Australia’s New Anti-Dumping Arrangements

Legislation to further strengthen Australia’s anti-dumping regime recently passed through the Parliament and will operate from 1 July 2003.

These changes are consistent with Australia’s WTO and other international trade obligations and will bring the system more into line with the approach taken by the US and Europe.

They include establishing a new Anti-Dumping Commission, a funding boost for the anti-dumping system, improved responsiveness, efficiency and effectiveness and reduced cost and complexity for users.

Dumping – definition

Dumping occurs when export prices are below normal selling prices in the exporting country. Import duties can be imposed when it causes or threatens material injury to the industry producing like goods in the importing country. Likewise subsidies that have a similar effect are actionable by countervailing duties.

The new Commission will be based in Melbourne and the additional resources are expected to lead to improved response times, more rigorous analysis, less red tape, better transparency and improve public confidence in the system.

The law surrounding the application of retroactive duties is to be clarified and simplified while a new review mechanism and increased penalties will deal with circumvention of duty arrangements by importers. Duties will also be leviable at the full dumping margin in many cases rather than at a level just sufficient to offset the injury.

These reforms will be introduced in consultation with the International Trade Remedies Forum, a stakeholder body established to provide strategic advice and feedback to government on the operation of the system.

These reforms complement the changes implemented in June 2011 that improved the timeliness of investigations, increased resources, improved decision making and provided greater access to the system to small and medium sized enterprises.

The government says it remains committed to an open trade environment and remains a strong defender of the rules governing international trade. As there is no international agreement on anti-competitive practices, an anti-dumping system is the only means of countering unfair market behaviour globally.

The message is clear for those exporting goods to Australia and for importers alike – follow the rules or be prepared to accept substantially stiffer penalties for non-compliance.

Contributed by Peter Kittler (Canberra) – peterkittler@hotmail.com

St. Paul de Vence – a globalised AND localised artistic community

Nestled in the foothills of the Alps-Maritime, some fifteen minutes by car from the French Riviera, lies the ancient walled village of St Paul de Vence.

Located on a rocky promontory, the former Roman garrison site dates back 2,000 years and is spread over two acres – comprising a chapel, cemetery, chateau, homes and galleries. Narrow cobbled laneways lead tourists to sculptures, museums and art and craft stores. And overlooking the distant Mediterranean the hills and valleys around St Paul are covered with olive groves, flowers and vines just as they were centuries ago.

Artists began frequenting St Paul in the 1920s attracted by the village’s brown stone, colourful rolling hills and rich intense light. The trailblazers were Paul Signac, Raoul Dufy and Chaim Soutine. They were later followed by Picasso, Fernand Leger, Marc Chagall and Henri Matisse who was based at Vence a few kilometres away. Through the twentieth century actors, writers and artists made St Paul into a bubbling cultural centre. The 1950s and 60s were the village’s golden age when film making put it on the international stage as world famous directors and actors were attracted by the Victorine film studio and the proximity to Cannes Film Festival.

Today there are some 25 galleries displaying art works ranging from modern through contemporary, fringe and naïve across all forms including traditional painting, sculpture, textiles, jewellery and plastics along with four museums.

What attracted me to visit St Paul was a suggestion that this artistic enclave owes its success to government funding, that it seeded the establishment of this thriving art community. So I set out to investigate.

Talking to several shop owners who had been there for decades, all looked at me aghast at the suggestion of government money. Non, non, non! They originally came because St Paul offered the scenery and light, they stayed because their work became popular – there were no handouts then and there are no handouts now! “We pay commercial rents for our shops and get no government help’ was the common view.

Today there are only a handful of local painters, and they haven’t achieved the recognition of their predecessors. The art is now sourced from all over Europe. As one shop owner said, art is a specialised business, we operate in a particular segment and we have to cater to an international market which is constantly changing and evolving, we cannot just keep stocking what was popular last year or the year before, we have to stay abreast of changing tastes, we have to know our market intimately and continually adjust to it. There can be no loyalty to any local artist, not if we want to survive.

Contributed by Peter Kittler (Canberra), a consultant to the Cockatoo Network – peterkittler@hotmail.com

Industry Statement – opportunity beckons

Australia’s long-awaited Industry & Innovation Statement, released in February, provides an intriguing opportunity for local councils.

It stems from the announcement of ten Innovation Precincts, with $500 million funding. As I’ve foreshadowed in recent months, these will be established in areas of current Australian competitive advantage like manufacturing, food, finance and resources and up to five Precincts will support emerging opportunities – their focus will be on industries with strong export potential.

Melbourne is to be a food precinct under the new arrangements, which is very interesting given that most manufacturers have moved out to Cranbourne, Shepparton, Ballarat, Bairnsdale etc. Perhaps the CSIRO and the Australian Research Council, whose influence and/or facilities lie in Melbourne, had a big say in the decision?

