Application for review of a Ministerial decision · 9.1.3 On 21 January 2019, the Verification...

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Application for review of a Ministerial decision

Customs Act 1901 s 269ZZE This is the approved1 form for applications made to the Anti-Dumping Review Panel (ADRP) on or after 20 May 2019 for a review of a reviewable decision of the Minister (or his or her Parliamentary Secretary). Any interested party2 may lodge an application for review to the ADRP of a review of a Ministerial decision. All sections of the application form must be completed unless otherwise expressly stated in this form. Time Applications must be made within 30 days after public notice of the reviewable decision is first published. Conferences The ADRP may request that you or your representative attend a conference for the purpose of obtaining further information in relation to your application or the review. The conference may be requested any time after the ADRP receives the application for review. Failure to attend this conference without reasonable excuse may lead to your application being rejected. See the ADRP website for more information. Further application information You or your representative may be asked by the Member to provide further information in relation to your answers provided to questions 9, 10, 11 and/or 12 of this application form (s269ZZG(1)). See the ADRP website for more information. Withdrawal You may withdraw your application at any time, by completing the withdrawal form on the ADRP website.

1 By the Senior Member of the Anti-Dumping Review Panel under section 269ZY Customs Act 1901. 2 As defined in section 269ZX Customs Act 1901.

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Contact If you have any questions about what is required in an application refer to the ADRP website. You can also call the ADRP Secretariat on (02) 6276 1781 or email [email protected].

mailto:[email protected]

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1. Applicant’s details

Applicant’s name: Tai Shan City Kam Kiu Aluminium Extrusion Co., Ltd and its related bodies corporate: • Kam Kiu Aluminium Products Sdn. Bhd, • Kam Kiu (Hong Kong) Limited; and • Kam Kiu (Australia) Pty Ltd Address: Shiqiao Industrial Zone, Dajiang County, Taishan City, Guangdong Province, People’s Republic of China Type of entity (trade union, corporation, government etc.): Corporation

2. Contact person for applicant

Full name: Ada Ye Position: General Manager, Kam Kiu (Australia) Pty Ltd Email address: [email protected] Telephone number: +61 (3) 9889 4899 Mobile number: +61 400289321 Fax: +61 (3) 9889 4891

3. Set out the basis on which the applicant considers it is an interested party:

• Tai Shan City Kam Kiu Aluminium Extrusion Co., Ltd (Kam Kiu) produces aluminium

extrusions which are exported to Australia from the People's Republic of China, and which are the subject of anti-dumping and countervailing measures in the reviewable decision.

• Kam Kiu Aluminium Products Sdn Bhd is a related corporation of Kam Kiu, and was, during part of the period under review, the company through which products manufactured by Kam Kiu were exported to Australia.

• Kam Kiu (Hong Kong) Limited is also a related corporation of Kam Kiu, and is now the

company through which products manufactured by Kam Kiu are exported to Australia.

• Kam Kiu (Australia) Pty Ltd is another related corporation of Kam Kiu, and is involved in the sale of the goods exported to Australia to Australian end users.

Accordingly each of the applicants is affected by the dumping and countervailing measures applying to Kam Kiu’s exports which were revised in the reviewable decision.

PART A: APPLICANT INFORMATION

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4. Is the applicant represented?

Yes ☒ No ☐

If the application is being submitted by someone other than the applicant, please complete the attached representative’s authority section at the end of this form.

*It is the applicant’s responsibility to notify the ADRP Secretariat if the nominated representative changes or if the applicant become self-represented during a review.*

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5. Indicate the section(s) of the Customs Act 1901 the reviewable decision was made under:

☐Subsection 269TG(1) or (2) – decision of the Minister to publish a dumping duty notice

☐Subsection 269TH(1) or (2) – decision of the Minister to publish a third country dumping duty notice

☐Subsection 269TJ(1) or (2) – decision of the Minister to publish a countervailing duty notice

☐Subsection 269TK(1) or (2) decision of the Minister to publish a third country countervailing duty notice

☐Subsection 269TL(1) – decision of the Minister not to publish duty notice

☒Subsection 269ZDB(1) – decision of the Minister following a review of anti-dumping measures

☐Subsection 269ZDBH(1) – decision of the Minister following an anti-circumvention enquiry

☐Subsection 269ZHG(1) – decision of the Minister in relation to the continuation of anti-dumping measures

6. Provide a full description of the goods which were the subject of the

reviewable decision:

This reviewable decision concerned certain aluminium extrusions exported from China. The goods are described in Final Report 482 as follows:

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.

