ABBREVIATIONSThe following abbreviations are used in this Report:Act (the)Dumping and Countervailing Duties Act 1988Amendment Act (the)Dumping and Countervailing Duties Amendment Act 1994Applicant (the)Winstone Wallboards LtdCTSCTS Quality Building Products LtdETL/ElephantElephant Trading LtdFOBFree on BoardGyptecGyptec Plasterboards LtdLDCLess Developed CountriesLLDCLeast Developed CountriesMinistry (the)Ministry of CommerceNIFOBNon-injurious Free On BoardQualisticQualistic Building Supplies LtdRikkiRikki Merchants LtdSecretary (the)Secretary of CommerceSCTSCT Co LtdSiam GypsumSiam Gypsum Industry Company LimitedSigmaSigma Agencies LtdThai GypsumThai Gypsum Products Public Company LimitedWinstoneWinstone Wallboards LtdWTOWorld Trade OrganisationWTO Anti-Dumping AgreementAgreement on Implementation of Article VI of the GATT 1994______________Indicates confidential information

1.INTRODUCTION

This report sets out the considerations relating to a reassessment of anti-dumping duties on plasterboard from Thailand.

2. BACKGROUND

On 21 December 1989, the Minister of Commerce made a final determination under section 12 of the Dumping and Countervailing Duties Act 1988 ("the Act"), that imports of plasterboard from Thailand were being dumped and causing injury. An anti-dumping duty of 15.69 cents per square metre was imposed.

On 9 April 1991, a duty reassessment was made, amending the basis for duty to a non-injurious price level. Under this approach, a price for the imports’ entry into the New Zealand market is set at a level at which the domestic industry would not be injured, and the FOB equivalent calculated. The amount of duty is then the difference between that non-injurious FOB level ("NIFOB") and the export value of the goods. The calculation of the NIFOB level from the non-injurious entry price level was based on the selling arrangements between the Thai producer and the New Zealand customers that operated at the time of the reassessment. This calculation included the deduction from the non-injurious price level of elements for duty, ocean freight, port service charges, customs clearance charges, inland freight, devanning, wastage, financial costs, and an importer’s margin, to reach the FOB element of the price which would be non-injurious.

In May 1995, a reassessment was completed which considered whether or not changes in the import arrangements following the 1991 reassessment had affected the ability of the NIFOB to maintain the non-injurious market price level. The conclusion reached was that the purpose of the anti-dumping duty on plasterboard from Thailand was not being circumvented as a result of the arrangements currently in place for the importation of such goods. The changed arrangements for imports had not affected the ability of the NIFOB approach to maintain a non-injurious market price level. Therefore, no change in the NIFOB basis for duty was required. However, the Ministry considered that to ensure that the purpose of the anti-dumping duty on plasterboard was maintained, the Gazette Notice should be amended to make the Customs value of the goods the comparison point with the NIFOB.

A review of the continued need for the imposition of anti-dumping duty on plasterboard from Thailand was initiated on 18 December 1994. This review concluded that anti-dumping duties on foil-backed plasterboard should be removed because the goods were no longer produced in New Zealand and dumped imports threatened further material injury additional to that found in the original investigation. This meant that the level of the NIFOB needed to be revised to reflect changes in costs. Accordingly, the values of the elements in the formula used to derive the NIFOB from the non-injurious market price were investigated, revised amounts determined on the basis of information provided to the Ministry, and a revised NIFOB applied, as set out in the Gazette notice of 26 February 1996. The Review and Reassessment Report also noted that the elements of the level or rate of anti-dumping duty should be reassessed at least at six-month intervals to determine whether changes in the values of those elements were necessary.

An investigation into the dumping of certain other plasterboard, involving different lengths of standard 9/9.5mm plasterboard, was initiated on 10 October 1995 and resulted in the imposition of anti-dumping duties on 29 March 1996 on the same basis as those imposed on the original goods investigated. An investigation into imports of 10mm plasterboard from Thailand, which was initiated on 26 January 1996, reached a similar conclusion and similar anti-dumping duties were applied on 23 July 1996.

On 4 June 1996, a reassessment of the anti-dumping duties applicable to plasterboard from Thailand was initiated pursuant to the Review and Reassessment recommendation that the elements of the level or rate of anti-dumping duty imposed should be reassessed at least on a six-monthly basis. The reassessment covered the period January to June 1996. On 1 July 1996, an interim reassessment of the duties was made in order to take into account the reduction in the normal duty applicable to plasterboard from Thailand from 12 percent to 10 percent. On 13 January 1997, the anti-dumping duties applicable to standard plasterboard of any width or length and of between 8.75mm and 10.25mm in thickness, certain other sizes of plasterboard and 10mm plasterboard from Thailand were reassessed. This interim reassessment is referred to as the "1996 Reassessment". In November 1996, the New Zealand industry lodged an application for judicial review of the Review and Reassessment completed in February 1996.

A further reassessment was initiated on 27 January 1997 in order to cover the period July to December 1996 ("Reassessment 1996-2"). However, in view of the judicial review proceedings, the Reassessment 96-2 was suspended pending the resolution of the issues raised and was terminated in conjunction with the settlement of the judicial review proceedings.

In early July 1997, the Thai Government floated the Baht. The consequence was an immediate and significant decline in the value of the Baht against both the US and New Zealand dollars. Later in July 1997 the New Zealand dollar also lost value against the US dollar. As a result, the margin of dumping (which is the difference between a normal value expressed in Baht and an export price derived from a US dollar selling price as determined by the last Review and Reassessment) declined to the extent that it became likely that the applicable NIFOB duty could lead to the imposition of a remedy in excess of the margin of dumping. This situation would be inconsistent with section 14 (4) of the Act. At the same time, the Ministry entered into a Settlement Agreement, which suspended the judicial review action. This Agreement also set out the basis on which the Ministry would approach the current reassessment (the "1997 Reassessment"), which was initiated on 25 August 1997 (See section 4 regarding the basis of the reassessment).

Verification visits were made to both SCT and Thai Gypsum in November 1997 and export prices and normal values established for shipments in the period July – August 1997. On the basis of the information gathered during this exercise the investigating team prepared a draft reassessment report recommending that the Minister reassess the anti-dumping duty on imports of standard plasterboard from Thailand, and that duties should be based on a reference price formula which allowed the calculation of the margin of dumping for each shipment.

Winstone believed that such a course of action was outside the scope of section 14(4) of the Act and lodged an extensive submission on this point. In April 1998 the Ministry sought advice from the Crown Law Office as to whether its interpretation of section 14(4) was correct, or whether the argument submitted by Winstone had merit. Crown Law confirmed the Ministry’s interpretation of the Act in late December 1998.

During the period that this matter was being decided, the plasterboard market in Thailand was subject to significant change. Domestic prices increased, the export price was reduced and the Thai Baht gradually strengthened during the year. It was clear that any reassessment of the anti-dumping duty on plasterboard from Thailand would need to update both the export price and normal values for the shipments during 1998, in order to accurately assess the appropriate duty payable during this period.

Further verification visits were carried out in March of this year. This report and its recommendations take into account the circumstances that have prevailed since the initiation of the reassessment in August 1997.

3. PARTIES

Industry

The industry consists of Winstone Wallboards Ltd ("Winstone"), a wholly-owned subsidiary of Fletcher Challenge Ltd, the sole New Zealand producer of plasterboard.

Thai Producers

Two companies have been identified by the investigating team as being producers of plasterboard. They are:

Siam Gypsum Industry Company Limited ("Siam Gypsum"); and

Thai Gypsum Products Public Company Limited ("Thai Gypsum").

Both companies have headquarters in Bangkok and production facilities elsewhere in Thailand. Siam Gypsum plasterboard is marketed under the "Elephant Board" brand, while Thai Gypsum markets its plasterboard under the "Thai Board" brand.

Exporters

Two companies are involved in exporting plasterboard to New Zealand. They are:

SCT Co Ltd of Thailand; and

Thai Gypsum Products Public Company Limited.