The reality is that for certain industries, urban agglomerations of research infrastructure, plant, equipment and workers are important e.g. finance, IT, biotech and pharmaceuticals. However this isn’t the case for the food, timber, metals and engineering industries.

The configuration and location of most of the precincts have yet to be decided.

The opportunity is thus for regional cities and towns to negotiate and lobby their way into these precincts, including the afore-mentioned food precinct, especially since the government would be open to sensible propositions at a time of a hung Parliament. We’re now scheduling meetings with the industry and regional development departments to discuss how regional hubs can be positioned in the new arrangements. If your Council has an interest in this dialogue, please contact us ASAP.

Clusters and supply chains

The Industry Statement actually uses the terms precinct and cluster interchangeably, which is nice after our decade of effort in opening federal policymakers’ eyes to the potential of clusters. We must thank my colleague Professor Roy Green (UTS) for his leadership on this.

To explain, a few years back our Cockatoo members identified some 100 industry clusters around Australia. We have been dropping hints about they could form the basis of a new industry policy, especially given that localised processes are increasingly important.

For example, in South Australia we identified clusters of differing sizes in horticulture (Virginia, Riverland, Hahndorf), seafood (Port Lincoln), automotive and engineering (northern Adelaide), wine (Barossa and Clare Valleys), food (northern Adelaide), minerals and metals Upper Spencer Gulf) The defining features of each of these clusters are the specialisation and critical mass that helps them build supply chains into global markets. I will identify more of these clusters next month.

The Industry Statement touches on the importance of supply chains. We believe there is real scope for companies to now engage with the federal government to think about how high-value global supply chains can be nurtured in association with these clusters and precincts. Once again, please forward your ideas!

Defensive measures

As mentioned above, the Statement had a defensive component, presumably crafted by the manufacturing unions. It involves increased vigilance on cheap imports via anti-dumping action. The reality is that many foreign companies are selling their goods into our market at cost just to keep their operations going. But an anti-dumping program will not prevent these practices, and anti-dumping cases are excruciating slow.

A beefed-up Australian Participation Program, to seek higher levels of Australian content in major resource and engineering projects, will also be sought. However our signing of Free Trade Agreements means that we can no longer mandate particular levels of local content for these projects.

Innovation grants

The third leg of the Statement involves $350 million in a new round of the Innovation Investment Fund program to stimulate private investment in Australian start-ups. There is also a new competitive Industry Collaboration Fund (up to $50 million a year). This is all a little murky because the offset savings are linked to reducing the eligibility of the resource companies to R&D grants.

In any event, Shadow Minister Sophie Mirabella is the one to watch. She has not yet ruled anything in or out.

THIS ARTICLE APPEARS IN THE MARCH 2013 EDITION OF LG FOCUS

Linking clusters with Greece

Greece is at a critical point in its long and proud history. Its ability to overcome its economic difficulties will arguably depend on forging new global partnerships with external players.

To this end, the Cockatoo Network is interested in identifying how and where joint ventures might be developed between Greek and Australian businesses as part of Greece’s recovery program – the rationale is that Australia has weathered the GFC relatively well, it has companies hungry to expand into new global markets, and our nations have a strong cultural and social affinity that can underpin the commercial relationship.

The problem however is that new trade and investment joint ventures do not come easily. In our experience, the biggest problem is information failure – the likely partners are not aware of each other and the support agencies are not sufficiently connected. The process of engagement is therefore slow and often a matter of luck. We want to speed this process and bring a new dynamic into the relationship via the linking of companies with collaborative mindsets. The key roles of the Cockatoo Network will be to:

1. Identify the mutual business opportunities for Australian and Greek companies.
2. Present these opportunities to the relevant companies.
3. Engage other relevant stakeholders, including support agencies.

We are currently in discussions with the Australian Government, industry chambers and industry associations. If you have a likely interest in this subject – wherever you are – please contact us ASAP.

The world’s future – a must read

Russ Fletcher (Montana Roundtable, USA) has forwarded the link to a very, very good analysis by the US National Intelligence Council – provides a framework for thinking about the future. You will note some bias, but that is understandable. Below is a sample – the identification of four megatrends:

1. Individual empowerment will accelerate owing to poverty reduction, growth of the global middle class, educational attainments, ICT and manufacturing technologies, and health-care advances.

2. Diffusion of Power – there will not be any hegemonic power. Power will shift to networks and coalitions in a multipolar world.

3. The demographic arc of instability will narrow. Economic growth might decline in “aging” countries – 60% of world’s population will live in urban areas and migration will increase.

4. Food, Water, Energy nexus – demand for these will grow substantially due to population growth. Tackling one problem will be linked to supply and demand for the others.