7. Provide the tariff classifications/statistical codes of the imported goods:

The goods are currently classified to the following tariff subheadings and statistical codes in Schedule 3 of the Customs Tariff Act 1995 (Cth): 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

PART B: REVIEWABLE DECISION TO WHICH THIS APPLICATION RELATES

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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

8. Anti-Dumping Notice details:

Anti-Dumping Notice (ADN) number: 2019/44 Date ADN was published: 8 May 2019

*Attach a copy of the notice of the reviewable decision (as published on the Anti-Dumping Commission’s website) to the application*

A copy of the notice of reviewable decision is attached as Attachment 1.

If this application contains confidential or commercially sensitive information, the applicant must provide a non-confidential version of the application that contains sufficient detail to give other interested parties a clear and reasonable understanding of the information being put forward. Confidential or commercially sensitive information must be marked ‘CONFIDENTIAL’ (bold, capitals, red font) at the top of each page. Non-confidential versions should be marked ‘NON-CONFIDENTIAL’ (bold, capitals, black font) at the top of each page.

• Personal information contained in a non-confidential application will be published unless otherwise redacted by the applicant/applicant’s representative.

For lengthy submissions, responses to this part may be provided in a separate document attached to the application. Please check this box if you have done so: ☒

9. Set out the grounds on which the applicant believes that the reviewable decision is not the correct or preferable decision:

See Attachment 2.

PART C: GROUNDS FOR THE APPLICATION

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10. Identify what, in the applicant’s opinion, the correct or preferable decision (or decisions) ought to be, resulting from the grounds raised in response to question 9:

See Attachment 2.

11. Set out how the grounds raised in question 9 support the making of the proposed correct or preferable decision:

See Attachment 2

12. Set out the reasons why the proposed decision provided in response to question 10 is materially different from the reviewable decision:

See Attachment 2

13. Please list all attachments provided in support of this application:

Attachment 1 – ADN 2019/44 – Notice of the Reviewable Decision Attachment 2 – The applicants’ detailed response to questions 9-12 of the application Attachment 3 – Letter of authority from Kam Kiu to the Review Panel in relation to Corrs Chambers Westgarth

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The applicant/the applicants’ authorised representative [delete inapplicable] declares that:

• The applicants understand that the Panel may hold conferences in relation to this application, either before or during the conduct of a review. The applicants understand that if the Panel decides to hold a conference before it gives public notice of its intention to conduct a review, and the applicants (or the applicants’ representative) do not attend the conference without reasonable excuse, this application may be rejected; and

• The information and documents provided in this application are true and correct. The applicants understand that providing false or misleading information or documents to the ADRP is an offence under the Customs Act 1901 and Criminal Code Act 1995.

Signature:

Name: Andrew Korbel

Position: Partner

Organisation: Corrs Chambers Westgarth

Date: 07 / 06 / 2019

PART D: DECLARATION

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This section must only be completed if you answered yes to question 4.

Provide details of the applicant’s authorised representative:

Full name of representative: Andrew Korbel Organisation: Corrs Chambers Westgarth Address: Level 17, 8-12 Chifley Square, Sydney NSW 2000 Email address: [email protected] Telephone number: (02) 9210 6537

Representative’s authority to act

*A separate letter of authority may be attached in lieu of the applicant signing this section*

A letter of authority, dated 29 May 2019, is Attachment 3 to this application.

