Re Tasman Timber Limited v Minister of Industry and Commerce Homebush Bay Timbers Pty Ltd v Minister of Industry and Commerce [1983] FCA 20; (1983) 67 FLR 12 (15 February 1983)

FEDERAL COURT OF AUSTRALIA

Re: TASMAN TIMBER LIMITED v. MINISTER FOR INDUSTRY AND COMMERCE.
HOMEBUSH BAY TIMBERS PTY LTD v. MINISTER FOR INDUSTRY AND COMMERCE
[1983] FCA 20; (1983) 67 FLR 12 No. G 196 and G 212 of 1982
Administrative Law

COURT

FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Lockhart J.(1)

CATCHWORDS

Administrative Law - Customs Tariff (Anti-Dumping) Act 1975 - nature of countervailing duties - imposition of securities - application for orderof review of dicision to impose cash securities on importers of New Zealand timber pursuant to s. 42 of Customs Act 1901 - countervailing duties distinguished from anti-dumping duties - whether securities properly imposed - whether Australia breached its international obligations under GATT and NAFTA - source and nature of power to impose securities.

Administrative Decisions (Judicial Review) Act 1977 ss. 1, 5, Schedule, Customs Act 1901 s. 42, Customs Tariff (Anti-Dumping) Act 1975 ss. 6, 10, 13, 14

Administrative Law - Customs - Countervailing duties - Securities - Imposition of cash securities on importers of New Zealand timber - Application for order of review - Limits of power to impose securities - Whether securities related to subsidies - Whether department addressed relevant considerations - Whether international obligations breached - Whether securities imposed for protection of revenue - Whether security may only be required where existing liability to duty - Customs Act 1901 (Cth), s. 42 - Customs Tariff (Anti-Dumping) Act 1975 (Cth), ss 6, 10, 13, 14 - Administrative Decisions (Judicial Review) Act 1977 (Cth), s. 5, Sched. 1. Some of the applicants are exporters of timber from New Zealand and others carry on the business of importing timber from New Zealand into Australia.

Certain companies engaged in the timber industry in Australia complained to the Commonwealth Department of Industry and Commerce that the New Zealand Government was providing financial assistance in various forms to the extent of 19.09 per cent of the F.O.B. value of square dressed structural softwood New Zealand timber exported to Australia.

By a notice dated 3rd November, 1982, the Comptroller-General of Customs pursuant to s. 42 of the Customs Act 1901 purported to impose countervailing cash securities on imports of the timber described above. The applicants then sought orders of review of that decision under the Administrative Decisions (Judicial Review) Act 1977. By consent the two applications were heard together.

Held: The applicants had established their case for an order of review on the grounds mentioned in s. 5(1)(e) including s. 5(2)(a), (b) and (f) of the Administrative Decisions (Judicial Review) Act 1977 in respect of the decision by the Comptroller-General of Customs imposing cash securities by a notice dated 3rd November, 1982, because - (1) The decision referred to was of an administrative character and made pursuant to s. 42 of the Customs Act 1901.

(2) Section 42 of the Customs Act 1901 permits the requirement and taking of securities to protect the revenue of the customs to satisfy duty if and when levied.

Cadbury-Fry-Pascall Pty Ltd v. Federal Commissioner of Taxation [1944] HCA 31; (1944) 70 CLR 362; R. v. Comptroller-General of Customs; Ex parte Woolworths Ltd [1935] HCA 37; (1935) 53 CLR 308, applied.

(3) The power given by s. 42 of the Customs Act 1901 must be exercised bona fide, within the limits and for the objects intended by Parliament which are to protect the revenue arising from customs duty but not to impose a penalty or a discriminatory tax upon an importer.

(4) The power to take security pursuant to s. 42 must take its colour and content from the primary power to impose countervailing duties which it supports.

(5) Section 10 of the Customs Act 1901 empowers the Minister to impose countervailing duties equal to the amount of subsidy.

(6) In the exercise of the power to require security preliminary to the imposition of countervailing duties, equivalence in amount between the security and the subsidy is not essential but some reasonable attempt must be made by the department to achieve equivalence. This was not done here.

(7) The cash securities in the instant case imposed by customs are unrelated in amount to any subsidy or financial advantage provided by the New Zealand Government.

The department failed to consider materially relevant considerations and addressed itself to materially irrelevant considerations.

HEARING

1982, December 13-15; 1983, February 15. 15:2:1983
APPLICATIONS.

Two applications pursuant to the Administrative Decisions (Judicial Review) Act 1977 for an order to review a decision by the Comptroller-General of Customs were heard together by consent.

D. E. Horton Q.C. and C. A. Sweeney, for all applicants except the second and third applicants.

A. M. Gleeson Q.C. and C. A. Sweeney, for the second and third applicants.

K. Mason Q.C. and L. S. Katz, for the respondents.

Cur. adv. vult.

Solicitors for all applicants except the second and third applicants: Minter

Simpson.

Solicitors for the second and third applicants: Freehill Hollingdale & Page.

