sideform Extensions (an extruded aluminium accessory that can be used with Spartan Sideform Extrusions), from interim dumping duty and dumping duty in accordance with subsection 8(7)(e) of the Dumping Duty Act, and interim countervailing duty and countervailing duty under subsection 10(8)(d) of the Dumping Duty Act. The Commissioner’s view is that, providing that the description of the exemption goods is sufficiently precise (both with respect to the goods and the identity of the importer), the risk of the exemption being applied to goods that are not for use as samples is very low. The Commissioner therefore recommends that the exemption instrument ensures that only those exemption goods imported by, or on behalf of, SRB for use as samples are exempt from the anti-dumping measures. The proposed exemption instrument is contained at Attachment 7.

6.1 Effective date of exemption The date of effect of an exemption is at the discretion of the Parliamentary Secretary subject to subsections 8(8A) and 10(9A). Subsections 8(8A) and 10(9A) provide that, if the exemption is given because of an application for exemption (as is the case in this inquiry), the date of effect must not be earlier than the day the application is made. The Commission’s normal policy is to recommend that an exemption has effect from the date of the application. SRB’s application was made on 2 March 2015. However, there were delays in the applicant providing sufficient information for the inquiry be initiated. Given these delays, the Commissioner recommends that the exemption be backdated to the date of initiation, 11 June 2015.

PUBLIC RECORD 24

7. Attachments Attachments Confidentiality Title EPR identifier

Attachment 1 Not confidential Exemption Application EX0038/002

Attachment 2 Not confidential Australian industry questionnaire response, INEX (Public Record version)

EX0038/003

Attachment 3 Not confidential Australian industry questionnaire response, Capral (Public Record version)

EX0038/004

Attachment 4 Not confidential Australian industry questionnaire response, GJE

EX0038/005

Attachment 5 Not confidential Applicant’s submission in response to industry questionnaire responses

EX0038/006

Attachment 6 Not confidential Australian industry submission, Capral EX0038/007

Attachment 7 Not confidential Instrument of Exemption