SCT Co Ltd

SCT Co Ltd ("SCT") company is the export marketing arm of the Siam Cement Public Company Limited group of companies and handles the group’s international trading and marketing for a wide range of products. The Elephant Board brand of plasterboard exported to New Zealand by SCT is manufactured by the Siam Gypsum - Navanakorn plant. This plant originally operated two board lines, but now only has one after the second was moved to the Siam Gypsum - Songkhla plant located in the South of Thailand. The Songkhla plant produces plasterboard for both the domestic and for export markets, such as Malaysia. Plasterboard for domestic production is also produced at the relatively new Siam Gypsum - Saraburi plant. Together with Siam Gypsum Industry Co Ltd, these plants make up the plasterboard activities of Siam Cement Public Company Ltd. SCT does not sell on the domestic market, but, for the purposes of the reassessment, Siam Cement Public Company limited is regarded as the producer and exporter.

SCT was sent an Exporters Questionnaire on 11 September 1997. SCT provided a completed copy of the questionnaire by fax on 9 October and the original copy containing all attachments arrived by courier on 13 October 1997. A verification visit to SCT was carried out on 3 November 1997. The information provided in SCT’s questionnaire response and information provided by SCT during the visit was verified. Additional information was also requested and subsequently provided by SCT.

A second verification visit to SCT was undertaken on 29 and 31 March 1999.

Thai Gypsum Products Public Company Limited

Thai Gypsum, established in 1968, was Thailand’s original plasterboard manufacturer. It manufactures for the Thai domestic market and exports plasterboard to a number of countries throughout the world. Thai Gypsum in also involved in the manufacture of a range of other building products, some of which are exported. For the purposes of this reassessment Thai Gypsum is considered to be the producer and exporter of the Thai Board brand of plasterboard.

An Exporters Questionnaire was sent to Thai Gypsum on 11 September 1997, but no reply was received. A meeting was held with Thai Gypsum on 5 November 1997, at which time Thai Gypsum undertook to provide information to the Ministry. This information was not provided. Therefore, dumping calculations following the visit were based on the best information available (see Public File Document #179).

As discussed above, the delay in receiving legal advice meant that updated information had to be collected and verified. Thai Gypsum provided some information (Public File Document #357) prior to the second verification visit, which was undertaken on 30 March 1999. Thai Gypsum provided limited information during this visit and some of the additional documentation requested by the verification team was delivered to the team on 31 March 1999. The verification team considers that the limited information provided during the 1997 and 1999 verification visits is insufficient to form a basis on which to base dumping calculations. Therefore, the dumping calculations for Thai Gypsum contained in this report are based on the best information available, which includes information provided by Thai Gypsum; the New Zealand importers, CTS Quality Building Products Ltd ("CTS"), Gyptec Plasterboards Limited ("Gyptec"), and Qualistic Building Supplies ("Qualistic"); the Malaysian exporter, Transpac International Trading ("Transpac"); the producer and the exporter of plasterboard sold by the Siam Cement Group, Siam Gypsum and SCT; and the New Zealand Industry, Winstone.

Export Agents and Importers

Four companies currently control the importation into New Zealand and distribution of plasterboard sourced from Thailand. They are:

Sigma Agencies Limited of Auckland

Elephant Trading Limited of Dunedin;

CTS Quality Building Products Ltd of Auckland; and

Qualistic Building Supplies Limited of Christchurch.

Sigma Agencies Limited

Sigma Agencies Ltd ("Sigma") is the export sales agent for SCT in the North Island. Sigma arranges sales for a number of importers, including Rikki Merchants Ltd ("Rikki") which has the same common shareholders as Sigma.

Elephant Trading Limited

Elephant Trading Ltd ("ETL") carries out a similar function to that of Sigma, but is not an export sales agent. ETL arranges imports for a group of South Island companies that are also shareholders in ETL.

CTS Quality Building Products Ltd

CTS is an importer and reseller of plasterboard from Thai Gypsum. CTS is also a manufacturer of ceiling tiles and it imports shorter lengths of plasterboard for this purpose.

Qualistic Building Supplies Limited

Qualistic imports plasterboard on its own account for reselling in the market place, principally in the Christchurch area. It sources plasterboard via Transpac, a Malaysian based company, which has been identified as being the facilitator/agent arranging for the shipment of plasterboard directly to Qualistic from Thai Gypsum. Qualistic pays Transpac, which in turn remits the money to Thai Gypsum.

Transpac was sent a Questionnaire on 10 October 1997 in order to ascertain the role it plays in the export of plasterboard from Thai Gypsum to Qualistic. A reply was received on 24 October 1997 which provided a limited amount of information.

Importers

The Act defines "importer" in section 3 as follows:

"Importer" has the meaning given to it in section 2(1) of the Customs and Excise Act 1996:

Section 2(1) of the Customs and Excise Act 1996 provides as follows:

"Importer" means a person by or for whom goods are imported; and includes the consignee of the goods and a person who is or becomes the owner of or entitled to the possession of or beneficially interested in any goods on or at any time after their importation and before they have ceased to be subject to the control of Customs:

For the purposes of this reassessment, the importer is regarded as the party identified as the importer in customs documentation. The following parties were identified during verification visits to Sigma, Elephant, and Qualistic, and from New Zealand Customs documentation held by the Ministry, as having been importers of plasterboard during the period 2 July 1997 to 12 March 1999.

Ceiling Tile Solutions Ltd

Central Warehouse Building Supplies

Counties Timber & Hardware

E H Ball & Son Ltd

Elephant Trading Ltd

Elephant Wallboard

Gyptec Plasterboards Ltd

Howard Simmonds Timber Ltd

Jarrah Roberts Ltd

Jim Martin Building Supplies Ltd

K J & P G Morgan Ltd

Kapiti Timber

L A Clark

Lake Timber & Hardware

Mainland Holdings Ltd

Maramatia Consultancy

Ned Kelly Building Supplies

New Plymouth Building Supplies

Niagara

Qualistic

Rikki Merchants Limited

Smith Timber Ltd

Timmo’s Timber

Triangle Timber Ltd

Tutakaka Coast Timber

W Crighton & Son Ltd

Warehouse Building Supplies

4. BASIS FOR THE REASSESSMENT

The purpose of this reassessment is to take into account changes in the value of the Thai Baht over the last few years, to meet the Ministry’s obligations under the settlement reached in relation to the judicial review proceedings, and to reassess the rate or amount of anti-dumping duty.

The Settlement Agreement (see Appendix 1) sets out the general principles to be adhered to by the Ministry when carrying out reassessments of plasterboard.

Although the verification visits were carried out in early November 1997, issues subsequently raised by the New Zealand industry needed to be addressed and it was not possible to complete the reassessment within the time frame originally envisaged. This delay necessitated further verification visits in March 1999 to update information on export prices and normal values.

5. REASSESSMENT OF DUMPING

In order to determine the extent to which the dumping margin might have been affected by the devaluation of the Thai Baht and any movements in domestic and export prices of Thai plasterboard, the Ministry sought information from SCT and Thai Gypsum.

Exchange Rates

One of the considerations leading to the initiation of the reassessment was the movement in exchange rates. The chart below shows movements in the Thai Baht to US dollar exchange rate since July 1997.

wpe1.jpg (7063 bytes)

Normal values are expressed in Thai Baht, export transactions take place in US dollars, and the injurious effect must be reflected in New Zealand dollar terms. The WTO Anti-Dumping Agreement refers to exchange rates in Article 2.4.1, which reads as follows:

When the comparison under paragraph 4 requires a conversion of currencies, such conversion should be made using the rate of exchange on the date of sale⁸, provided that when a sale of foreign currency on forward markets is directly linked to the export sale involved, the rate of exchange in the forward sale shall be used. Fluctuations in exchange rates shall be ignored and in an investigation the authorities shall allow exporters at least 60 days to have adjusted their export prices to reflect sustained movements in exchange rates during the period of investigation.

⁸Normally, the date of sale would be the date of contract, purchase order, order confirmation, or invoice, whichever establishes the material terms of sale.

In an investigation, the Ministry normally considers transactions over the period of investigation, which can be a year or six months, and determines the extent of dumping on the basis of those transactions and the exchange rates applicable to each one. The rapid devaluation of the Thai Baht raised the question of an appropriate date of currency conversion; there was a significant difference between the exchange rate at the date of sale and the exchange rate at the date of payment. The Ministry had argued that the date of payment was the appropriate date for currency conversion, as this would reflect the actual amount received by the exporter. This methodology was challenged by Winstone. The Ministry then sought an opinion from the Crown Law Office on the question of the interpretation of Article 2.4 of the Anti-Dumping Agreement and section 5(b) of the Dumping and Countervailing Duties Act 1988. The Crown Law Office considered that in this case the currency conversion should be made using exchange rates at the date of sale, as required by both Article 2.4 of the Agreement and section 5(3) of the Act. The Crown Law Office noted that the date of sale can be established by examining the date at which the property in the goods is considered to pass.