Solicitor for the respondents: B. J. O'Donovan, Commonwealth Crown Solicitor.

E. F. FROHLICH

ORDER

The applicants bring in short minutes of orders to give effect to the Court's reasons for judgment.

DECISION

These are two applications under the Administrative Decisions (Judicial Review) Act 1977 ("the Judicial Review Act") heard together by consent for orders of review of a decision of the second respondent to impose cash securities pursuant to s. 42 of the Customs Act 1901 ("the Customs Act") which is incorporated and to be read as one with the Customs Tariff (Anti-Dumping) Act 1975 ("the Act"): s. 6 of the latter Act. The cash securities relate to the importation of softwood timber from New Zealand.

Some of the applicants are exporters of timber from New Zealand, and others carry on the business of importing timber from New Zealand into Australia. The particular timber involved here is New Zealand square dressed structural timber, more generally known to Australians as 'four by twos' ("the Timber").

Certain companies engaged in the Australian timber industry and The Woods and Forests Department of South Australia complained to the Department of Industry and Commerce ("the Department") that the New Zealand Government was providing New Zealand exporters of the Timber to Australia financial assistance in various forms to the extent of 19.09% of the FOB value of the Timber.

The second respondent, the Comptroller-General of Customs, published an Australian Customs Notice No. 82/228 dated 3 November 1982 announcing the commencement of inquiries to determine the existence, degree and effect of any subsidy in respect of exports of the Timber from New Zealand. The Notice was in these terms:-

'COUNTERVAILING INQUIRY _ SQUARE DRESSED STRUCTURAL

SOFTWOOD TIMBER EX NEW ZEALAND

In accordance with Australia's obligations under Article 2 of the

GATT Code on Subsidies and Countervailing Duties, interested parties are advised that investigations have been initiated to determine the existence, degree and effect of any alleged subsidy, bounty, reduction or remission of freight or other financial assistance paid or granted with respect to exportations of square dressed structural softwood timber from New Zealand.

This action follows a complaint made to the Department by Australian industry that material injury has been caused and is threatened by exportations of square dressed structural softwood timber falling within sub-item 44.13.200 statistical codes 175 and 186 of the Australian Customs Tariff.

The subsidy practices so far identified are described on the attached schedule.

It is claimed that subsidised imports have caused material injury to the Australain (sic) industry as evidenced by falling sales, retrenchment of staff and suppressed prices leading to an inability to recover cost increases.

The Department is satisfied that there is sufficient evidence to justify initiating an investigation and has reached a preliminary affirmative finding. Pending the completion of inquiries it has been decided to impose countervailing cash securities on imports of square dressed structural softwood timber from New Zealand on and from the date of this notice.

Any inquiries concerning this notice should be directed to Mr K. Duffy (062-716312).

(T.P. HAYES)

Comptroller General

CANBERRA ACT

3 November 1982

(Dumping _ C82/6284)"

The applicants seek orders of review of the decision to impose cash

securities. The applicants claim to be persons aggrieved by the decision and they challenge its validity on various grounds which I shall come to later, but which require an understanding of the notion of countervailing duties, relevant provisions of the Act and the Customs Act and certain international codes and treaties to which Australia is a party. It is to these that I now turn.

The Act is an essential part of the machinery designed to protect Australian industry. The protection afforded by the Tariff would be eroded if overseas exporters sell to Australia at depressed prices by various means including dumping and subsidised exports.

Dumping, in a broad sense, is the sale of goods abroad at a price which is lower than the selling price of the same goods at the same time and in the same circumstances at home: Wilczynski, The Economics and Politics of East-West Trade (MacMillan, London, 1969) at p. 139. The concept of dumping is that goods are imported into a country and offered for sale at a price less than their normal sales value in the country of origin. Dumping usually results in sharp and substantial increases in imports with consequent market disruption in the importing country. The function of anti-dumping legislation is to increase the cost of the imported goods to their normal value in their home market so as to achieve the full protection of the Tariff.

Countervailing duties are essentially different from anti-dumping measures although in this country they are included in the same legislation and, as will be seen when I deal with the evidence, they are sometimes treated by the Department as different aspects of the same general problem. Overseas exporters may sell to Australia at depressed prices by differentiated price systems supported by the home Government whereby their home market in effect subsidises their manufacture, production or export. Countervailing duties are imposed by the Government of the importing country to countervail or balance the effect of the price subsidy granted by the home country, that is to equal the amount of the subsidy. They are duties to prevent the dumping of goods by imposing a duty on the importer equal to the exporter's Government subsidy. If a countervailing duty is greater than the subsidy it would really be an ordinary import duty acting as a trade barrier. Unlike anti-dumping duties, countervailing duties necessarily assume that the Government of the exporting country has granted a subsidy in some form to the manufacturer, producer or exporter of the relevant goods and the countervailing duty is to countervail or offset the subsidy.

The verb 'countervail' is derived from the Latin 'contra' and 'valere' and from the tonic stem of the old French verb 'contrevaloir'. The verb is defined is the Shorter Oxford Dictionary as:

'1. trans. To be equivalent to in value _ 1655.