The person named above is authorised to act as the applicant’s representative in relation to this application and any review that may be conducted as a result of this application.

Signature: (Applicant’s authorised officer)

Name:

Position:

Organisation:

Date: / /

PART E: AUTHORISED REPRESENTATIVE

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ATTACHMENT 1

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9 Grounds on which the applicant believes that the reviewable decision is not the correct or preferable decision

9.1 Introduction 9.1.1 In this document, references to “the Act” are to the Customs Act 1901 (Cth),

references to “the Regulations” are to the Customs (International Obligations) Regulation 2015 (Cth), and references to “the AD Agreement” are to the Agreement on Implementation of Article IV of the General Agreement on Tariffs and Trade 1994. Similarly, references to “sections”, “regulations”, and “articles” are references to the provisions of these instruments, respectively.

9.1.2 On 12 July 2018, in response to a request from the then Assistant Minister for Science, Jobs and Innovation, the Commissioner of the Anti-Dumping Commission (Commission) initiated a review of the dumping and countervailing measures affecting exporters of certain aluminium extrusions (goods) to Australia from the People’s Republic of China (China) (ADN 2018/111) (Review 482).

9.1.3 On 21 January 2019, the Verification Team’s Exporter Verification Report (2019 Verification Report) in relation to Tai Shan City Kam Kiu Aluminium Extrusion Co., Ltd (Kam Kiu) was published.1

9.1.4 On 18 February 2019, Corrs Chambers Westgarth (Corrs) and Zhong Lun made submissions on behalf of the applicants in response to the Verification Report (the Applicants’ Submissions).2

9.1.5 On 22 February 2019, the Commission published Statement of Essential Facts 482 in respect of the review (2019 SEF). As noted in the Commission’s final report, the Commission had insufficient time to consider the Applicants’ Submissions in the preparation of the 2019 SEF.3 Accordingly, the submissions were instead considered in the preparation of the Commission’s final report.

9.1.6 On 27 February 2019, Corrs and Zhong Lun reasserted the positions taken in the Applicants’ Submissions by way of a letter addressed to the Commission.4

9.1.7 On 8 April 2019, the Commission completed its final report to the Minister for Industry, Science and Technology (Minister) (REP 482) in which it recorded it had found that the variable factors relevant to the determination of dumping duty payable and countervailing duty payable under the Customs Tariff (Anti-Dumping) Act 1975 had changed. Accordingly, the Commissioner recommended that the dumping duty notice and the countervailing duty notice, in respect of certain

1 Document 044 on the Electronic Public Record for Review 482 (EPR 482). 2 Document 049 on EPR 482. 3 Final Report – REP 482, document 063 on EPR 482, page 24. 4 Document 051 on EPR 482.

THIS IS ‘ATTACHMENT 2’ TO THE APPLICATION FOR REVIEW OF A MINISTERIAL DECISION IN RESPECT OF REVIEW 482 – ALUMINIUM

EXTRUSIONS EXPORTED FROM THE PEOPLE'S REPUBLIC OF CHINA

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Anti-Dumping Review Panel Application by Kam Kiu - Review 482—Aluminium Extrusions Exported from the People’s Republic of China

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aluminium extrusions exported to Australia from China, should have effect as if different variables factors had been ascertained.

9.1.8 On 8 May 2019, the Minister accepted the Commissioner’s recommendations and declared, in accordance with section 269ZDB(1)(a)(iii), that the dumping duty notice and the countervailing duty notice, in respect of certain aluminium extrusions exported to Australia from the People’s Republic of China, should have effect as if different variables factors had been fixed (Reviewable Decision).5

9.1.9 Having made the Reviewable Decision under section 269ZDB(1)(a)(iii), in respect of aluminium extrusions exported to Australia by Kam Kiu the Minister imposed a fixed rate of combined Interim Dumping Duty and Interim Countervailing Duty of 39.2%, including:

(a) a dumping margin of 35.7%; and

(b) a subsidy margin of 3.6%,

adjusted in respect of the subsidy rate as prescribed in REP 482.