Accordingly, the Ministry has used the invoice date to establish the date of sale and the rate of exchange for each transaction. The exchange rates used are the interbank rates listed by the OANDA currency conversion site on the internet (http://www.oanda.com/converter/classic).

The New Zealand Customs exchange rate has been used for the US dollar and Thai Baht to NZ dollar currency conversions. These conversions are required to establish the New Zealand dollar value of the Normal Value Equivalent and Thai producer values, and to establish duty amounts payable or refundable.

Shipments Considered

For the purposes of determining current export prices, the Ministry has considered goods shipped after the Baht devaluation on 2 July 1997. Information has been provided for shipments in the period commencing 2 July 1997 up to 11 January 1999 by ETL; 21 January 1999 by Sigma; 5 February by Qualistic; and 12 March 1999 by CTS. This information has been used to determine the existence and extent of dumping.

Export Price

SCT Co Ltd

Base Price

The transaction values for actual shipments were used as the base price for the export price calculation. The transaction value is the __________________ price expressed in US dollars and does not include any commissions or margins for export agents or importers.

Deductions

Export Packing

Additional export packaging costs include steel belt, plastic wrap, plastic tape, labour cost, fork-lift rent, gasoline, supervisor, fork-lift driver, reject board, labels and crate costs. An adjustment has been made using export packing costs per square metre allocated to each length of board by SCT and verified in 1997.

Packing costs for bolsters (used in some 1997 shipments) were calculated on the basis of a Terminal Handling Charge and a Stuffing Charge. Details of these charges were provided during the 1997 verification and were allocated to the relevant individual shipments. Since the beginning of October 1997, bolster charges were included in the ocean freight charge, therefore no deduction for this item is required from that time.

Freight to Wharf

The 1997 verification team sighted and verified freight invoices for 1997 shipments and allocated freight to wharf costs individual transactions. Information provided by SCT during the 1999 verification visit showed that freight to wharf costs per trailer have not changed. Freight costs for the shipments examined by the 1999 verification team have been allocated to individual shipments using an estimation of the number of trailers required, which is based on 1997 information. Costs per shipment have been allocated per square metre by volume.

Shipping Charges

In its submission SCT had referred to a "Port Handling Charge" in addition to shipping charges. The 1997 verification team established that these were one and the same charge, and included port handling, documentation, and Customs clearance charges. An additional Government charge that related to the overtime attendance of Customs officials was also included in the calculation of shipping charges. Detailed invoices, consolidated for each shipment, were sighted and charges allocated to individual transactions. During the 1999 verification SCT stated that shipping charges had not changed. Using an estimation of the number of trailers required for each shipment, shipping charges have been allocated to individual shipments. Costs per shipment have been allocated per square metre by volume.

SCT provided both the 1997 and 1999 verification teams with evidence of bill of lading fees charged per importer per shipment. Bill of lading fees for individual transactions have been allocated per square metre by volume.

Credit

Export credit is provided to Sigma Agencies and Elephant Trading on the basis of bank guarantees. In 1997 the same credit policy applied in respect of domestic sales to similar customers. However, during the 1999 verification visit SCT explained that customers were now starting to purchase on a cash basis. Where it was established that the customer selected by the verification team for comparison purposes had purchased on a cash basis, an adjustment has been made by applying monthly lending rates sourced from the International Monetary Fund’s International Financial Statistics (April 1999) (Public File Document #389) to the FOB price of the goods exported to New Zealand customers.

Export Subsidy

It was established the "export subsidy" referred to in SCT’s questionnaire response was in fact similar to a drawback payment which is more appropriately dealt with in the context of calculation of the normal value.

Winstone’s Submissions

Winstone has made a number of submissions (including Public File Documents #96; #193; #211; #227; #246; and #322) on export prices and normal values, including an evaluation of the Ministry’s findings in the 1997 Verification Report of the visit to SCT (Public File Document #158).

Base Price

The base prices used by Winstone in its early submissions were out of date and inaccurate. The base prices used by the Ministry are based on actual and verified transactions.

SCT Margin

Winstone’s submission claimed that an export price deduction should be made for an export margin or the costs incurred by SCT as the export house for Siam Gypsum.

The Siam Cement Group consists of a parent company, the Siam Cement Public Company Limited, and its subsidiaries. The Siam Cement Group is a diversified industrial conglomerate handling more than 60,000 different product items and employing more than 35,000 people. The Group is organised into Business Groups headed by Vice Presidents. The Business Groups which are relevant to the plasterboard reassessment are the Trading Group (which is administratively linked with the Cement Group) and the Construction Materials Group.

SCT is the company in the Trading Group that is involved in international business. SCT currently has overseas offices and trading ventures in a number of countries. SCT is a fully-owned subsidiary of the Siam Cement Public Company Limited and exports primarily cement, construction materials, paper, plastic resins, food products, and gypsum. In addition, the company imports primarily raw materials. The manufacture of plasterboard is carried out by the Siam Gypsum, which is part of the Construction Materials Business Group. Both SCT and Siam Gypsum have their offices in Bangsue at 1 Siam Cement Road. The figure below illustrates the company structure.

With regard to the margin and costs incurred by SCT, the Ministry is satisfied that no deduction needs to be made because SCT operates as part of the Siam Cement Group and a similar arrangement exists in respect of domestic sales.

Export Costs

Winstone also claimed that export price deductions should be made in respect of export packaging costs; export credit; transport costs; container costs; terminal handling charge; and Customs clearance charges.

Adjustments for the actual export packaging, inland freight, and bill of lading costs have been made, as described above. An adjustment has also been made for credit costs where sales on the domestic market were made on a cash basis. Since the adjustment for shipping charges, and for bolsters where relevant, cover the container costs, terminal handling charges, and Customs charges claimed by Winstone, no separate deductions are required for these items.

Thai Gypsum Products Public Company Limited

Following the 5 November 1997 meeting with Thai Gypsum, the Ministry proposed that export price for Thai Gypsum should be based on the best information available, which was considered to be the invoiced prices provided by Qualistic and Transpac; the overseas freight information provided by Qualistic; the commission or margin for Transpac estimated by Winstone; and the port charges, customs clearance, and credit costs estimated by Winstone (Public File Document #179).

Winstone subsequently provided further information, which it claimed should be used in place of the information provided earlier. The Ministry analysed this information and compared it with information provided by SCT. The reseller’s margin was changed to reflect the updated information provided by Winstone and the adjustments for inland freight and a combination of shipping charges and bill of lading fees were based on information provided by SCT.

Base Price

Base prices following the meeting with Thai Gypsum in 1997 were established using the best information available, which was considered to be the information contained in an invoice provided by Qualistic and Transpac for a shipment made outside the period under examination (June 1997).

The Ministry has since obtained invoices from New Zealand importers CTS, Gyptec, and Qualistic for shipments of plasterboard from Thai Gypsum made in the period under consideration. The pricing information contained in these invoices is considered to be the best information available and has been used to establish base prices. The base prices are on a

______________________________________________________________. Base prices shown on invoices supplied by Qualistic include a reseller’s margin.

Deductions

Ocean Freight

Ocean freight costs were initially based on the best information available, which was a check of the rate charged on a shipment made in June 1997 by Qualistic. During and following the 1999 verification visit, Thai Gypsum provided shipping rate quotations made within the period under consideration. These quotations are considered to be the best information available and have been used to calculate an ocean freight adjustment.

Trader Margin

Plasterboard produced by Thai Gypsum and imported by Qualistic is purchased through a Malaysian company, Transpac. An adjustment was made by the 1997 verification team using information supplied by Winstone. Winstone subsequently claimed that the appropriate margin should be based on the mid-point of its estimates of FOB prices to New Zealand and Hong Kong (Public File Document #211). The Ministry disagreed with this methodology, but the estimated FOB price for sales to New Zealand provided by Winstone is considered to be the best information available and has been used to calculate a new margin. No such adjustment is necessary for sales to CTS and Gyptec, as these sales are not made via Transpac.