2. ... to reciprocate _ 1633.

3. To counterbalance _ 1547.

4. To make up for ME.'

Anti-dumping legislation has existed in Australia in one form or another since the Australian Industries Preservation Act 1906, Part III of which was designed to prevent dumping. Other legislation in this field has been the Customs Tariff (Industries Preservation) Act 1921, the Customs Tariff (Dumping and Subsidies) Act 1961 and the Customs Tariff (Dumping and Subsidies) Act 1965. Then came the Act in 1975.

A number of multilateral agreements or codes resulted from the Tokyo round of multilateral trade negotiations between the signatory nations to the General Agreement on Tariff and Trade ("GATT"). One of these codes is known generally as the Anti-Dumping Code. Another, which is the material code for present purposes, is the GATT Code on Subsidies and Countervailing Duties ("the Subsidies Code").

The Act adopted a large number of the provisions of the Anti-Dumping Code and of the Subsidies Code, but it is open to serious question whether the Act adopted the substance of those codes when enacted in 1975. The Act was amended in 1981 by the Customs Tariff (Anti-Dumping) Amendment Act 1981 (No. 66 of 1981) which was designed to incorporate in the Act the new provisions of the Anti-Dumping Code and the Subsidies Code which resulted from a number of understandings reached in the Tokyo round of the multilateral trade negotiations concluded in December 1979.

It is common ground that Australia acceded in 1975 to the Anti-Dumping Code and the Subsidies Code and in 1981 to their revisions.

The two Codes are part of Australian municipal law only to the extent that the Act is a domestic implementation by the Commonwealth Parliament of Australia's ratification of the Codes.

I turn now to the Act. Sections 10 and 11 purport to implement the 'countervailing duties' provisions of Article VI of GATT. It is important to remember that the Subsidies Code and the Anti-Dumping Code are merely elaborations of GATT itself. Paragraph 3 of Article VI of GATT provides:-

'3. No countervailing duty shall be levied on any product of the territory of any contracting party imported into the territory of another contracting party in excess of an amount equal to the estimated bounty of subsidy determined to have been granted, directly or indirectly, on the manufacture, production or export of such product in the country of origin or exportation, including any special subsidy to the transportation of a particular product. The term 'countervailing duty' shall be understood to mean a special duty levied for the purpose of offsetting any bounty or subsidy bestowed, directly or indirectly, upon the manufacture, production or export of any merchandise.'

Section 10 of the Act provides, so far as relevant:-

'10. (1) Subject to sections 13 and 14, where the Minister is satisfied, as to any goods that have been exported to Australia, that _

(a) in the country of origin or the country of export of the goods, there has been paid or granted, directly or indirectly, upon the production, manufacture, carriage or export of those goods a subsidy, bounty, reduction or remission of freight or other financial assistance; and

(b) by reason thereof _

(i) material injury to an Australian industry has been or is being caused or is threatened or the establishment of an Australian industry has been or may be materially hindered; or

(ii) in a case where security has been taken under section 42 of the Customs Act in respect of any duty that may become payable on the goods under this section material _ injury to an Australian industry would or might have been caused if the security had not been taken,

the Minister may, by notice published in the Gazette, declare that this section applies to those goods.

...

(3) There shall be charged, collected and paid on goods to which this section applies a special duty of Customs, to be known as countervailing duty.

(4) Subject to sub-section (5), the countervailing duty in respect of goods is a sum equal to the amount of the subsidy, bounty, reduction or remission of freight or other financial assistance that has been paid or granted, directly or indirectly, upon the production, manufacture, carriage or export of goods.

(5) The Minister may, by notice published in the Gazette, direct that the countervailing duty in respect of goods is an amount to be ascertained by reference to the value, or to the weight or other measure of quantity, of the goods less the amount, if any, by which that amount exceeds the countervailing duty that would be payable in respect of the goods under sub-section (4), and the notice has effect accordingly.

(6) A notice under sub-section (5) applies to goods entered for home consumption after a date specified in the notice, which may be a date earlier than the date of publication of the notice but shall not be a date on or before a date on which an earlier notice under that sub-section applied to the goods.

(7) If the Minister is satisfied that adequate information as to the amount of subsidy, bounty, reduction or remission of freight or other financial assistance in relation to goods cannot be obtained, the amount of subsidy, bounty, reduction or remission of freight or other financial assistance shall, for the purpose of this section, be such as is determined, in writing, by the Minister."

Section 13 relevantly provides:-

'13. (1) Subject to this section, the Minister shall not cause a notice to be published under sub-section 8(1), 9(1), 10(1) or 11(1) in respect of goods that have been entered for home consumption.

(2) Sub-section (1) does not prevent the publication of a notice under sub-section 8(1), 9(1), 10(1) or 11(1) in respect of goods that have been entered for home consumption in relation to which security has been taken under section 42 of the Customs Act in respect of any duty that might become payable under section 8, 9, 10 or 11 of this Act, as the case may be (not being security that has been cancelled) by reason of the publication of such a notice or in relation to which the Customs had the right to require and take such security (not being security that would have been cancelled in accordance with the Customs Act if it had been taken).'