9.2 Summary of concerns with the Reviewable Decision 9.2.1 The applicants respectfully submit that the Reviewable Decision, in so far as it

concerns Kam Kiu, is not the correct or preferable decision.

9.2.2 The applicants submit that the Commissioner ought not to have made, and the Minister ought not to have accepted and relied upon, certain findings and recommendations in REP 482, which resulted in the Minister’s decision to impose on Kam Kiu a combined rate of dumping and countervailing duty of 39.2%.

9.2.3 In particular, as explained in further detail below:

(a) the dumping margin applicable to Kam Kiu was calculated using a constructed normal value;

(b) that constructed normal value included a profit component, which was calculated by reference to all like goods sold domestically by Kam Kiu;

(c) certain types of products sold domestically by Kam Kiu during the period of review:

(i) were not exported to Australia; and

(ii) have much higher profit margins than the products which were both sold domestically and exported to Australia;

(d) as a result, it was appropriate for the Commission to exclude the domestic-only products from the calculation of the profit component of Kam Kiu’s constructed normal value. The Commission did not do so, despite the fact that it did exclude those same products, for the same reason, in identical

5 Anti-Dumping Notice – ADN 2019/44, document 064 on EPR 482.

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circumstances, and using the same type and level of data, in Review 392 in 2017; and

(e) if it had done so, the dumping margin now applicable to Kam Kiu would be significantly lower.

9.3 Fair comparison requires an allowance for profits from High-end Models 9.3.1 Kam Kiu manufactures a range of models of aluminium extrusions that are used in

medical equipment, in the motor vehicle industry and in mobile phones (High-end Models). These High-end Models account for about 65% of Kam Kiu’s domestic sales. They are focussed on Kam Kiu’s domestic market, and, as demonstrated in Kam Kiu’s Response to the Exporter Questionnaire in this review (2018 REQ),6 Kam Kiu does not export these High-end Models to Australia.

9.3.2 The High-end Models differ from other models manufactured by Kam Kiu (Normal Models), including those that Kam Kiu does export to Australia, in that they involve different combinations of:

(a) tighter manufacturing tolerances;

(b) higher grades of alloy;

(c) additional processing—such as, precision bending, cutting, punching or drilling;

(d) additional preparations prior to being coated; and/or

(e) detailed finishes.

9.3.3 Section 269TACB prescribes that the assessment of whether dumping has occurred is to be undertaken using a methodology by which the “export price” of a good and the “normal value” of that good are compared.

9.3.4 As the Applicants’ Submissions7 made clear (see in particular Schedule 1 and its confidential annexure), and as the Commission has accepted,8 the High-end Models that Kam Kiu sells domestically differ to the models exported to Australia in a range of ways which affect their price comparability, and the comparability of the profit derived from the High-end Models and the exported models.

9.3.5 For the reasons submitted to the Commission in the Applicants’ Submissions, and repeated below, the applicants contend that the Commission should have made an allowance in the calculation of the constructed normal value for Kam Kiu, for the significantly higher profit associated with the High-end Models than the profits earned domestically on goods of the type exported to Australia.

6 The non-confidential parts of which are document 008 on EPR 482. 7 Document 049 on EPR 482. 8 Sections 2.3 to 2.5 of the Verification Report for Kam Kiu in Review 392 (2017 Verification Report), published on

31 July 2017 –document 050 on EPR 392; Statement of Essential Facts 392 –document 056 on EPR 392, section 4.9.3; 2019 Verification Report, sections 2.3 and 2.4 at pages 5–6 –document 044 on EPR 482.

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9.3.6 Such an allowance is necessary to ensure a fair comparison between the export price and normal value determined for Kam Kiu. If no allowance is made, the normal value will be inflated by the inclusion of a larger profit margin than Kam Kiu could actually achieve in respect of the goods that it exports to Australia, owing to the higher profit margin that it generates from the High-end Models which it sells in its domestic market.