Insurance

No adjustment for insurance was made following the 1997 verification. However, during the 1999 verification Thai Gypsum claimed an adjustment for insurance and provided copies of insurance premium quotations. These quotations are considered to be the best information available and an insurance adjustment has been made for all shipments made on a CIF basis.

Export Packing

The invoice from Transpac to Qualistic used by the 1997 verification team showed a "FR overcharge". This charge includes freight to wharf and export packing costs for flat rack containers. As the charge was shown separately from the price of plasterboard, no adjustment was required. However, the majority of invoices examined by the 1999 verification team did not show such a charge. Thai Gypsum claimed a US$____ per square metre amount for export packaging costs. As the verification team was unable to verify actual export packaging costs incurred by Thai Gypsum, an adjustment for export packing has been made on the basis of the best information available. While the verification team has verified export packing costs for SCT, these are not considered to be an adequate basis for calculating export packing costs for Thai Gypsum, since Thai Gypsum uses a less expensive form of packing for exports of plasterboard than SCT. Therefore, the best information available regarding export packing costs incurred by Thai Gypsum is considered to be the cost given by Thai Gypsum. Accordingly, an adjustment for export packing has been made for all shipments, except where a FR overcharge amount is shown separately and, therefore, no adjustment is necessary.

Freight to Wharf

The invoice from Transpac used by the 1997 verification team showed a "FR overcharge". This charge includes internal freight to wharf costs. As this charge is shown separately from the price of plasterboard, no adjustment was required. Following the provision of further information by other interested parties, an adjustment based on SCT’s freight to wharf costs was suggested in the Draft Reassessment Report. During the 1999 verification Thai Gypsum claimed that there were no freight to wharf costs. However, several invoices from Transpac to Qualistic indicated that freight to wharf costs (FR overcharge) had been incurred. Consequently, the 1999 verification team has made an adjustment for freight to wharf costs based on the best information available, which is considered to be the average of the per square metre freight to wharf costs incurred by SCT. No adjustment has been made where the FR overcharge is shown separately on the invoice.

Shipping Charges

Following the 1997 verification, an adjustment was made for port charges and customs clearance using the best information available at that time, which was that provided by Winstone. Since then, information from SCT regarding shipping costs has been verified and is now considered to be the best information available. Accordingly, a combined adjustment for shipping charges and bill of lading fees has been made based on costs incurred by SCT.

Export Prices

The Ministry has calculated export prices for each transaction shown on the shipping invoices for exports to New Zealand from 2 July 1997 up to 11 January 1999 for ETL; 21 January 1999 for Sigma; 5 February for Qualistic; and 12 March 1999 for CTS, with deductions from the prices paid or payable made on the basis explained above.

Normal Value

SCT Co Ltd

Level of Trade

Plasterboard is produced by Siam Gypsum at several manufacturing plants throughout Thailand (see paragraph 3.4 above) and is transferred to the marketing arms of the company at transfer prices. The marketing arm for domestic sales is Siam Gypsum Industry Co Ltd. Profits made by the marketing arm are consolidated into the parent company accounts. This situation mirrors that on the export side, where SCT is the export-marketing arm for products of the Siam Cement Group.

The 1997 verification team identified "Code 5" customers as the appropriate level of trade for comparison purposes. Code 5 customers deal in more than one product manufactured by the Siam Cement Group. Code 4 customers specialise in one of the products manufactured by the Siam Cement Group. Both Code 4 and Code 5 include wholesale, distribution, and retail customers. For sales of plasterboard, there is no price difference between Code 4 and Code 5 customers. The 1999 verification team selected a Code 4 customer, ____________, which is considered to be at a similar level of trade to New Zealand importers.

Base Prices

Since 2 July 1997 there have been five applicable price lists showing the following per sheet prices for plasterboard of 9mm in thickness and of 2400mm in length: 138 Baht from September 1995; 149 Baht from 13 August 1997; 171 Baht from 2 January 1998; 188 Baht from 1 April 1998; 198 Baht from 4 January 1999. These prices, which were inclusive of delivery until 2 March 1998, have been used to establish base prices.

Adjustments

Section 5(3) of the Act provides:

Where the normal value of goods imported or intended to be imported into New Zealand is the price paid for like goods, in order to effect a fair comparison the normal value and the export price shall be compared by the Secretary—

(a) At the same level of trade; and

(b) In respect of sales made at as nearly as possible the same time; and

(c) With due allowances made as appropriate for any differences in terms and conditions of sales, levels of trade, taxation, quantities, and physical characteristics, and any other differences which affect price comparability.

Terms and Conditions of Sale

Discounts and Rebates

Base prices are normally subject to discounts and rebates available to virtually all commercial customers. The actual rates for discounts and rebates are flexible based on market requirements. The 1997 verification team examined discounts applicable to Code 5 customers. The 1999 verification team was provided with discount schedules and invoices for the Code 4 customer it selected, ____________. An adjustment has been made in the periods defined by discount schedules, using the actual discount calculated from invoices as having been received by _____________.

The 1997 verification team made an allowance for rebates based on the average rebate level for sales to a Code 5 customer with equivalent volumes of trade to export sales to New Zealand. The 1999 verification team has made an allowance for rebates at the rates indicated on the discount schedules for the Code 4 customer selected. The rate effective on 3 October 1997 differs from the rate applied by the 1997 verification team. Shipments from 3 October 1997 have, therefore, been re-calculated using the rate verified in 1999.

Following the 1997 verification visit, SCT provided information relating to additional "bonus" discounts, which are based on the "cooperativeness and loyalty of the customer". Information confirming payment of a bonus to a customer achieving similar sales volumes as exports to New Zealand was provided. During the 1999 verification, SCT provided the verification team with documentation showing the rate and amount of bonus payable to particular customers. Bonus payments ceased after the period ending June 1998. An allowance has been calculated in the periods in which bonus discounts were offered by applying the bonus rates to __________. The bonus rate applicable in late 1997 was not available to the 1997 verification team. Accordingly, the bonus rates verified in 1999 have been used to re-calculate bonus rates applied by the 1997 verification team.

Inland Freight

Siam Gypsum’s domestic sales were made on a delivered basis until 2 March 1998. Following the 1997 verification visit, SCT provided information relating to the calculation of transport costs. SCT proposed that the adjustment be based on the percentage of the transport and selling costs over total sales revenue net of discounts (but not rebates). Evidence of transfers of this amount were provided, together with information relating to sales information. For the purposes of this adjustment, only actual transportation costs were used, not sales force costs. The 1999 verification team has made an allowance for transactions between 25 October 1997 and 2 March 1998 using the average cost of freight as a percentage of sales revenue calculated using information verified in 1997. Since SCT began charging freight separately from 2 March 1988, no allowance for freight has been made from this date forward.

Credit

In relation to the 1997 verification, Winstone claimed that no credit was given for the majority of sales made by Siam Gypsum and that the discount level reflected the level of credit provided. SCT officials stated that, despite the current economic conditions in Thailand, the company was able to continue to extend credit to domestic customers because of its longstanding policy of requiring bank guarantees. Prior to the 1999 verification visit, Trade Consultants, acting on behalf of Winstone, claimed that SCT’s domestic customers are required to pay in cash and that no credit terms are available (see Public File document #322). SCT confirmed that credit terms are still available to domestic customers able to provide a bank guarantee, but domestic customers were starting to purchase on a cash basis in order to take advantage of SCT’s discount for cash. Invoices provided to the verification team showed that the selected customer, _______________, received cash discounts. An export price adjustment has been made for the cost of credit where the corresponding normal value transaction was made on a cash basis.

Levels of Trade

No adjustment is required because the Ministry considers that the export transactions and the domestic transactions are at similar levels of trade.

Taxation

As noted in the Export Price section above, a drawback or refund process is provided to cover duty paid on imported raw materials and other taxes and duties under the Tax and Duty Compensation of Exported Goods Produced in the Kingdom Act. The imported content of SCT’s plasterboard includes Kraft paper imported into Thailand and purchased by SCT and Kraft paper imported directly by SCT. Thailand’s current WTO bound duty rates on paper and paperboard are set at 30 percent. The applicable percentage refund for exports of plasterboard was ___ percent in 1997. During the 1999 verification, SCT provided documentation showing that it was still claiming refunds at this same rate.