The report covers population, health, technology, global threats, sectoral performance etc. An interesting example is the analysis of hot spots, as follows.

“Democratic deficits are said to exist when a country’s developmental level is more advanced than its level of governance. Democratic deficits are tinder that might be ignited by various sparks. Our modeling – based on the International Futures model – highlights many of the Gulf, Middle East and Central Asia countries – Qatar, the UAE, Bahrain, Saudi Arabia, Oman, Kuwait, Iran, Kazakhstan, Azerbaijan – and Asian countries such as China and Vietnam. This set of countries is very different from the “usual suspects” lists provided by indices of state fragility or failure.”

Go to Global Trends 2030: Alternative Worlds

Off-shoring has peaked?

Professor Brian Roberts (Cockatoo member) recently forwarded a timely article ‘The Third Industrial Revolution’ (The Economist, 21 April 2012)

The gist of the article is that off-shoring has peaked i.e. the shift of manufacturing to low-wage countries has slowed because labour costs are becoming less important. For example, a $499 first-generation iPad has only $33 of manufacturing labour, of which final assembly in China accounts for just $8.

The article makes the claim, echoed elsewhere in international circles, that companies want to be closer to their customers so that they can respond more quickly to changes in demand. A related factor is that with sophisticated products, it helps to have the people who design them and the people who make them in the same place. The Boston Consulting Group estimates that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made back home by 2020.

Well this makes intuitive sense. Let’s certainly hope so. The importance of proximity to customers, designers, suppliers etc. bodes well for the precinct agendas described above.

Smart Specialisation and Precincts – ways of advancing your community

The European Commission is much involved in urban and regional development thinking, and it has been promoting the Smart Specialisation concept. It basically involves EC regions specialising in activities that align with their competitive advantages. And the Commission offers financial inducements to this end.

Now the churlish might argue that this policy shift has come a bit late to help Greece, Spain and Portugal. But the truth is that ‘regions’ hold a lot of sway in Europe – they are a fundamental part of its social and industrial fabric.

Alfred Marshall (Principles of Economics, 1890) was espousing this stuff more than a century ago. He talked about particular locations having types of specialization. Indeed he anticipated later discussion of the role of place as a point of information exchanges, and of innovation developing through that “something in the air” that arises when people mingle and exchange ideas. He identified four particular features of precincts – knowledge spillovers as a result of informal networking; access to a common pool of factors of production such as labour or R&D facilities; specialisation of production within supply chains; and the facilitation of ‘comparison shopping’ for buyers.

Precincts are, by the way, akin in some ways to clusters, and the Cockatoo Network is quick to highlight this to government officials who still think clusters are about picking winners. Rubbish of course.

Five tips for facilitating specialisations and precincts

It makes good sense for councils and regional stakeholders to use local specialisation and precinct concepts in their lobbying efforts to government agencies. Below are some suggested initiatives that could complement your lobbying effort. Contact us for support (naturally!).

1. Map your specialised assets and their linkages – a natural start point, and great marketing tool.

2. Get international agencies to study or talk about your area of specialisation – Cockatoo members regularly work with the OECD or UN agencies to raise awareness of their regions.

3. Commission university studies on national issues at your local level – these can be good copy for national newspapers, which then educate external audiences about your local specialisation.
4. Leverage your champions – they are in your midst.
5. Do something bold and innovative – all towns, cities and suburbs have specialisations, but they’re hidden to the outside world. A bold project can lift the specialisation profile.

There’s something about San Sebastian!

Report from TCI’s annual global conference

The 15th TCI annual global conference was held in the Basque Country from 16-19 October 2012. A highly successful event with 450 delegates representing 67 countries. (Unfortunately I was the only Australian this year). The conference theme was “Place based competitiveness in times of global change”, underlining the need to be focused and strategic in promoting the competitive advantages of regions and localities.

There IS something about Sas Sebastian! One of the many workshops was dedicated to understanding the bleak situation with the Spanish economy – however one would have thought Spain a much rosier place walking the streets of San Sebastian. The pounding of the Atlantic around the headland of the old town, the surf beaches and pintxos (Basque form of tapas) bars on every corner make for a wonderful setting. In fact San Sebastian was voted one of Europe’s top food and wine cities by Trip Advisor in 2012, boasting more Michelin star restaurants than any other European city.

The success of the Basque country in weathering the economic storms over Europe is palpable. Tours to various Basque clusters further highlighted this. Basque was one of the early adapters of a competitive cluster policy and their clusters are performing and centrepiece to the Basque economy.

