Do Free Trade Agreements Protect Me From Dumping Duty?

What is dumping duty and why does it exist? 

Dumping duty can be imposed by the Australian government to protect local industries from foreign companies looking to sell their like goods on the Australian market at a lower price than that of their own domestic market (normal value). The dumping duties can be an ad valorem duty, fixed duty, floor price, or a combination of fixed and variable duty.

Dumping is not prohibited under international trade agreements and it is not illegal.

However, broadly speaking, the World Trade Organisation’s (WTO) Anti-Dumping Agreement allows governments to act against dumping where there is material injury to the competing domestic industry in the importing country.

What is countervailing duty?

Countervailing (or anti-subsidy) duty can be imposed by the Australian government when an overseas government is giving the exporting company either a production subsidy or an export subsidy – current trade wars spring to mind. The countervailing duty can be an ad valorem duty or a fixed amount per unit, or a combination of the two.

The WTO Anti-Dumping Agreement does two things in relation to subsidies: it disciplines their use and it regulates the actions countries can take to counter the effects of subsidies.

Should you be aware?

So with the recent proliferation of free trade agreements (FTAs) do you as an importer need to worry about Australian Border Force imposing dumping &/or countervailing duties on goods from a country with which Australia has entered into an agreement? The short answer is ‘yes’ depending on the commodity you are importing. For a complete list of commodities affected click the link below.

https://adcommission.gov.au/measures/Pages/default.aspx

 

Whilst FTAs are designed to reduce the barriers of trade between two or more countries, they do not absolve importers from the responsibility of ensuring that their imported goods are purchased at ‘normal value’ nor from having to pay dumping &/or countervailing duties if they are not. The implications of neglecting to grasp these issues could represent a significant financial detriment to your business.

If you would like a free assurance appraisal of your imports, or if you would like to know more, speak to your ITM representative about how we can explore duty and risk minimisation possibilities for your business.

 

Michael Grech
Global Supply Chain Specialist