Consistent with its practice in previous investigations the Ministry provides for drawback and tax refund on exports as an adjustment to normal value for differences in taxation. Accordingly, the normal value incorporates this adjustment for drawback of ___ percent of the FOB price of plasterboard exported to New Zealand customers.

Quantities

No adjustment is required.

Physical Characteristics

Winstone has claimed that an adjustment should be made for the physical difference between the 9mm board sold domestically and the 9.5mm board sold to New Zealand. Winstone’s calculation of the adjustment was based on the difference between Thai domestic selling prices for 9mm and 12mm plasterboard, pro rated for 9.5mm plasterboard.

In contrast, SCT submitted that any adjustment should be based on material cost differences. SCT provided evidence of the cost of gypsum, which is the only material where there is any significant difference in cost between different thicknesses of plasterboard.

The Ministry considers that an adjustment for physical difference should be based on the material cost difference between the 9mm plasterboard sold on the Thai market and the 9.5mm plasterboard exported to New Zealand, rather than on the difference in selling prices between 9mm and 12mm plasterboard. Plasterboard of 12mm in thickness is not considered to be a like product to 9mm or 9.5mm plasterboard and the price of 12mm plasterboard reflects the different market that it is sold into.

A positive adjustment based on the cost of gypsum provided by SCT in 1997 has been made to account for the lower material costs incurred in the manufacture of 9mm plasterboard.

Other Differences Affecting Price Comparability

In 1997, SCT claimed adjustments for direct and indirect selling and administration costs. The Ministry’s approach is that such adjustments can be made only in respect of selling and other costs which directly affect the price of goods, i.e. they are effectively reflected in a reduction in revenue. Examples given were promotional programmes such as "free" board supplied if a set quantity is purchased, specific co-op advertising related to specific sales, and salesmen’s commissions where the level of commission is dependent on the volume of sales.

Following the 1997 verification visit, SCT also provided information regarding a promotional campaign for the fourth quarter of 1997 under which a jacket is provided for purchase of a set quantity of product. This form of promotional assistance can be related to the price received for the goods, and in previous cases an allowance has been made for such programmes. However, it was subsequently determined that the promotional campaign was not carried through and the Ministry has not made an adjustment.

SCT had included an amount for "Extraordinary Expenses (Income)" in its 1997 claim for adjustments. The Ministry has agreed that since this amount was negative and was extraordinary revenue it should not be included.

No allowances were sought by SCT during the 1999 verification for other differences affecting price comparability.

Normal Value Calculation

The Ministry has calculated normal values for each transaction shown on shipping invoices for exports of plasterboard from SCT to New Zealand from 2 July 1997 up to and including shipments made on 11 January 1999 for exports arranged by ETL and 21 January 1999 for exports arranged by Sigma. Allowances have been calculated on the basis outlined above.

Thai Gypsum Products Public Company Limited

Thai Gypsum has provided the Ministry with some documentation. However, this information is considered to be insufficient to form an appropriate evidentiary basis for the calculation of normal values. Consequently, the Ministry has relied upon the best information available, which includes information provided by Winstone, SCT, and the limited amount of information provided by Thai Gypsum.

Level of Trade

Thai Gypsum provided only limited information about sales on the domestic market. Consequently, both the 1997 and 1999 verification teams were unable to establish a comparable level of trade for Thai Gypsum’s sales to domestic customers.

Base Price

Thai Gypsum provided price lists showing the following per sheet prices for 9mm plasterboard of 2400mm in length: 138 Baht from 15 September 1995; 149 Baht from 12 August 1997; 171 from 1 January 1998; 188 Baht from 1 April 1998; 188 Baht from 15 June 1998; 198 Baht from 1 January 1999. List prices have been used to establish base prices. List prices are inclusive of internal freight. However, Winstone (Public File Document #322) claims that since 2 January 1998, Thai Gypsum has passed on the cost of internal freight to its customers.

Adjustments

Terms and Conditions of Sale

Discounts and rebates

In the absence of sufficient information from Thai Gypsum, an allowance for a standard discount has been based on the best information available, which is considered to be the updated information provided by Winstone (Public File Document #322).

As insufficient information was provided by Thai Gypsum regarding rebates, Winstone’s information is considered the best information available. Accordingly, an allowance of _____ percent of the list price has been made for shipments made up to 13 August 1997. No allowance for rebates has been made for sales made from 13 August 1997.

Bonus

During the 1999 verification visit, Thai Gypsum claimed that domestic customers receive a bonus at the end of the year if they achieve volume targets, however no supporting documentation was provided. In the absence of sufficient information, no allowance has been made for this item.

Inland Freight

In the absence of sufficient information from Thai Gypsum, an allowance for internal freight has been made using the best information available, which is considered to be that provided by Winstone and SCT. This allowance has been made using the average cost of freight calculated from information provided by SCT, but only in respect of sales up to 2 January 1998 from which date Winstone claims Thai Gypsum has passed on the cost of inland freight to its customers.

Credit

Winstone claimed that no credit is offered by Thai Gypsum to domestic customers. However, during the 1999 verification visit Thai Gypsum stated that its standard credit term for domestic customers is _______. Thai Gypsum claimed that it was actually incurring higher credit costs because the economic crisis had led customers to pay at much later dates. The Ministry considers that the terms of credit at the time of sale, namely _______, should be used as the basis for calculating credit costs incurred by Thai Gypsum for domestic sales. As these credit terms approximate the credit terms extended to New Zealand customers, no allowance has been made for credit.

Taxation

Thai Gypsum has not provided any information regarding its eligibility for or the receipt of refunds for goods exported in accordance with the Tax and Duty Compensation of Exported Goods Produced in the Kingdom Act. In the absence of any other information, no adjustment has been made for this item.

Physical Characteristics

The plasterboard exported by Thai Gypsum is predominantly of 10mm in thickness (a small amount of 9mm and 9.5mm was also exported for use in ceiling tiles), while the plasterboard sold on the domestic market is of 9mm in thickness. Where necessary, an adjustment for physical difference has been made using material cost information provided by SCT.

Other Differences

During the 1999 verification visit, Thai Gypsum claimed allowances for storage (the cost of operating its depots); local promotion; sales incentives; and insurance on domestic sales. Thai Gypsum did not explain or support these claims with evidence. In the absence of any other information, no allowances have been made for these items.

Normal Value Calculation

By applying the list prices and allowances outlined above, the verification team has calculated the normal values on the dates of Thai Gypsum’s export transactions with New Zealand customers from 2 July 1997 up to and including shipments made on 12 March 1999.

Dumping Margin

On the basis of the export prices and the normal values described above, the Ministry has determined that imports from both SCT and Thai Gypsum during the period since the initiation of this reassessment have been dumped. Due to the changes in both the domestic and export prices and the fluctuation of exchange rates over this period the margins vary considerably.

There were ___ shipments, representing ____ transactions, from SCT in the period 2 July to 21 January 1999. Of these, ____ (approximately 89 percent) transactions were dumped with a weighted average dumping margin of 41.03 percent, and a range of margins of 3.07 percent to 102.22 percent.

_______________________ transactions (10 percent) were not dumped, while __ transactions (less than 1 percent) had a de minimis level of dumping, i.e. the margin of dumping was less than 2 percent, expressed as a percentage of the export price. There were __ shipments, representing ___ transactions, from Thai Gypsum between from 2 July 1997 to 12 March 1999. Of these transactions, ___ (approximately 82 percent) were dumped with an average dumping margin of 52.51 percent, and a range of margins between 3.70 and 79.86 percent. One transaction appears to have been charged at an incorrect price, giving a dumping margin of 150.94 percent. ____________ transactions (approximately 16 percent) were not dumped and _ transactions (approximately 2 percent) had margins that were de minimis.

The extent of any dumping during this period reflect the changes to the Thai domestic price, export prices and the exchange rates applicable to each shipment.

6. REASSESSMENT OF INJURY

Review and Reassessment

In the current case, the last detailed analysis of injury was the Review completed in February 1996. The Review and Reassessment Report noted that the purpose of considering injury to the industry in a review is to establish whether the continued imposition of anti-dumping duties is necessary to prevent the continuation or recurrence of injury. This will include an evaluation of the extent of injury that would be likely to occur if the duty was removed. In considering the relevant factors and indices relating to injury, the Ministry took into account forecasts of the likely scenario if anti-dumping duties were removed. As a result of its analysis, the review team concluded that:

In the absence of anti-dumping duties it was likely that there would be a further significant increase in the volume of dumped imports;

In the absence of anti-dumping duties it could be expected that there would be significant price undercutting, price depression and price suppression;

In the absence of anti-dumping duties and in light of the significant price and volume effects, it could be expected that dumped imports would have a significant adverse economic impact on the New Zealand industry.

