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• 9. Duties

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• Plasterboard from Thailand

552. The Chief Executive of the Ministry has initiated a reassessment of the amounts of anti-dumping duty that currently apply, pursuant to section 14(6) of the Act.

553. This section of the report forms an Interim Report for that reassessment and provides interested parties with the opportunity to comment on the proposed duties. Interested parties have until 1 May 2006 to make submissions upon the report.

554. All submissions must be accompanied by a non-confidential version at the same time in order to be taken into account in the Ministry's recommendations to the Minister regarding the reassessed duty.

555. Section 14 of the Act relates to the imposition of anti-dumping duties, the relevant parts of which are set out below:

(1) At any time after the Minister makes a final determination under section 13(1) of this Act in relation to goods, the Minister may give notice of the rate or amount of duty determined under subsection (4) of this section (which notice may be given simultaneously with, or at any time after, the notice given under section 13(2) of this Act) and there shall, with effect on and from the applicable date referred to in section 17 of this Act, be imposed,-

(a) In respect of those goods that are dumped, a duty to be known as anti-dumping duty:

…

(2) Anti-dumping duty … imposed under subsection (1) of this section, shall be collected and paid on the demand of the [[Customs]] on and from the day after the date on which the notice under subsection (1) of this section is published in the Gazette.

…

(4) The anti-dumping duty … in the case of goods to which this section applies shall be a rate or amount determined by the Minister,-

(a) In the case of dumped goods, not exceeding the difference between the export price of the goods and their normal value; and

(5) In exercising the discretion under subsection (4) of this section, the Minister shall have regard to the desirability of ensuring that the amount of anti-dumping … duty in respect of these goods is not greater than is necessary to prevent the material injury or a recurrence of the material injury or to remove the threat of material injury to an industry or the material retardation to the establishment of an industry, as the case may require.

(6) The [Chief Executive] may initiate a reassessment of any rate or amount of anti-dumping…duty determined under subsection(4) of this section, including any elements of any formula used to establish such a rate or amount,-

(a) On the initiative of the [Chief Executive];

(b) Where a request for a reassessment is submitted to the [Chief Executive] by an interested party who submits evidence justifying the need for a reassessment; or

(c) Following the completion of a review carried out under sub-section (8) of this section-

And the Minister may determine a new rate or amount in accordance with subsection (4) of this section, and, in that event, shall give notice of the new rate or amount.

9.1 Current Duty Rates

556. The rates of duty that currently apply to imports of plasterboard from Thailand appear in Table 9.1. These rates were set following the 2002 reassessment.

Table 9.1: Current Anti-Dumping Duties

9.2 Method of Imposing Duty

557. Anti-dumping duties can be applied in a number of ways and can be imposed as a rate or amount, including any rate or amount established by a formula. The basic approaches are:

• an ad valorem rate;
• a specific amount per unit of product; and
• a reference price mechanism.

558. The main objective of an anti-dumping duty is to remove the injurious impact of dumping. In deciding on the form of duty, considerations relating to ease of administration, ability to ensure the dumping margin is not exceeded, fairness between parties, and predictability all need to be taken into account. The objective of the anti-dumping duty is to remove injury attributable to dumping, and is not to punish the exporter, or to provide protection to an industry beyond the impact of the dumping.

559. Section 14(4) of the Act provides that the Minister must not impose a duty that exceeds the margin of dumping for the dumped goods. The Solicitor-General has advised that the references to "export price" and "normal value" in this section are to be read as references to the export prices and normal values established during an investigative process or to the values at the time the goods subjected to the duty are imported.¹ Given this, the Ministry's approach is to adopt a form of duty that minimizes the possibility of exceeding the margin of dumping on shipments subsequent to the imposition of the duty.