9.3.7 By including those higher profit margins in the profit component, there is the potential for a flawed and unfair outcome in which any of Kam Kiu’s competitors that do not manufacture models equivalent to the High-end Models—models which those competitors would be able to sell at a higher rate of profit in their domestic market—would have a lower rate of profit applied to their products by the Commission during its construction of a normal value in respect of their products. In this case, Kam Kiu’s Normal Products would have a higher dumping margin applied to them—despite potentially having the same cost to manufacture and sell as its competitors, as well as the same profit margin on the equivalent products sold domestically—and may ultimately become more expensive in Australia, pricing Kam Kiu out of the Australian market.

9.3.8 An adjustment to account for this would be consistent with the purpose of both the AD Agreement and the relevant provisions of the Act.

9.3.9 The concept of a “normal value” is to allow a fair comparison to be made between the price charged by a foreign manufacturer in its domestic market—such as the People’s Republic of China—and the price charged by that manufacturer in an export market—such as the Australian market. Where the “normal value” of a good in the foreign market would not allow a fair comparison—typically due to some factor decreasing the price of the good in that market—section 269TAC(2) allows the Minister to construct a normal value. Therefore, it would be contrary to the purpose of a “normal value” if the constructed normal value was affected by some other factor which artificially raised the value, so that a fair comparison could not be achieved.

9.3.10 This objective of enabling a fair comparison to be made is also reflected in the text of article 2.4.

9.3.11 To illustrate further the unfairness that would result from not making an allowance, it is worth considering a hypothetical scenario in which the alleged dumping (and therefore the goods under consideration) is of High-end Models, rather than Normal Models.

9.3.12 In this hypothetical, the foreign manufacturer produces both Normal Models and High-end Models, each of which it sells domestically, but only exports the High-end Models to Australia. As is the case for Kam Kiu, the foreign manufacturer in this hypothetical earns a higher profit margin in respect of its High-end Models than its Normal Models. Further, for the purpose of this hypothetical, assume that these High-end Models are, in fact, being dumped into Australia by the foreign exporter.

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9.3.13 If the Commission, in this hypothetical, in constructing a normal value in respect of the goods under consideration, were to treat the High-end and Normal Models as “like goods” for the purposes of section 269TAC(2), the profit margin applied in constructing the normal value—as calculated otherwise in accordance with regulation 45(2)—may result in an unrealistically low constructed normal value for the High-end Models. As a consequence, this could lead to an outcome where goods that are, in fact, being dumped are, nevertheless, not found to have been dumped by the Commission.

9.3.14 Presumably, in this scenario, the Australian industry would be dissatisfied with this outcome and would submit that the profits derived by the foreign manufacturer from the domestic sales of their Normal Models should be excluded from the profit margins applied by the Commission when constructing a normal value.

9.3.15 Kam Kiu submits that that would, in this hypothetical scenario, be the appropriate course for the Commission to take, as it would allow a proper comparison between prices.

9.3.16 Similarly, Kam Kiu respectfully submits that, in respect of its High-end Models, it is not appropriate for these models to be included in the profit margins applied by the Commission in constructing a normal value for the goods under consideration, as this does not allow a proper comparison between prices.

9.4 Approach taken in Review 392 (the 2017 Review) 9.4.1 While Review 482 was initiated by the Commissioner in 2018, a review of the

measures applying to aluminium extrusions exported to Australia from China (Review 392 or the 2017 Review) was initiated and completed less than a year earlier, in 2017. As the approach taken to the profit component of Kam Kiu’s constructed normal value in the 2017 Review was different to the approach taken by the Commission in Review 482, we set out some detail below about the 2017 Review.

9.4.2 The 2017 Review was initiated on 23 March 2017,9 and Kam Kiu was among five exporters selected for examination by the Commission.