The review team noted that on the basis of the information available it appeared that the anti-dumping remedy had not achieved the desired effect, at least in the year to June 1995. It was considered that this was because the costs between the FOB and the market level had decreased since the NIFOB was originally calculated, and to the extent that prices of imports, when sold on the market, were lower than the non-injurious level, and the domestic industry had lost sales and market share as a result, then there was an impact on revenue and profits attributable to this cause. Unless this was dealt with then there was a potential decline in revenue and profits, indicating a threat of material injury.

Current Reassessment

Section 14(5) of the Act requires the Minister, in setting the reassessed duty, to have regard to the desirability of ensuring that the amount of anti-dumping duty in respect of those goods is not greater than is necessary to prevent the material injury to a domestic industry.

When the current reassessment was initiated in terms of section 14(6) of the Act, the verification of export prices and normal values indicated that a duty based on the margin of dumping, rather than the level of injury, was appropriate and the draft Reassessment Report released in April 1998 contained such a recommendation. This Report also acknowledged that if, as a result of movements in exchange rates, dumping of plasterboard from Thailand resumed or increased, then it may become necessary to review the continued need for the imposition of anti-dumping duties in the light of the extent of dumping and injury attributable to it. The reassessment was expected to be completed shortly after interested parties had been given the opportunity to comment on the draft Report. However in April 1998, Winstone raised legal issues surrounding the interpretation of section 14(4) of the Act. A definitive legal opinion from the Crown Law Office was not received until January 1999.

The change in circumstances identified by the latest verification visit has established that dumping margins have increased significantly. During the investigation period (July 1997 to February 1999) the dumping margins have ranged from 0 percent to 100 percent. The margins are presently higher than when the current NIFOB price methodology was introduced. Several factors are responsible for this situation including, the devaluation and revaluation of the Thai baht against the US dollar, Thai producers lowering their export prices, increases in price on the Thai domestic market and changes to discount and rebate schemes applicable to domestic sales. All of these changes can have an effect on the dumping margin applicable to Thai plasterboard.

The high levels of current dumping margins means that there is a possibility that the level of injury is less than the margin of dumping. The current NIFOB was calculated using the "1988 benchmark" approach to establish a non-injurious price for Winstone. However, the Ministry considers that it is no longer sound to simply calculate a new NIFOB on the same basis as the 1996 Review and Reassessment Report. Also, the Settlement Agreement between the Ministry and Winstone lays out an agreed approach to achieving the calculation of the level of injury and a new NIFOB. Thus, in order to establish a duty based on the level of injury, if this is less than the margin of dumping, the level of injury caused by the dumped imports would have to be fully reconsidered. The Ministry considers that any such reconsideration of the level of injury can only be instituted as part of a review conducted under the provisions of section 14(8) of the Act.

Legal counsel for Sigma, Shieff Angland, submitted that "the proposal to apply a remedy that represents the full margin of dumping, without reassessing the margin of injury, is a flagrant and clear breach of section 14(5) of the Act". Shieff Angland accepted that where a reassessment was being carried out over the "usual short time-frame", the normal practice was to simply adjust the margin of dumping and leave the injury issue to a subsequent review. However, because this reassessment had now lasted almost two years and the most recent injury assessment was in February 1996, Shieff Angland has submitted that injury levels can not be ignored. Sigma submitted that a duty based on the full margin of dumping ______________________________________________________.

The Ministry sought a legal opinion to address the issues raised by Shieff Angland. The opinion states that section 14(5) imposes a procedural requirement on the Minister to "have regard to the desirability of ensuring that the amount of anti-dumping or countervailing duty in respect of those goods is not greater than is necessary to prevent the material injury … to an industry…". The opinion further states that the Minister is not required to ensure that the amount of anti-dumping duty is not greater than is necessary to prevent material injury. Rather, the Minister may give such weight to the desirability of ensuring that the anti-dumping duty is not greater than is necessary to prevent material injury to an industry, as he considers appropriate. The High Court considered the meaning of the words "have regard to" in NZ Co-operative Dairy Company v Commerce Commission [1992]1 NZLR 601, at page 612. It stated:

We do not think there is any magic in the words ‘have regard to’. They mean no more than they say. The Tribunal may not ignore the statement. It must be given genuine attention and thought, and such weight as the Tribunal considers appropriate. But having done that the Tribunal is entitled to conclude it is not of sufficient significance either alone or together with other matters to outweigh other contrary considerations which it must take into account in accordance with its statutory function.

The Ministry recognises that it may be desirable to delay the reassessment pending the outcome of any review initiated under section 14(8) of the Act. Relevant factors which would support such a delay include that:

the margins of dumping on imports of plasterboard are presently high when compared with the margins of dumping in the past which could suggest that the level of injury is less than the margin of dumping;

the importers claim that the viability of their businesses is seriously threatened if the duty is based on the margin of dumping.

The Ministry considers that while it is desirable that the amount of anti-dumping duty is not greater than is necessary to prevent material injury, there are a number of factors that must be weighed against this consideration. These include:

while there is a possibility that the level of injury is less than the margin of dumping, Winstone has submitted that the level of injury exceeds the margin of dumping;

in order to determine the level of injury, a review will be required, which could take up to a further six months;

the reassessment was initiated in August 1997 and it would be undesirable to extend it further;
the Secretary intends to initiate a review, which will examine the level of injury, upon completion of the reassessment; and
if, as a result of that review, a duty less than the margin of dumping is established, a refund of any excess duty can be made to importers if appropriate.

It should be noted that the Ministry intends to commence a review of the level of injury immediately upon the completion of this reassessment. The Ministry will attempt to complete this review as quickly as possible, but notes that the statutory timeframe for such a review is 180 days from the date of initiation.

Taking the above matters into account, the Ministry considers that a duty should be reassessed on the basis of the difference between the established normal value and the Thai producer value of the dumped imports, until a review establishes whether or not a lesser duty is appropriate. Accordingly, the investigating team recommends that the Minister reassess the anti-dumping duty on imports of plasterboard from Thailand on this basis. It also recommends that the Secretary initiate a review under section 14(8) of the Act to consider whether or not the duty is greater than is needed to prevent material injury to the New Zealand industry. If such a review is initiated the Ministry would be bound by the provisions of the Settlement Agreement at paragraphs 4 – 6, which outline the approach to considering material injury in this case.

7. ANTI-DUMPING DUTIES

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: a specific amount per unit of product; an ad valorem rate; and a reference price approach under which 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 or the non-injurious price.

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.

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 is to be read as a reference to the export price and normal value established in the investigation or to the values at the time the goods subjected to the duty are imported. Given this, the Ministry's approach is to adopt a form of duty that minimises the possibility of exceeding the margin of dumping on shipments subsequent to the imposition of the duty by the Minister. Where the duty imposed has exceeded the margin of dumping, Article 9.3.2 of the Agreement and section 14(10) of the Act provide for refunds of the difference between the duty paid and the lower duty imposed as a result of the reassessment.

A specific duty, based on the monetary value of a margin of dumping, has the advantages of being convenient to apply and impossible to evade by incorrectly stating the value for duty. A specific rate 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 specific amount, 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. A specific duty expressed as a monetary amount can really operate only when prices and exchange rates are consistent and stable and where the transaction-to-transaction comparison does not result in a range of different dumping margins. An alternative approach to deal with this problem is to express a specific duty as a formula, being the difference between equivalent prices to the normal value and the export price of a particular shipment, with the values for the normal value and export price being fixed. When those elements of the formula are expressed in terms of the currency of each transaction, the problem of exchange rate movements can be dealt with. However, such an approach does not deal with the problem of changes in export prices for reasons other than exchange rate movements or movements in normal values.

An ad valorem duty, based on the dumping margin expressed as a percentage of the export price, and itself expressed as a percentage of the dutiable value is convenient to apply and is not so affected by exchange rate movements. However, it can be affected by false statements about the value of the goods. 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 range of different dumping margins. An ad valorem rate gives an indication of the impact of the duty, but is not as clear an indication as the other forms of duty.