Cluster policy pioneers such as Antonio Subira, Catalonia; Jon Azua, Basque Country; Ifor Ffowcs-Williams, NZ; Gerd Meier zu Kocke, Germany; Alonso Ramos Vaca, Mexico, discussed the past 15 years of TCI and cluster policy. The session facilitated by Christian Ketels, current TCI President, celebrated the vision and commitment of the Basque people to their policy of ‘clusterisation and strategic thinking’.

Michael Porter summed things up by saying we no longer need to understand the ‘why and what of cluster policy’, we just need to get better at doing the ‘how’. Michael Porter has recently developed a Microeconomics of Competitiveness (MOC) program as a platform that can be taught at universities around the world to improve understanding of competitiveness and clusters.

I presented the views of Australian women cluster managers in the “Gender and Diversity in Clusters” workshop with three other brave women from Denmark, Germany and Austria. The audience grew as we went along and by the end we felt we had hit on a topic that resonates. There seems to be a quiet swell of renewed interest in gender and diversity issues.

The issue, in Europe and elsewhere, is that plenty of women are in the top jobs, including managing clusters, but few are on Boards. Norway has just implemented a 40% compulsory inclusion of women on Boards policy apparently. Also an issue of representation of women in engineering and design sectors. They are at universities, but this is not translating to the industries. Great case study presented by Kersten Hindrum, an engineer from the Danish maritime sector, about a ‘women only’ designed pleasure craft which received rave reviews and media at this year’s Danish boat show. The point was that women use the indoors of the craft and therefore should design them!

Expect to see more on this subject at the TCI annual conference in Kolding, Denmark in September 2013.

Contributed by Tracy Scott-Rimington (Brisbane) tracysr@bigpond.com. Go to http://www.tcinetwork.org

In support of Air Cranes

The Erickson S-64 air-cranes continually prove their worth – 9,600 litres in one load certainly has an effect. We recently spoke with the local representative of the US parent. He says there are six leased to Australia for around three months each year – two are based in both Melbourne and Sydney, and one in Adelaide and Perth. The cost per air-crane is less than $2 million all-up (i.e. including pilots), which is very reasonable when the annual costs of fire damage is taken into account.

Could we do with more than six? A dozen wouldn’t be out of the question if you take into account that the annual losses are huge. A few Cockatoo members had first-hand experience of the Canberra bushfire 10 years ago (4 deaths and 500 homes destroyed). And the enquiry into the disaster concluded that it might have been avoided if action was taken in the 24 hours after the lightning strikes i.e. the fires sat out in the Brindabella ranges virtually untouched.

We’re not here to apportion blame, but the Bushfire Cooperative Research Centre further concluded that ‘the critical condition is the ability of aircraft to knock down a fire before ground crews arrive – buys time. This advantage is much greater in inaccessible terrain.’

In addition, The Fire Management area of the Department of Sustainability and Environment (Victoria) also released a supportive analysis in the late 1990s, as follows:

“The helitanker was effective in directly attacking the edges of going fires, hot spots and spot fires, in providing valuable support to the ground firefighting resources and in working with both the fixed-wing and other rotary-wing firebombers…Its ability to quickly deliver large volumes of fire retardant in potentially threatening situations under extreme fire danger conditions was well demonstrated. The large volume carried and the ability to split the load also allow it to deliver separate drops to several locations…by directly attacking high-intensity fires the Aircrane Helitanker was credited with several significant saves where high-value assets were under threat. “

The overall fire management task is funded by the feds and states, together with levies collected by the insurance companies in some states. This system is now apparently moving to a council rates arrangement (which is fairer since insured properties have been subsidising the uninsured).

The bottom line is that if the feds, states and territories own say $20 billion worth of land and buildings in fire-prone areas, spending a further $8 million a year on 4 Erickson’s would have to be good insurance.

If your region or council has an interest in this subject, please contact us.

Precincts now in vogue for National Broadband Network roll-out

A number of members have not done well out of the NBN roll-out. The problem stems from the roll-out plan being based primarily on engineering efficiency considerations (the lowest cost and quickest rollout schedule). There has not been any conscious consideration of commercial benefits e.g. where high speed broadband would be most effective in addressing poorly served areas (rural areas and urban black spots) or targeting areas where the return on network installation would be greatest (business parks and high income/high density suburbs).

Having gone public on the NBN roll-out schedule with Government support, and defended its decision to be politically and commercially agnostic, there is little or no chance of the Government being diverted from this path. We have therefore held talks with the Department of Broadband, Communications & Digital Economy (DBCDE) and NBN Co. in recent weeks about the scope for regions to now take advantage of NBN roll-out by developing clusters and precincts. The annual update of the NBN roll-out is due in March.

Members please note – we are delighted to announce that we have specialist support via Dr. Paul Paterson (ex-Telstra and ex-NSW Dept. of State & Regional Development). He can be contacted on paul.paterson@ppconsulting.net.au