9.4.3 On 25 August 2017, the Commission published SEF 392 (2017 SEF). It recorded that the Commission accepted a submission from Kam Kiu that “profits derived from the domestic sales of High-end Models should be excluded from the calculation of profit for the purpose of constructing a normal value” in order to “ensure a fair comparison … between the export price of the goods under consideration and the normal value of those goods”.10

9.4.4 In October 2017, the Commission completed its review and published REP 392. In respect of Kam Kiu, the Commission calculated a dumping margin of 21.0%, a subsidy margin of 4.5% and a fixed rate of 25.5%. This rate was determined

9 Anti-Dumping Notice – ADN 2017/38, document 070 on EPR 392. 10 Statement of Essential Facts – SEF 392, document 056 on EPR 392, page 31.

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using a combination of fixed and variable duty method; the same method used in the Review 482.

9.4.5 On 8 November 2017, the then Parliamentary Secretary accepted the Commission’s recommendations in REP 392, including all material findings of facts and law.11

9.5 Data available allowed the necessary calculations 9.5.1 In both the 2019 Verification Report and the 2019 SEF, the Commission recorded

that, contrary to the approach taken in the 2017 Review, its preliminary view was that it would include the High-end Models in the calculation of the profit component of Kam Kiu’s constructed normal value.

9.5.2 In REP 482, the Commission confirmed that it had done that, though (as discussed below) apparently for different reasons to those outlined in the 2019 Verification Report and the 2019 SEF. In REP 482 the Commission suggested that “the information provided by Kam Kiu in [the 2018 REQ], relating to its domestic CTMS of the goods, does not separate costs to a level where the costs of all high-end models, and therefore profit, can be differentiated from other models”,12 and therefore the Commission formed the view that profit on the sale of the High-end Models should be included in the determination of profit.

9.5.3 In summary, in response to that reasoning Kam Kiu respectfully submits that:

(a) prior to REP 482 there had been no suggestion to Kam Kiu, formally or informally, that the data it had provided in the 2018 REQ did not permit the calculation of profit on products other than the High-end Models;

(b) the data provided by Kam Kiu in respect of its domestic sales in the 2018 REQ was relevantly the same as the data which had been provided by it in its 2017 REQ; 13

(c) the Commission did not express any reservations about the accuracy or completeness of that data in the 2019 Verification Report or 2019 SEF;

(d) in the 2017 Review, the Commission used the data provided by Kam Kiu in respect of its domestic sales to calculate a profit margin obtained in sales of products other than the High-end Models,

(e) the Commission could have undertaken the same approach to that calculation, for the purposes of Review 482, using the domestic sales data provided in the 2018 REQ; and

(f) there were also other approaches that the Commission could have taken to calculate profit margins for the sales of the Normal Models using data from the 2018 REQ together with data and analysis from the 2017 Review.

11 Anti-Dumping Notice – ADN 2017/38, document 070 on EPR 392. 12 REP 482, document 063 on EPR 482 at page 48. 13 The non-confidential parts of which are at document 026 on EPR 392.

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Availability of data 9.5.4 For each of the roughly domestic sales itemised by Kam Kiu in its 2018

REQ Kam Kiu identified whether the product was a High-end Model (a phone case, sunroof rail or medical product) or another product (described as an “other non-excluded product”). As is explained below, it had also done the same in the course of the 2017 Review.

9.5.5 The information which was provided by Kam Kiu to the Commission in the 2017 Review included a line by line listing of Kam Kiu’s domestic sales in the period of review. (These then formed part of the Verification Team’s preliminary normal value calculations, which were contained in Confidential Appendix 4—‘Normal Value (constructed)’ to the 2017 Verification Report.14) This information included, for each domestic sale, an entry in column ‘G’ which recorded whether the product sold fell into the following categories:

(a) medical;

(b) sunroof rail;

(c) phone case; or

(d) other non-excluded model.

9.5.6 The calculation of the constructed normal value for Kam Kiu in 2017 was recorded in Confidential Appendix 4—‘Normal Value (uplifted constructed revised profit) to the 2017 SEF. It recorded, in the tab entitled “Profit”, the calculation of profits from Kam Kiu’s domestic sales both with and without the High-end Models. It appears that the Commission undertook the calculation of profit without the High-end Models simply by excluding the models described as “medical”, “sunroof rail” or “phone case”.