Section 14, to which s. 10 is subject, provides:-

'14. The Minister shall not cause a notice to be published under any provision of this Act other than sub-section 10 (2B), (2C) or (2D) unless he is satisfied that the publication of the notice is not inconsistent with the obligations of Australia under any international agreement relating to tariffs or trade.'

Sub-sections (10) (2B), (2C) and (2D) are irrelevant for present purposes.

Australia and New Zealand are parties to the 'New Zealand-Australia Free Trade Agreement' (NAFTA).

It is common ground that NAFTA and the Subsidies Code constitute international agreements relating to tariffs or trade within the meaning of s.14. It is also common ground that the only relevant source of the power of the Customs (that is the Department) to require and take securities is s. 42 of the Customs Act as incorporated in the Act by s.6. Section 42 relevantly provides:-

'42. (1) The Customs shall have the right to require and take securities for compliance with this Act, for compliance with conditions or requirements to which the importation or exportation of goods is subject and generally for the protection of the revenue of the Customs, and pending the giving of the required security in relation to any goods subject to the control of the Customs may refuse to deliver the goods or to pass any entry relating thereto.

...

(3) The rights of the Customs under this section may be exercised by a Collector on behalf of the Customs.'

Section 43 provides that securities shall be given in a manner and form approved by a Collector and may, subject to that approval, be by bond, guarantee, cash deposit or any other method or by two or more different methods.

With these considerations in mind I turn now to the facts.

On 30 July 1982 various companies engaged in the Australian timber industry and The Woods and Forests Department of the Government of South Australia lodged with the Department an 'Application for Anti-Dumping and/or Countervailing Duties' against imports of the Timber from New Zealand. The application is in a printed form apparently issued by the Department and tends not to distinguish overmuch between anti-dumping duties on the one hand and countervailing duties on the other. This is understandable because, when complaints are made initially by local manufacturers or producers of goods, they may not know whether the source of the problem is dumping strictly so called or subsidies received from the Government of the exporter of the goods. Also, it seems that Australia has never imposed countervailing duties in respect of goods imported from any country.

In the 'Application for Anti-Dumping and/or Countervailing Duties' reference is made to:

'F. Subsidisation

The New Zealand Government provides Export Performance Incentives to exporters, including exporters of timber. The Bureau of Agricultural Economics has recently assessed the benefit of these incentives as 19.09% of F.O.B. values (pre-tax) for dressed timber in 1980-81.

At a conference in Auckland on 21st and 22nd July 1982, convened under the auspices of the Australian and New Zealand Governments, the New Zealand Sawn-Timber Delegation claimed that this incentive was required to maintain competitiveness in the Australian market against third country imports. This statement was made by Mr. B. Webby, Director of the New Zealand Forest Service Commercial Division and Chairman of New Zealand Sawmillers Federation Export Division."

This appears to be the first reference to any attempt to assess the benefit of New Zealand Government subsidies as 19.09% of FOB values pre-tax for the Timber. The figure is of some importance for reasons which emerge later.

On 6 August 1982 the Department wrote a letter to the New Zealand High Commission informing it of the receipt of the application 'from Australian industry for anti-dumping and countervailing action' to be taken against the Timber. The letter enclosed a copy of the non-confidential section of the dumping questionnaire submitted by the local industry and it concluded with a statement that an officer from the Australian Customs Service in Canberra would carry out the necessary inquiries in New Zealand to establish 'a normal value' for the goods.

On 9 August 1982 the Comptroller-General issued an Australian Customs Notice No. 82-157 stating as follows:-

'In accordance with Australia's obligations under Article 6(f) of the GATT Anti-Dumping Code, interested parties are advised that inquiries have been formally initiated under the provisions of the Customs Tariff (Anti-Dumping) Act 1975 to determine whether export prices of square dressed structural softwood timber are less than normal values for these goods in New Zealand.'

Reference was made in the Notice to the complaint to the Department by the local industry that material injury had been caused and was threatened by dumped imports of the timber. The Notice went on to say that the industry claimed that the alleged dumped imports were causing injury by reduced production, falling sales and suppressed prices leading to an inability to recover cost increases. The Notice stated that preliminary local inquiries had been made into the local industry's claim and that the Department was satisfied that there was sufficient evidence to justify the initiation of formal inquiries.

Mr. K.F. Duffy, an officer of the Department travelled to New Zealand between 15 and 26 August 1982 for the purpose of conducting inquiries concerning the allegations of dumping of the timber. He spoke to representatives of three New Zealand companies and informed each of them that the Department had received a complaint of financial assistance being provided for the production, manufacture and carriage or export of timber products exported to Australia. He asked them whether their respective companies received any 'export subsidy' and was told that they received benefit under the 'Increased Exports Taxation Incentive Scheme for Square Dressed Softwood Structural Timber'.