A reference price duty has advantages in that it is best able to deal with movements in the export price and exchange rates (if expressed in the currency of the normal value), and is particularly appropriate for dealing with situations where 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. Nevertheless, a reference price does have the advantage that it clearly signals to the exporter and importer what level of price is undumped or non-injurious, and provided it is carefully described the problem of evasion can be dealt with.

In the current case, the considerations which need to be taken into account in deciding on the form of duty include movements in exchange rates, export prices, and normal values, and the need to ensure a consistency of approach with regard to exporters and the various export channels.

Taking into account all of these considerations, and particularly in view of the fluctuating exchange rates, it is necessary to reassess the current anti-dumping duty which is based on a non-injurious price. Changes in exchange rates have increased dumping of plasterboard from Thailand, therefore it would not be appropriate to revoke anti-dumping duties. The consideration of the form of duty has taken into account the matters referred to in paragraphs 7 to 25 of the Settlement Agreement.

The Ministry considers that it would be appropriate to apply anti-dumping duties based on the margin of dumping for both SCT and Thai Gypsum. The margin of dumping would be expressed as the difference between the weighted average of Normal Value Equivalent amounts (references prices determined by the Ministry as the normal values plus appropriate export price adjustments to bring them to an equivalent level to the exporter’s selling price) and a transaction value, which will be called the Thai producer value. This approach would remove any need to reassess duty rates at short notice on the basis of changes in exchange rates or export prices.

For SCT, weighted average Normal Value Equivalent amounts, expressed in Baht, will be established for 9 periods (i.e. following significant changes in normal value and export price adjustment elements), as follows:

Period	Baht
13 August to 25 September 1997	_____
12 October to 26 December 1997	_____
11 January to 25 February 1998	_____
13 March to 25 March 1998	_____
10 April to 10 June 1998	_____
25 June to 26 August 1998	_____
10 September 1998	_____
27 September to 30 December 1998	_____
11 January onwards	_____

The normal value equivalents during each period were no more than 0.58 Baht below and, except for in the first period, no more than 0.89 Baht above the weighted average Normal Value Equivalent values set. The first period includes several transactions where bolsters had been used in export packaging. The adjustment for bolsters for these transactions resulted in a positive variance from the weighted average Normal Value Equivalent of 1.13 Baht. The 98 percent of transactions without a bolster adjustment, representing 95 percent of the volume, in the first period varied by no more than 0.60 Baht from the weighted average Normal Value Equivalent.

For Thai Gypsum, weighted average Normal Value Equivalent values will be established for 7 periods as follows:

Period	Baht
15 September 1997	_____
22 September to 24 November 1997	_____
30 November 1997	_____
26 December 1997	_____
9 March 1998	_____
27 April to 18 December 1998	_____
18 January 1999 onwards	_____

The Normal Value Equivalents during each period were no more than 0.75 Baht below and no more than 0.82 Baht above the weighted average Normal Value Equivalent values set

The transaction value to be compared with the weighted average Normal Value Equivalent value is essentially the FOB price, but exclusive of any agents’ or resellers’ margins or commissions. This approach would remove the New Zealand industry’s concerns relating to margins, commissions and different import arrangements, as referred to in paragraphs 16 and 17 of the Settlement Agreement. The New Zealand Customs Service would calculate the Baht equivalent of the transaction price using the Customs exchange rates in order to establish the duty payable.

A residual rate of anti-dumping duty for newcomers would be set at 99 percent ad valorem of the Thai Producer Value. This rate is based on the weighted average margin of dumped transactions from SCT in the most recent period.

Section 14(10) of the Act provides as follows:

Without limiting the ability of the Minister to require refunds in other circumstances, where a reassessment under subsection (6) of this section results in a lower duty being imposed on any goods, the Minister may require the [Customs] to refund, with effect from the date of initiation of the reassessment (or, in the case of a reassessment carried out under paragraph (c) of that subsection, from the date of initiation of the review referred to in that paragraph), the difference between the duty paid and the lower duty.

Any anti-dumping duties paid since the initiation of the reassessment (25 August 1997) which exceed the amount which would have been paid if the proposed duty was in place should be refunded.

Importers have raised the issue of the levying of retrospective duties being claimed for shipments that have been entered into New Zealand under the current NIFOB duty applicable during the course of the reassessment period. This has been raised in the context that any new anti-dumping duty will be applicable from 27 August, the date of initiation of the reassessment.

Retrospective duties can only be levied according to the terms and provisions of section 17 of the Act. The provision applies when the Minister makes a provisional direction under section 16 of the Act or a final determination under section 13 of the Act. Neither of these provisions apply in the particular case. The Minister is reassessing the rate or amount of anti-dumping duty payable under section 14(6) of the Act and therefore retrospective measures cannot be applied to any new formula or rate approved by the Minister.

In accordance with section 14(10) of the Act the reassessment of anti-dumping duties should require a refund of anti-dumping duties paid since the initiation of the reassessment where the amount paid was in excess of the proposed duty.

8. RECOMMENDATIONS

It is recommended that the Minister should:

note

note that the Secretary of Commerce intends to initiate a review of the imposition of the anti-dumping duty in terms of section 14(8) of the Act;
reassess, on the basis of the information obtained during the reassessment, the anti-dumping duty on imports of standard plasterboard from Thailand, and that the duties applicable to the Thai exporters should be based on a weighted average Normal Value Equivalent basis as outlined above; and
agree that any anti-dumping duties paid since the initiation of the reassessment (25 August 1997) that are in excess of the duties which would have been applicable if the proposed duty was in place, should be refunded to the extent of such excess.

ANNEX 1

AN AGREEMENT made this 5th day of August 1997

BETWEEN WINSTONE WALLBOARDS LIMITED, a duly incorporated company having its registered office at Auckland and carrying on business as a manufacturer of plasterboard (hereinafter referred to as "Winstone") on the one part.

A N D THE MINISTER OF COMMERCE, THE SECRETARY OF COMMERCE and THE MINISTRY OF COMMERCE (hereinafter jointly and severally referred to as "Commerce") on the other part.

WHEREAS:

A. WINSTONE carries on business in New Zealand as a manufacturer of plasterboard and is and was at all material times the "industry" for plasterboard in New Zealand in terms of the Dumping and Countervailing Duties Act 1988 ("the Act").

B. THE Minister of Commerce is a Minister of the Crown exercising statutory powers under and by virtue of the Act.

C. THE Secretary of Commerce is the Secretary exercising statutory powers under and by virtue of the Act.

D. THE Ministry of Commerce is the Government department responsible for administering the Act and its officers and employees act from time to time as the delegates of the Minister and of the Secretary for the purposes of each of them exercising statutory powers and statutory powers of decision under and by virtue of the Act.

E. AT various times since 1988 and in the respects detailed in the relevant Commerce records, Commerce has exercised statutory powers of decision and other statutory powers under and by virtue of the Act in relation to dumped plasterboard imported into New Zealand from Thailand.

F. VARIOUS issues have arisen between Winstone and Commerce in respect of some of the actions and decisions of Commerce in respect of the dumped plasterboard imported into New Zealand from Thailand and, in particular, Winstone commenced Judicial Review proceedings in the High Court of New Zealand under CP 301/96, Wellington Registry ("the proceeding").

G. AS a result of Commerce considering the issues referred to in the preceding paragraph and thus considering the submissions and evidence, including expert evidence, filed on behalf of Winstone and considering the independent legal advice given to Commerce by the Crown Law Office:

(a) Commerce acknowledges certain principles relating to the Act and its administration;

(b) Commerce and Winstone wish to resolve certain of the issues between them and to record clearly those principles which both parties acknowledge to be correct and applicable to the correct application of the Act in a situation where there is dumping.

NOW THEREFORE it is hereby agreed between the parties as follows:

ASSESSMENT OF MATERIAL INJURY

General Principles

1. In determining whether or not any material injury to an industry has been or is being caused or is threatened in accordance with Section 8 of the Act, Commerce must have regard to the position the industry would or would likely be in but for the dumping.

2. In determining material injury as aforesaid Commerce must act on the
evidence, including the opinion evidence of appropriately qualified experts, submitted by the industry and others in the sense that Commerce must come to a conclusion consistent with the evidence before them.