Ad Valorem Duty

560. An ad valorem duty is a duty based on the dumping margin, expressed as a percentage of the export price, and is expressed as a percentage of the value for duty amount. An ad valorem duty is convenient to apply and is not substantially affected by exchange rate movements. However, collusion between exporters and importers can lead to the manipulation of the invoice value of the goods concerned. Ad valorem rates are often appropriate where there is a large range of goods or where new models appear, provided that the transaction-to-transaction comparison does not result in a wide range of dumping margins.

561. Because an ad valorem duty is imposed proportionate to the export price of the goods, a particularly low export price (and therefore a potentially more injurious export price) will result in a lower amount of duty, which may not be sufficient to remedy the injury caused by the dumping. Conversely, a particularly high export price (and therefore likely to be less injurious), will attract a higher amount of duty, which may be higher than is necessary to remove the injury caused by the dumping.

562. Ad valorem duties can also be used to impose duties where there is found to be dumping causing or threatening to cause material injury to a domestic industry, but that some circumstances exist to indicate that a duty should not be collected at the present time. In these circumstances an ad valorem duty at zero percent is imposed. This allows the Ministry to reassess or review the anti-dumping duty as part of a review or reassessment of the goods from that source as a whole. For example, if prices are dumped but the goods are considered to be entering above the industry's non-injurious price a zero duty may be imposed. However, if no duty was imposed, then any changes in price, or any other market situation, that would normally result in a reassessment or review would require a new dumping investigation to be undertaken. Other methods of imposing a duty are also capable of achieving a similar outcome but ad valorem rates are most effective in the circumstances where a duty should not be collected for the time being, but where a change in circumstances, that would result in the need for a reassessment or a review, may occur in the future.

563. An ad valorem rate gives an indication of the impact of the duty, but does not target the dumping as accurately as other forms of duty.

Specific Duty

564. A specific duty is a set amount per unit of product based on the monetary value of a margin of dumping. It has the advantages of being convenient to apply and impossible to evade by incorrectly stating the value for duty and clearly indicates to the importer the amount of duty payable. However, difficulties can arise where there is a wide range of goods involved, where exchange rates fluctuate to the extent that the margin of dumping will be exceeded without constant reassessments of the duty, or where the exporter otherwise changes prices so that the duty is either greater than the margin of dumping or less than the margin of dumping previously established.

565. A specific duty, expressed as a monetary amount, can only really operate effectively when prices and exchange rates are consistent and stable and where the transaction-to-transaction comparison does not result in a wide range of different dumping margins.

566. An alternative approach to deal with exchange rate fluctuations is to express a specific duty as the difference between the normal value and the export price, expressed in the currency of the country of origin and to convert this amount into NZD at the date of sale or importation for each transaction. However, this approach does not deal with the problem of changes in export prices for reasons other than exchange rate movements or movements in normal values such as a price change.

567. A specific duty has the advantage of ensuring that anti-dumping duty is collected and is often appropriate in cases where bundle pricing, off invoice rebates or other non-price consideration (being outside the net invoice price of the subject goods) are occurring.

Reference Price Duty

568. Under the reference price approach, the duty payable is the difference between the transaction price and a reference price. The reference price would normally be based on the normal value, by means of Normal Value (Value for Duty Equivalent) (NV(VFDE)) amounts, or the non-injurious price (a price at which imports would not cause injury to the New Zealand industry), either at the FOB or cost insurance and freight level. A NV(VFDE) amount represents the un-dumped value of the goods at the FOB level.

569. A reference price duty has the advantage that it is best able to deal with movements in the export price and exchange rates (if expressed in the normal value currency), and is also suitable when a lesser duty is applicable. However, it has been argued that it is more easily evaded than the other forms of duty, by overstating the value for duty of the goods. A reference price does have the advantage of clearly signalling to exporters and importers what price is un-dumped or non-injurious, and provided the like goods and the reference price are carefully described, the problem of evasion can be dealt with. In addition, a reference price duty only collects duty when the goods are priced below the non-injurious or un-dumped reference price. It therefore collects duty only to the extent necessary to remove injurious dumping.