At all relevant times two forms of subsidy were in force in New Zealand authorized by the New Zealand Government. They are complicated schemes and, as it is not necessary that the details be stated, I will forbear from doing so. One scheme, called 'The Old Scheme', commenced in 1977 and expires on 31 March 1983. It allows a taxpayer a deduction from assessable income for increased export sales of certain goods equivalent to 25% of the value of 'qualifying' FOB export sales above the annual average level of export sales made in the base period. The other scheme, called 'The New Scheme', is different in many and material respects from 'The Old Scheme' and proceeds on the basis of tax credits to exporters.

On 27 September 1982 the Department wrote to the New Zealand High Commissioner stating that on 6 August the Department had informed him of the intention to conduct inquiries in New Zealand to establish normal values following the request from Australian industry for 'anti-dumping action'. The letter also mentioned to the High Commissioner that he had been informed that countervailing action against those imports had been requested by Australian industry. This letter seems to be the first indication of any distinction being drawn by the Department between 'anti-dumping action' and 'countervailing action'. The letter went on to say that inquiries had been completed into the dumping allegations and said that certain dumping margins were evident. It said that a prima facie case had been established that dumped imports of the timber had caused and were causing injury within Australia. The letter stated that the Australian Government accordingly requested consultations with the New Zealand Government in accordance with the provisions of Article 10 of NAFTA in respect of the Timber and that consultations were regarded as being commenced from the date of that letter. It said that the Australian industry's application for countervailing action was still under consideration and the Australian Government requested the New Zealand Government to provide information on the nature and extent of any subsidy granted or maintained in respect of the Timber in accordance with the Subsidies Code.

On 7 October 1982 the Acting Minister Commercial of the New Zealand High Commission replied to the request for information on the nature and extent of any subsidy. The writer said that the New Zealand authorities were prepared to provide information on the benefits 'which are available to New Zealand exporters from the Export Incentive Schemes notified by New Zealand as being not in conformity with the GATT Subsidies Code when New Zealand became a signatory last year'. There followed a list of those schemes. The letter stated:-

'The New Zealand authorities also advise that the New Zealand Government, through the Inland Revenue Department can only provide specific details of benefits received under these export incentive Schemes by individual exporting companies, as opposed to those detailed above which are available to exporters generally, if the companies agree to that information being released. To act otherwise would be a breach of the confidentiality provisions of the Inland Revenue Department Act 1974. It is accordingly suggested that this information on both tax credit and tax deductions would therefore best be obtained by you from each of the New Zealand exporting companies on the basis of a direct approach'.

On 11 October 1982 Mr. Day, a member of a firm of 'Government Relations and Management Consultants' who act for the New Zealand exporters of the timber was informed by Mr. O'Rourke, the Director (Appraisements and Dumping) of the Department that:-

'...although a complaint had also been made by the local industry that New Zealand imports of the said timber were subsidised and should therefore be the subject of countervailing duties, the Bureau of Customs had decided not to investigate the question of subsidies for the time being but to proceed with its inquiries into whether there had been dumping of the said timber and whether this dumping had caused material injury to the local industry such as to warrant the imposition of dumping duties'.

On 12 October 1982 a letter was written from Mr. A. H. Page, the Australian Minister (Commercial) at the Australian High Commission, Wellington, New Zealand to the New Zealand Department of Trade and Industry referring to previous correspondence and to discussions which apparently took place on 7 October between the relevant officer of the Department and Mr. Page concerning the procedures to be followed in countervailing cases under NAFTA. In that letter Mr. Page referred to the fact that, in a previous exchange of letters from the Joint Secretaries of the New Zealand-Australia Free Trade Agreement Consultative Committee, it was provided that Article 10 of NAFTA did not preclude the imposition of securities prior to or during the consultation period provided for in that article. I will return later to Article 10 when dealing with the submissions of the parties. Mr. Page then set out a list of administrative procedures which he said were seen as consistent with Australia's legislation and NAFTA. Copies of the letters exchanged by the Joint Secretaries of the NAFTA Consultative Committee are in evidence before me. They show that both Australia and New Zealand were in accord as to their respective understandings of the agreement reached in relation to the possible imposition of securities as recorded in NAFTA itself. It is not necessary to refer to these letters in detail but it is sufficient to say that the provisions of Article 10 which provides for consultation 'to consider measures to prevent future injury' did not in the view of either country preclude the imposition of securities.

A meeting of parties was held in Canberra on 18 and 19 October 1982 to consider the dumping complaint lodged by the Australian producers. A submission was supplied by the Australian producers at that meeting. It is a rather large document and, so far as relevant to this case, talks of injury in various forms to the Australian producers from the importation of the Timber at depressed prices. It concludes by requesting 'immediate anti-dumping measures against these dumped imports.'

On 22 October 1982 a telex was sent by the Department to a Mr. Kloeden, an officer of an Australian timber company, saying:-

'DEPT. NOW EXAMINING ALLEGATIONS OF SUBSIDIES PAID BY N.Z. GOVERNMENT ON TIMBER SALES.