9.5.7 It can be ascertained from the “Profit” tab of that spreadsheet that the average profit after excluding those models fell from % to %. As a result the dumping margin for Kam Kiu also fell from 46.6% (as calculated in the 2017 Verification Report) to 21% (in the 2017 SEF).

9.5.8 The very same level of information which enabled the Commission to undertake that calculation in the context of the 2017 Review was available to the Commission in the context of the domestic sales relied on by the Commission in Review 482. This can be seen, for example, in Confidential Appendix 3—‘Domestic Sales’ to the 2019 Verification Report.

Reliability and completeness of data

9.5.9 In the 2017 Review, the Commission had conducted an on-site verification of Kam Kiu’s data, including its domestic sales and its cost to make and sell (CTMS).

14 Document 050 on EPR 392.

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9.5.10 In that process the Commission’s verification team formed the view that the domestic sales data was “complete, relevant and accurate”.15

9.5.11 In relation to the CTMS, it said that:16

(a) using data provided during the visit the verification team had calculated the CTMS for all models produced during the review period (in addition to models exported to Australia); and

(b) the verification team was satisfied that the revised CTMS data was “complete, relevant and accurate”.

9.5.12 In Review 482, when reviewing Kam Kiu’s 2018 REQ, the Commission’s verification team decided to conduct a desktop “benchmark verification”, rather than an on-site verification. It concluded that the information provided by Kam Kiu was “consistent with expected values and can be considered reliable” for the purposes of the review.17

9.5.13 The verification team did not express any reservations about the accuracy or completeness of the information provided by Kam Kiu in the domestic sales listing (and nor was any reservation subsequently expressed about it in the 2019 SEF). In relation to CTMS, after considering further information requested by it in relation to one model (only), the verification team found that the CTMS data provided by Kam Kiu were “as expected, and in line with the CTMS findings” in the 2017 Review.18

9.5.14 The applicants respectfully submit that there is no reason for the Commission to depart from the course it followed in 2017, and that it could have and should have calculated a profit excluding medical, sunroof rail and phone case products.

9.5.15 The applicants have undertaken their own calculation with those exclusions (using Kam Kiu’s domestic sales data (Appendix 3 in Confidential Appendix D to the 2019 SEF) and estimate that the profit margin would, with that adjustment, be reduced from % to %. If that lower profit margin had been used in the constructed normal value it would have resulted in the dumping margin in respect of Kam Kiu being reduced from 35.7% to 11.4%.

Approaches to calculation using available data

9.5.16 The various ways that the Commission could have approached the exclusion of the High-end Models from the calculation of profit on Kam Kiu’s domestic sales, using data already provided to the Commission include (but are not limited to) the following:

(a) omitting from the profit calculations all sales of products designated as medical, sunroof rail or phone case;

15 Section 5.7 of the 2017 Verification Report, document 050 on EPR 392. 16 Sections 4.1 and 4.4 of the 2017 Verification Report, document 050 on EPR 392. 17 Section 1.1 of the 2019 Verification Report, document 044 on EPR 482. 18 Section 4.2 of the 2019 Verification Report, document 044 on EPR 482.

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(b) calculating profit for each sale by reference to CTMS of product codes (rather than finishes), and then omitting from the profit calculations sales of those model codes for which domestic sales are wholly (model ) or predominantly (models and ) of High-end Models; and

(c) for any product codes where domestic sales have included both High-end Models and Normal Models, deriving CTMS for each model within the product codes using a combination of the CTMS or profit margin calculated for those models within the same product codes in the 2017 Review, and the CTMS for those product codes in Review 482.