570. Reference prices also have the effect of not removing the injury to an industry when goods are invoiced at or above the set reference price, but some form of non-price consideration is also occurring. In these circumstances the reference price is almost enabling the dumping to cause injury and a reference price mechanism is not an effective form of duty to employ.

Conclusion

571. It has been the normal practice of the Ministry to impose duties through the use of reference prices, when appropriate, for the reasons outlined above. However, in the present case the Investigating Team considers that the export prices to BML [text deleted due to confidentiality] the information presented and considered during the review about general pricing structures in the global plasterboard trade.

572. The general view in world markets appears to be that standard board is treated as a generic product being used for general purposes and as a consequence occupies the volume part of the market. In contrast the specialist performance boards occupy market niches and are used for specific purposes. Prices of standard plasterboard, therefore, reflect the commodity nature of the product and are generally lower than the specialist performance boards. This appears to be reflected in the price where a price premium is paid for the performance boards. All parties to the review indicated that performance boards achieve higher prices (although are sold in lower volumes) than standard plasterboard.

573. As reported in the Interim Report for the review the one exception to this general rule presented during the investigation was the pricing of BPB's exports of performance boards to BML, at a price [text deleted due to confidentiality] than the prices of its exports of standard plasterboard to BML. The Ministry considers that this difference constitutes a non-price consideration. Therefore the Ministry recommends that a specific duty be imposed to ensure that the remedy is effective and bundle pricing does not occur.

574. The level of the performance board export prices to BML indicates that, in the absence of a non-price consideration that is currently operating, that the export price of standard plasterboard to BML would drop considerably in the absence of duties.

575. For exports by SGI/SCT to Elephant it is proposed that the duty be set using the ad valorem method as this method, more easily than others, accommodates a zero rate of duty.

576. In the case of exports by SGI/SCT to importers other than Elephant there is no evidence of bundled pricing off invoice rebates or any other non-price considerations. Due to the advantages of using reference prices outlined above, the Ministry normally uses this type of duty and in the absence of any reasons that would dictate the use of an alternate duty mechanism, it is proposed that exports by SGI/SCT, to importers other than Elephant, be imposed via a reference price mechanism.

9.3 Level and Timing of Duty

577. Anti-dumping duties can not be applied at a level higher than the margin of dumping and section 14(5) of the Act requires that the Minister have regard to the desirability of ensuring the amount of duty is not greater than is necessary to prevent material injury to the New Zealand industry.

578. Consideration of the appropriate type and level of duty in a reassessment following a review carries with it differing issues from the consideration of duties in a new investigation. Of particular relevance is the fact that the recently concluded 2005 Review found that Winstone was not being materially injured due to imports of dumped imports of plasterboard from Thailand and that the anti-dumping duties that are currently in place have been effective in preventing material injury to date.

579. This means that consideration must be given to the prices at which the plasterboard would be imported in the absence of anti-dumping duties as it is this dumping causing material injury, that was held to be likely to recur in the review, that the reassessed rates of duty are designed to address.

580. It is important to note that neither of the importers have provided any information on their average ex-store selling prices, or indeed any of the cost build-up to this point. This does not prevent the Ministry from proposing methods and amounts that the reassessed duties should take, but it does affect the ability of the Ministry to propose lesser duty amounts. It should be noted that the failure of the importers to provide information to date and the possible provision of this information following this Interim Report may not, in itself, be sufficient to alter the proposed method of imposition of duty.

SCT/Siam Gypsum

581. Exports from SGI/SCT to Elephant are currently subject to the lower of NIFOB NZDxxxx per square metre, or NVE of THB[text deleted due to confidentiality]. Exports from SGI/SCT to all other exporters are subject to anti-dumping duty at the rate of NVE THB[text deleted due to confidentiality]. The amounts in THB are converted into NZD at the relevant Customs exchange rate as at the date of import.