AS LOCAL INDUSTRY REQUESTED COUNTERVAILING ACTION DEPT. WOULD APPRECIATE YOUR DESCRIPTION AND QUANTIFICATION OF RELEVANT SUBSIDIES PAID ON RADIATA AND DOUGLAS FIR TIMBERS DESCRIBED IN COMPLAINT.'

On 25 October 1982 a telex was sent to the Department by a Mr. Roughana, an executive of the trade association representing the Australian timber producers, referring to the telex to Mr. Kloeden and stating amongst other things that it is the Australian producers' understanding that the export incentive applying to New Zealand timber exports is a tax rebate of 10.5%, as specified by 'Band B' of the 'Export Performance Taxation Incentive'. Then there appeared a calculation of what was said to be the effect of the rebate, the terms of which I need not set out, and saying that the 10.5% rebate was equivalent to an increase in selling price of 19.1%.

Also on 25 October 1982 a draft Minute was prepared within the Department, approved by a number of officers and finally approved that day by Mr. O'Rourke which, so far as material, is in the following terms:-

'COUNTERVAILING _ TIMBER

N.Z. Subsidies

There is ample evidence that the N.Z. govt. grants subsidies and other financial assistance both directly on the volume of exports of timber and indirectly on forest development, sawmill assistance etc. These are described in general terms in N.Z. government publications, copies of which are on file.

Injury to Australian Industry

The Australian industry has submitted evidence of falling sales, retrenchment of staff, reduced working hours, falling production, rising stock levels, and suppressed prices leading to a (sic) inability to recover cost increases. Profitability is severely depressed.

Causal Link

The Australian timber market has fallen a great deal due to the slump in housing starts. Despite this, however, imports from New Zealand appear to be rising and are acquiring a larger share of the market for square dressed softwoods. All other sources have slumped except USA which rose, but whose overall volume for the goods under reference is still small. Preliminary evidence suggests that the increased N.Z. share is due to a price advantage in the market.

Recommendation

I believe there is sufficient prima facie evidence to warrant initiation of a countervailing investigation, and I recommend accordingly.

I believe the degree of injury likely to be caused to the Australian industry during the course of the investigation is severe and there is sufficient evidence available to justify provisional measures, as provided for in the GATT Code on Subsidies and Countervailing. Importation of cash securities will protect our right to collect revenue retrospectively, if such action is finally decided.

(K.F.Duffy)"

Mr. O'Rourke gave evidence before me both by affidavit and viva voce. He swore that after studying all the evidence available to him he was satisfied on 25 October 1982 that there was sufficient prima facie evidence to show, amongst other things, that New Zealand exporters of the Timber were receiving financial assistance from the New Zealand Government to the extent of at least 19.09% of the FOB value and that New Zealand exporters of the Timber had increased their percentage share of the declining Australian market at the expense of local producers and that this caused or contributed to material injury being suffered by the Australian producers in various ways elaborated by him in evidence. He said that as a result of his recommendation a draft notice corresponding to Australian Customs Notice No. 82/228 of 3 November 1982 was approved on 25 October 1982.

On 26 October 1982 a letter was written by Mr. O'Rourke to the Secretary of the Department then administering the Act referring to the 'countervailing complaint lodged by the Australian industry' stating that the Department had been requested to impose cash securities. He said that the Department proposed to initiate provisional countervailing measures and requested that the New Zealand authorities be informed promptly of that decision, that an Australian Customs Notice announcing the commencement of formal inquiries and the imposition of cash securities would be published during the week commencing 1 November.

On 26 October 1982 a meeting was held of certain people in the Department then administering the Act and it appears that one of the people present wrote on some note of the meeting that the dumping complaint could not be sustained. Mr. O'Rourke said in evidence that that note was written by a Mr. Hodge whose understanding of the matter was obviously in error. At the meeting one of the people present was to speak 'to New Zealand people and advise them orally of the impending countervailing action and imposition of cash security'. Mr. O'Rourke said in evidence that those present at that meeting contemplated that there was going to be imposition of cash securities.

Two days later, 28 October 1982, there was a meeting in New Zealand of the responsible Australian and New Zealand Ministers and officers from the relevant Departments of both countries to discuss various matters including the imposition of cash securities.

On 29 October 1982 the Department wrote a letter to the Minister Commercial of the New Zealand High Commission informing him that investigations would be conducted into the complaint of subsidization, that an Australian Customs Notice would be issued during the week commencing 1 November (a copy of which was enclosed) that the Department had not yet identified all subsidies but had 'quantified the Export Performance Taxation Incentive Scheme and in the first instance, countervailing cash securities will be based on 19.09% of the actual FOB prices'. The letter said:-

'In accordance with the GATT Subsidies and Countervailing Duties Code, I would request specific details of the benefits available to exporters and timber producers under the remaining subsidies schemes including those nominated in your letter of 7 October 1982.'

Mr. O'Rourke gave evidence that as early as 30 July 1982 the percentage of 19.09% was being put upon the value of the alleged subsidy, that the Department attempted to obtain better and more precise information before imposing cash securities but it was the best information available to it. He rejected the suggestion put to him in cross-examination that the information as to 19.09% was incorrect, and he said the Department had considerable information available to it when making its decision to impose cash securities.

