In the trade war between the US and China it is the Chinese that are painted by the US as not playing by the rules. In an ironic turn of events, the Australian Government is now investigating claims that in response to the US China trade war, US suppliers of plastics are engaging in unfair trade practices that is causing harm to Australian manufacturers.
The Australian Anti-Dumping Commission (ADC) has commenced an investigation into the alleged dumping of high density polyethylene exported to Australia from the US, Singapore, Korea and Thailand. The claim is that the HDPE is being sold to Australian customers at dumped prices, being prices that are less than the price at which the same goods are sold in the exporter’s domestic market. The Australian industry is seeking dumping duties of 28% on HDPE exported from the US.
So what has caused US exporters to allegedly dump goods in Australia? The Australian industry claims that this is a fall out from the US China trade war. As part of the trade dispute China has increased tariffs on certain US HDPE to 25%. Naturally this causes a decrease in Chinese demand for US HDPE. At the same time, US levels of production of HDPE increased due to new production facilities coming online. Lower demand and increased production means lower prices.
The Australian industry claims that US suppliers with excess stock are targeting the Australian market as the Australia US Free Trade Agreement both lowers the costs of US imports (no 5% duty) plus there are less non-tariff barriers.
It is also alleged that the imports are not merely coming directly from the US. Some US HDPE is claimed to be exported first to Singapore where it is repackaged for export to other markets. It is alleged that US exports to Singapore have increased by 300% . It is not known whether Singaporean exporters are hiding the US origin of goods when repackaging and exporting to third countries.
We are aware of Chinese exporters seeking to have goods repackaged in Australia for export to the US without disclosure of the Chinese origin of the goods.
It will not be surprising if the claims of the Australian industry prove to be true. Raising tariffs to 25% will distort trade flows from China to other countries. For Australian importers this has resulted in lower prices but has allegedly cause loss to the Australian manufacturers. If dumping duties are imposed US exporters will need to look for another market for HDPE or hope that President Trump can quickly resolve the trade war.
What to do Now
Supply contracts – Australian importers need to manage the risk of massive dumping duties being imposed with very little notice. This can mean not committing to long term supply contracts or at least having the right to terminate those contracts if dumping duties are imposed.
Customs Compliance – Importers should also obtain assurances as to the origin of goods. If dumping duties are imposed there will be even greater motivation for suppliers to hide the true origin of any goods subject to those duties. Importers need to consider what actual proof they have as to the origin of the goods. As the importer of record, it is the importer that will be liable for any underpaid dumping duty. The Australian Border Force is becoming much more sophisticated in its monitoring of trade flows, increasing its ability to detect likely false origin claims.
Dumping investigation – Exporters of HDPE from the US, Singapore, Thailand and Korea need to properly manage the current Australian HDPE dumping investigation. For most exporters this will mean lodging exporter questionnaires and submissions regarding the claims made by the Australian industry. If this is not done, the exporter may be treated as uncooperative and be subject to the highest possible dumping duty rate. Importers should also consider lodging importer questionnaires and challenging the claims that any dumping has caused loss to the Australian industry.
Questionnaires and submissions are due by 31 July 2019. In respect of questionnaires, this is a very strict deadline.
Please contact us if you need assistance with contractual arrangements, trade compliance or the dumping investigation.