582. The 2005 Review concluded that anti-dumping duties on standard plasterboard from Thailand should not be revoked in respect of exports by SGI/SCT to importers other than Elephant; and that anti-dumping duties on standard plasterboard from Thailand, in respect of exports by SGI/SCT to Elephant, should be reassessed to zero. SGI/SCT did not comment on the proposals in the 2005 Review Interim Report.

583. The Ministry proposes that exports by SGI/SCT to Elephant be subject to anti-dumping duty at 0 ad valerom based on the value for duty amount.

584. While there is a sole supply agreement between Elephant and SGI/SCT this allows for Elephant to authorise direct supply by SGI/SCT to other entities. Therefore the Ministry considers that it should establish a rate for exports by SGI/SCT to importers other than Elephant.

585. Given the reasoning above the Ministry proposes a NV(VFD)E rate THB xxxx per square metre for exports by SGI/SCT to all other importers. This has been calculated by adding to the most recent normal values, as established during the review, the weighted-average adjustments made for packing, inland freight, customs clearance, terminal handling, CFS, bill of lading and cost of credit. All amounts were those established during the immediately preceding review and the calculation of the NV(VFDE) is shown in Table 9.2.

Table 9.2: Calculation of Duty for Exports by SGI/SCT to Importers other than Elephant.

BPB

586. Exports made by BPB are currently subject to a reference price duty mechanism set at a NVE of THB xxxx. This amount is converted to NZD from THB at the relevant Customs exchange rate at the date of import.

587. As indicated in paragraph 573 the Ministry recommends that the new duty for exports by BPB to BML be set as a specific duty. The Ministry has taken the export prices and normal values as established during the immediately preceding review back to ex-factory for the purpose of setting a duty rate. This is because ex-factory is the point that best reflects the amount of dumping. A specific duty can operate based on amounts at this level, which is not possible for other duty types, such as a reference price mechanism.

588. In calculating ex-factory amounts the Ministry has used the maximum amount for each adjustment made during the immediately preceding review. The detail of these adjustments is shown from paragraphs 157 and 233 of this report.

589. In establishing a duty rate for BPB, the Ministry has calculated the proportional difference in the weighted-average export price for SCT's exports of standard plasterboard, as established over the period of review of THBxxxx and SCT's weighted-average export price for performance plasterboards, as calculated over the same period, of THBxxxx, being a difference of xxxx percent of the weighted-average export price of standard plasterboard.

590. This proportionate differential between SCT's standard and performance plasterboard export prices was then deducted from a constructed weighted-average standard plasterboard export price for BPB's exports. This price was established by taking the most recent invoice price which had [text deleted due to confidentiality] to NZDxxxx from NZDxxxx (as at xxxx, and applying that to the exports made over the period of review and then subtracting the established adjustments to calculate likely export prices going forward. As the setting of duties is a forward looking process the Ministry considers that this is an appropriate methodology to use, as it is based on the current prices and the mix of product exported over the period of review. The weighted-average standard plasterboard export price for BPB calculated on this basis was THBxxxx. The differential calculated above, of xxxx percent, was then deducted from this export price to estimate a price that BPB would export standard plasterboard at in the absence of any anti-dumping duties, being THBxxxx.

591. This hypothetical price was then compared to BPB's established weighed-average normal value for the period of review of THBxxxx to derive a dumping margin of THBxxxx. This amount will then form the basis of the specific duty.

592. To check the reasonableness of this constructed price, in the absence of duties and bundle pricing, the Ministry has undertaken several comparisons with other plasterboard prices.

593. First taking the estimated likely dumping margin of THBxxxx added to the hypothetical price for standard board in the absence of duties, to give an un-dumped price of THBxxxx for BPB's standard plasterboard and comparing this to SCT's standard plasterboard export price. This gives a estimated export price for BPB to BML that represents xxxx percent of that from SGI/SCT to Elephant.