An attempt was made in cross-examination of Mr. O'Rourke to establish that an irrelevant matter was taken into account by the Department in determining to require cash securities namely, a scale by reference to which the alleged suppression of Australian timber prices was to be gauged showing increases in prices of a commodity other than timber. Mr. O'Rourke agreed that the Department took this scale into account as 'one of many matters' and that the scale was 'one of the methods used to justify the conclusion that there had been price suppression. He said that the price of the other product was 'an interesting exercise". The scale of price increases in this other commodity had little, if anything, to do with the Timber. It was considered by the Department as one of many matters having a bearing on the ultimate question of cash securities. The extent to which it played any real part at all in the deliberations of the Department to require cash securities is a matter of conjecture. I am not satisfied that it played any material part in the Department's deliberations or conclusions. In human affairs many things come to our attention which have little, if anything, to do with our ultimate decisions, but we consider them often to reject them or place no conscious or real reliance upon them. Departments of State are no different.

I turn to the submissions of the parties.

To attract this Court's jurisdiction under the Judical Review Act there must be a 'decision of an administrative character made, proposed to be made...under an enactment...'. The respondents submitted in the alternative that there was no relevant decision, that any decision which was made was not made under an enactment or that any decision is excluded from review under the Judicial Review Act by reason of para. (e) of Schedule I to the Act which excludes from review:-

'(e) decisions making, or forming part of the process of making, or leading up to the making of, assessments or calculations of...duty...under any of the following Acts:...

Customs Act 1901

Customs Tariff Act 1966...'

The applicants identified the decision as the one referred to in Australian Customs Notice of 3 November 1982, the second last sentence of which provides:-

'Pending the completion of inquiries it has been decided to impose countervailing cash securities on imports of square dressed structural softwood timber from New Zealand on and from the date of this notice.'

I am satisfied that the decision referred to in the Customs Notice was made, that it was a decision of an administrative character made pursuant to the power conferred by s. 42 of the Customs Act and that it is not a decision making or forming part of the process of making or leading up to the making of or otherwise relating to the assessment or calculation of duty under the Customs Act or the Customs Tariff Act 1966. Nor is it a decision of that character under the Act itself, although the Act is not mentioned in para. (e) of Schedule 1. The decision is what it is described as being in the Notice namely, a decision in effect to require the payment of cash securities before the Timber may be cleared from Australian Customs. The decision was made by the person in whom the power is vested by s.42 namely, 'the Customs' which by definition (s.4) means the Department. I overrule the objection to jurisdiction.

The applicants submitted that the decision is reviewable under para. 5(1)(b),(d),(e),(f), and (h) of the Judicial Review Act. To the extent that para. 5(1)(e) is relied on the applicants rely also on paras. 5(2)(a),(b) and (g).

It is common ground that the only relevant source of power to require and take securities is s.42 of the Customs Act and that unless the security could be required and taken 'generally for the protection of the revenue of the Customs' (sub-s.42(1) ) the decision in question must be bad. The expression 'the revenue of Customs' means the revenue from customs duty: R. v. The Comptroller-General of Customs; Ex parte Woolworths Ltd. [1935] HCA 37; (1935) 53 C.L.R. 308 (at p. 319).

The applicants made various submissions which it is convenient to express in summary form as follows:-

(a) The power conferred by s.42 to require securities to protect the revenue of the Customs can only be exercised where there is an existing liability to duty in respect of goods, not where there may never be an actual liability to duty arising in the future.

(b) The power to require securities under s.42 in this case could not be supported as being for the protection of the revenue of the Customs unless it is possible that retroactive countervailing duty might be imposed for which the securities could be seen as proper protection. The securities required here could not be supported on this basis for the following reasons:-

(i) The Minister's power to impose countervailing duties cannot be exercised unless the Minister is satisfied as to the circumstances specified in paras. 10(1)(a) and (b)(ii) of the Act namely that, in the country of origin or of export of the goods, there has been paid or granted upon the production or export of those goods any subsidy or other financial assistance and by reason thereof, in a case where security has been taken under s.42 in respect of any duty that may become payable on the goods under s.10, material injury to an Australian industry would or might have been caused if the security had not been taken.

(ii) Any countervailing duty imposed in respect of the Timber must be a sum equal to the amount of the subsidy or other financial assistance. Before security could be required under s. 42 in aid of a subsequent imposition of countervailing duties the Department must attempt to relate the securities to a particular subsidy which it thinks might have been paid or granted in respect of the goods. Section 42 does not authorise the requiring or taking of securities in vacuo. On the facts of this case, when a complaint was made by the local timber industry that New Zealand Government subsidies existed, no attempt was made by the Department to determine the nature or amount of that subsidy before the Notice of 3 November was given. The Department acted on information given to it by the industry in July 1982 as to the amount of duty needed to produce the consequence that, notwithstanding any subsidy or financial assistance from the New Zealand Government to New Zealand exporters of the Timber, those exporters would not be able to sell the Timber in Australia. It was said that there were two relevant subsidies in operation in New Zealand at material times and that the Department took only one of them into account in fixing the securities to be taken notwithstanding its knowledge of the existence of the two. In these circumstances the Department, in requiring the securities, failed to relate them to the subsidies granted by the New Zealand Government and acted essentially to protect local industry from New Zealand imports by preventing the Timber from entering Australia. This was said to penalize the importers of the Timber and not to protect the revenue of the Customs. The applicants relied on provisions of the Act itself especially sub-ss. 10(4) and 13(2) in support of this argument.