9.6 Exclusion of High-end Models from profit calculation is permitted 9.5.17 In the 2019 Verification Report, the verification team acknowledged the

Commission’s decision to exclude certain High-end models in REV 392 and justified their departure from this position as follows: 19

In SEF 392, the Commission outlined its assessment of [Kam Kiu’s] claims and accepted that high-end models that [Kam Kiu] sells domestically may differ from the models manufactured by [Kam Kiu] for export to Australia. However, the Commission did not accept that the high-end models were not like goods. The Commission did, however, accept that the profits derived from the domestic sales of the high-end models should be excluded from the calculation of profit for the purpose of constructing a normal value, ensuring a fair comparison is made between the export price of the goods under consideration and the normal value of those goods. After consideration, it is the verification team’s view that excluding the profit of any like goods sold in the ordinary course of trade on the domestic market in the profit calculation used for the construction of normal value is inconsistent with section 45 of the Customs (International Obligations) Regulation 2015 (the Regulations). For this reason, the verification team have departed from the methodology used in REV 392 and have not excluded the high-end models from the profit calculation for the purposes of REV 482.

9.5.18 The Applicants’ Submissions contained a detailed legal analysis underpinning the applicants’ contention that the exclusion of High-end Models from the profit calculation is permitted. In summary, the applicants submitted that the Act and the Regulations (which should be read as consistent with article 2.4 of the AD Agreement) permit that to occur by:

19 2019 Verification Report, document 044 on EPR 482, at page 11.

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(d) the exclusion of the High-end Models from the goods used to calculate the profit component of the constructed normal value;

(e) an adjustment to the profit component of the constructed normal value; and/or

(f) an adjustment to the costs component of the constructed normal value.

9.5.19 In REP 482 the Commission did not repeat or refer to it concern as to its power to omit the High-end Models from the calculation of the profit component. Accordingly, it appears that the Commission and the Minister accepted that they did have the power to act as the applicants had submitted that they should. However, if the applicants have misunderstood that position then they repeat and rely upon the submissions they made to the Commission on that issue.20

10 Correct or preferable decision 10.1 In order to conduct a fair comparison between the export price and the normal

value of Kam Kiu’s goods for the purpose of assessing dumping duty under section 269TACB, the correct or preferable decision would require:

(a) the exclusion of the High-end Models when determining the profit margin to be applied in the constructed normal value; or

(b) an adjustment to either the profit component or cost component of the constructed normal value, to account for the fact that no High-end Models have been exported to Australia.

10.2 Having undertaken that process, the correct or preferable decision would be for the Minister to determine a revised Ascertained Normal Value, reflecting the suggested approach to the calculation of the constructed normal value for Kam Kiu.

10.3 Accordingly, the applicants respectfully request the Review Panel recommend to the Minister that the Reviewable Decision be revoked and substituted with a new declaration that reflects further revised variable factors applicable to goods exported by Kam Kiu, adopting the approach to Kam Kiu’s constructed normal value proposed by Kam Kiu in this application.

11 How grounds raised support the making of the correct or preferable decision

11.1 In response to question 9, the applicants have submitted that the Reviewable Decision is not the correct or preferable decision because the Commission (and the Minister) included Kam Kiu’s High-end Models in the calculation of the profit to be used in the constructed normal value ascertained for Kam Kiu.

20 Sections 5 to 7 of the Applicants’ Submissions, document 049 on EPR 482.

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11.2 If the Commission had excluded the High-end Models from that calculation of profit, or had made an allowance for the different profits applicable to the High-end Models, then Minister would have determined a lower Ascertained Normal Value than found in the Reviewable Decision, resulting in a lower dumping margin for Kam Kiu’s products.

12 Material difference between proposed decision and Reviewable Decision

12.1 The proposed decision described in paragraph 10.2 above is materially different to the Reviewable Decision as the proposed decision would result in a significantly lower effective rate of duty on goods exported by Kam Kiu to Australia from the People’s Republic of China. As noted in paragraph 9.5.15 above, the applicants estimate that if the proposed decision were made the dumping margin, and combined duty, applicable to goods exported by KAE would be reduced by 24.3%.

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Application for review of a Ministerial decision · 9.1.3 On 21 January 2019, the Verification...

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