594. Another was the comparison undertaken was between the weighted-average export price of BPB's performance boards of THBxxxx compared with the estimated likely dumping margin THBxxxx added to the hypothetical price for standard board in the absence of duties. This gives an estimation of a potentially un-dumped price of THB xxxx for standard plasterboard, which represents xxxx percent of the price of BPB's performance plasterboard.

595. It is proposed that the duty of THBxxxx per square metre be levied as a specific duty that is converted to New Zealand dollars as at the invoice date using the relevant Customs exchange rate. Table 9.3 displays the calculation of the BPB duty rate in full.

Table 9.3: Calculation of Duties for Exports by BPB

596. The specific duty will not be disclosed to either BPB or BML, as it is calculated on amounts that are confidential to SGI/SCT. The Investigating Team did explain that this may be a possible effect of BPB not providing information during the review. However, it is considered appropriate to provide some indication of the quantum of the anti-dumping duty to BML, as it will be liable to pay the duty.

597. The level of the anti-dumping duty represents approximately 21 percent of BPB's calculated weighted-average export price of standard plasterboard.

598. Given the advice from BPB that a written sole supply agreement exists between it and BML the Ministry does not consider that it needs to calculate a rate for exports by BPB to any other importer and this amount will therefore apply to all exports by BPB.

Other Exporters

599. The current residual rate of anti-dumping duty for plasterboard from Thailand is based on the NV(VFDE) amount established for Elephant of THB[text deleted due to confidentiality].

600. It is the Ministry's normal practice for the residual anti-dumping duty rate to be set at the highest of all other rates, to prevent the establishment or use of alternate legal entities by existing exporters and importers to take advantage of a lower duty rate.

601. Therefore it is proposed that the anti-dumping duty rate for exporters other than BPB or SGI/SCT be set at the specific duty rate of THB[text deleted due to confidentiality] that was calculated for exports by BPB. This amount will be calculated on the declared value for duty amount and will be converted into NZD from THB using the relevant Customs exchange rate as at the invoice date.

9.4 Lesser Duty

602. Section 14(5) of the Act states that regard should be had to the desirability of a lesser duty, that is, a duty which is less than the full margin of dumping but is sufficient to remove the injury caused or threatened to be caused to the New Zealand domestic industry. This echoes the content of Paragraph 1 of Article 9 of the Agreement.

603. Usually the Ministry calculates a lesser duty by establishing an ex-store, or ex-factory non-injurious price, at which the importer could sell goods that may be dumped, but would not cause any injury to the domestic industry. This amount is then brought back to the FOB level to create a NIFOB duty rate.

604. In the present case, as mentioned previously, neither BML nor Elephant have provided the Ministry with detailed information on their net selling prices in order for the Ministry to be able to make any comparisons between their net selling prices and that of Winstone.

605. The Ministry has considered whether there is any other method available to it, by which to calculate a lesser duty in the absence of this information and is satisfied that there is not. Therefore a lesser duty cannot be calculated

9.5 Summary of Proposed Duties

606. Table 9.4 summarises the proposed anti-dumping duties. Amounts in THB will be converted to NZD using the relevant Customs exchange rate as at the date of invoice, which in the case of both exporters was established as the date of sale.

Table 9.4: Proposed Rates of Anti-Dumping Duty

9.6 Opportunity for Comment

607. Interested parties have until 1 May 2006 to make submissions upon this interim reassessment report. All submissions must be accompanied by a non-confidential version at the same time.

608. At this stage it is proposed that a final reassessment report will be completed as soon as practicable after receiving submissions on the interim reassessment report. However, depending upon the nature of the submissions received and the content thereof it may be necessary to lengthen the reassessment process in order to include new information in the Ministry's analysis. If submissions result in significant changes to the proposals contained in this interim reassessment report, the Ministry will consider issuing another interim report to allow parties to defend their interests before final recommendations are made to the Minister.