3. For the purposes of Section 8 (2)(c) of the Act and of any consideration by Commerce generally as to whether there has been price suppression caused by the dumping, any such price suppression is not limited only to those price increases which would have been likely to have occurred to cover actual cost increases.

Issues in the Proceeding

4. Commerce agrees that in the February 1996 Review and Reassessment Report when considering the extent of material injury to Winstone for the purpose of calculating a non-injurious price for Winstone, Commerce in adopting their "1988 benchmark" approach did not correctly calculate a non-injurious price for Winstone and that in future reassessments in this case it will follow the approach referred to in paragraph 1 above rather than the "1988 benchmark" approach.

5. Commerce erred in dismissing the evidence from Winstone and supporting evidence from an independent financial expert (Mr A Frankham) on the level of material injury as speculation and Commerce agrees that in future reassessments in this case it will follow the approach in paragraph 2 above.

6. Commerce agrees that in future reassessments in this case it will follow the approach in paragraph 3 above.

THE CALCULATION OF DUMPING REMEDIES (where it has been found that there is dumping causing or threatening material injury)

General Principles

Specific Duty

7. Commerce acknowledge that a specific dumping duty (that is a flat duty payable per unit of the dumped goods) is an available form of remedy and that Commerce will consider the imposition of such a remedy in any particular case.

8. Where dumping has been found in accordance with the Act, Commerce will have established the "export price" and the "normal value" of the goods which are the subject of the dumping complaint.

9. The "export price" and the "normal value" will be determined at the same level of trade (normally the price of the dumped goods ex-factory) in order to effect fair comparison as required by the Act.

10. The difference between the "export price" and the "normal value" is the dumping margin.

11. Commerce cannot impose a dumping duty which exceeds the dumping margin; Section 14 (4)(a).

Normal Value (Value for Duty Equivalent)

12. This is a remedy mechanism which calculates a Value for Duty Equivalent of the "Normal Value" and requires that the subject imports shall be liable to dumping duty to the extent that their Value for Duty, which term means their Customs Value as assessed by the Collector of Customs under the Customs Act, is less than the Normal Value (Value for Duty Equivalent) ("NV(VFDE)") so calculated.

13. The objective of such a mechanism is to set a NV(VFDE) which ensures that the exporter receives the full normal value for the subject goods or else the shortfall is paid as dumping duty thus eliminating the dumping which causes the material injury.

14. The mechanism requires an adjustment (addition) to the normal value to take it to the equivalent of the FOB point so that the Collector of Customs can compare the normal value so adjusted with the FOB value for duty (Customs Value) on any import of the subject goods.

15. It is essential therefore that in order to calculate the relevant adjustment to the normal value Commerce must identify all of the costs and charges that are part of the Customs Value actually presented to the Collector of Customs for duty purposes but which are not part of the "export price" for the purpose of calculating the dumping margin and that Commerce add all such costs and charges on to the "normal value" in order to construct the appropriate NV(VFDE).

16. Without limiting the generality of the principle referred to in paragraph 15 above, such costs and charges would include any of the following items included in an invoice presented to Customs in relation to the subject imports:

any selling agent's commission
any buying agent's commission
any margins on a second or subsequent sale for export interposed between the original exporter and the importer.

17. Where a variety of import arrangements are encountered such that the Customs Value of the subject goods comprises different costs and charges, Commerce must calculate a separate NV(VFDE) for each different import arrangement to reflect such differences and Commerce must also ensure that the Collector of Customs is able to identify the different import arrangement in order to apply the correct NV(VFDE).

"NIFOB" (non-injurious FOB value)

Calculation of NIP and NIFOB

18. In order to calculate a NIFOB Commerce must first calculate a non-injurious price ("NIP") for the New Zealand "industry".

19. The NIP for the industry is the price at which the industry would or would likely sell its like goods in the market but for the dumping. Hence, the NIP is to be calculated by Commerce in accordance with the general principles referred to in paragraphs 1 - 3 above.

20. The NIFOB is then calculated by deducting from the NIP so determined, various costs, expenses or margins ("cost elements") which the relevant importer either incurs or is properly entitled to an allowance for, between the point in the market at which the imported goods compete with the industry's NIP (hereinafter "the same level of trade") and the FOB point for the imported goods.

21. The purpose of correctly identifying the same level of trade for the imported goods is to ensure that the NIFOB for the imported goods is calculated so that the dumped goods when imported at that NIFOB price will not undercut the industry's NIP so determined.

Levels of Trade

22. In this case where importers of the dumped goods occupy positions in the New Zealand market where they are either at the same level of trade as the customers of the New Zealand industry or is at a level of trade subsequent to the customers of the New Zealand industry, then the relevant level of trade comparison is the price to that importer of the dumped goods at the wharf gate with the ex-factory NIP of the New Zealand industry, and the NIFOB must be calculated from that point so that the price of the dumped goods ex the wharf gate will equate with the ex factory NIP of the New Zealand industry.

23. Where in an importing structure the importer is related to its customers and those customers are at the same level of trade as customers of the New Zealand industry, Commerce must when determining the price ex importer's warehouse allow only an amount for profit margin which is objectively assessed as reasonable.

Issues in the Proceeding

24. Commerce failed to identify correctly the point at which the price of dumped Thai plasterboard competes with Winstone's ex-factory NIP.

25. In any reassessment in this case where the imports are not via a traditional importing structure, Commerce shall not include internal freight costs and a profit margin in the importer/retailers' "costs" deducted from Winstone's ex-factory NIP to calculate the NIFOB.

OTHER ISSUES

Reassessment

26. Commerce agree to carry out a reassessment in accordance with the general principles referred to above. Without the benefit of the detail which that reassessment will provide, Commerce presently expects that the level of material injury will require a remedy at least equal to the full dumping margin, in which case Commerce will not impose a remedy using a NIFOB mechanism. Commerce undertake that they have not concluded that they should not impose a remedy by way of a specific duty (as opposed to an NV(VFDE)) and will consider with an open mind all submissions by Winstone in the context of the further reassessment to the effect that a specific duty is the appropriate form of dumping remedy.

27. However, if Commerce either in the forthcoming reassessment or at any time hereafter intend to consider reverting to a NIFOB/Customs Value mechanism, Commerce will first give notice in writing to Winstone to enable Winstone to have the High Court determine the remaining issues between Winstone and Commerce, whether by way of the proceeding (suitably amended if necessary) being brought on for hearing or by way of a fresh proceeding, and Commerce will not proceed to maintain or to alter any dumping remedy affecting Winstone to a NIFOB/Customs Value mechanism unless and until the Court has ruled on the issues raised as to the validity of such an approach.

Financial Costs

28. In the February 1996 Review and Reassessment Report Commerce's inclusion in the cost elements of an allowance for "financial costs" in respect of the shipping time for the subject imports which it deducted from Winstone's non-injurious market price for the purpose of calculating the NIFOB remedy was not consistent with the evidence before them.

General

29. For the purpose of ensuring that the future relationship between the parties facilitates the efficient and factually and legally accurate administration and application of the dumping laws by Commerce, there will be as soon as practicable and in any event within 28 days of this Agreement a general discussion involving at least the head of the Trade Remedies Group, Commerce's senior legal adviser, a senior Winstone representative, one of its expert advisers and its legal advisers to discuss all matters of process of general concern to them with a view to ensuring that problems encountered in the past are avoided or can be dealt with in future in a more satisfactory way.

30. Except as dealt with in this Agreement, it is presently unnecessary to determine the issues raised in the proceeding and the proceeding is to be adjourned sine die in the event that it remains an appropriate vehicle to do so if such issues arise again and require resolution in the future.

31. In consideration of these presents Winstone waives any right or entitlement it may otherwise have had (which Commerce deny) to claim damages or compensation from Commerce by reason of any acts or omissions of Commerce in respect of the issues raised in the proceeding which are resolved in this Agreement.

32. Commerce will pay to Winstone the sum of $100,000 as a contribution towards Winstone's costs in the proceeding within 7 days of this Agreement.

EXECUTED this 1st day of August 1997 by the MINISTER OF COMMERCE, the SECRETARY OF COMMERCE and the MINISTRY OF COMMERCE, jointly and severally by their Solicitor and duly authorised agent:

EXECUTED this 5th day of August 1997 by WINSTONE WALLBOARDS LIMITED by its duly authorised agent:

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Printed: 26/11/2009