(c) The Act must be viewed in the light of GATT and the Subsidies Code because they contain elaborate provisions relating to the imposition of countervailing duties and the taking of provisional measures in the meantime. These international agreements were relied on strongly as reinforcing the submissions of the applicants. Reference to them was said to be supported by s. 14 of the Act because, whether or not it introduces GATT, the Subsidies Code and NAFTA as part of Australian municipal law (a matter which I do not have to decide), the section at least makes clear that the Act must be construed and its operation considered in the light of Australia's obligations under those international agreements.

The decision under challenge was said to be in breach of the following provisions of the Subsidies Code:-

. Article 5 para. 1 provides:-

'1. Provisional measures may be taken only after a preliminary affirmative finding has been made that a subsidy exists and that there is sufficient evidence of injury as provided for in Article 2, paragraph 1 (a) to (c). Provisional measures shall not be applied unless the authorities concerned judge that they are necessary to prevent injury being caused during the period of investigation.'

It was said that although the expression 'preliminary affirmative finding' is not defined some clue to its meaning is to be found in Articles 2.10 and 2.15 and that no such finding was made before the issue of the 3 November Notice.

. Article 2 para. 15 provides:-

'15. Public notice shall be given of any preliminary or final finding whether affirmative or negative and of the revocation of a finding. In the case of an affirmative finding each such notice shall set forth the findings and conclusions reached on all issues of fact and law considered material by the investigating authorities, and the reasons and basis therefor. In the case of a negative finding each notice shall set forth at least the basic conclusions and a summary of the reasons therefor. All notices of finding shall be forwarded to the signatory or signatories the products of which are subject to such finding and to the exporters known to have an interest therein."

It was submitted that this paragraph was not complied with in any material respect and, in particular, that the 3 November Notice fell far short of the paragraph's requirements.

Article 3 para. 1 provides:-

'1. As soon as possible after a request for initiation of an investigation is accepted, and in any event before the initiation of any investigation, signatories the products of which may be subject to such investigation shall be afforded a reasonable opportunity for consultations with the aim of clarifying the situation as to the matter referred to in Article 2 paragraph 1 above and arriving at a mutually agreed solution.'

It was said that no consultations took place with the aim of clarifying the situation referrable to any subsidies and injury to local industry or any causal link between the two.

Article 2 paras. 3, 5 and 9 provide:-

'3. When the investigating authorities are satisfied that there is sufficient evidence to justify initiating an investigation, the signatory or signatories, the products of which are subject to such investigation and the exporters and importers known to the investigating authorities to have an interest therein and the complainants shall be notified and a public notice shall be given. In determining whether to initiate an investigation, the investigating authorities should take into account the position adopted by the affiliates of a complainant party which are resident in the territory of another signatory.

...

5. The public notice referred to in paragraph 3 above shall describe the subsidy practice or practices to be investigated. Each signatory shall ensure that the investigating authorities afford all interested signatories and all interested parties a reasonable opportunity, upon request, to see all relevant information that is not confidential...and that is used by the investigating authorities in the investigation, and to present in writing, and upon justification orally, their views to the investigating authorities.

...

9. In cases in which any interested party or signatory refuses access to, or otherwise does not provide, necessary information within a reasonable period or significantly impedes the investigation, preliminary and final findings, affirmative or negative, may be made on the basis of the facts available.'

It was said that none of these steps were taken before it was decided to require cash securities.

Article 10 of NAFTA was said to have been contravened. It provides, so far as relevant:-

'ARTICLE 10

DUMPED AND SUBSIDISED IMPORTS

2. If a Member State gives written notice to the other Member State

that, in its opinion, goods being imported into its territory from the territory of the other Member State are within the meaning of its laws being dumped, or are being subsidised by the other Member State, and the importation of such goods is causing or may cause material injury to its producers of like or directly competitive products, or may hinder the establishment of an industry to produce or manufacture like or directly competitive products, the Member States shall thereupon consult together immediately to consider measures to prevent future injury. During such consultations neither Member State shall make direct inquiries concerning the matter in the territory of the other. For the purpose of this Article, consultations shall be deemed to have commenced on the day on which the notice referred to in this paragraph was given.

3. If the two Member States do not reach a mutually satisfactory solution within a period of sixty days from the commencement of the consultations referred to in paragraph 2 of this Article, the Member State into whose territory the goods are being imported may levy dumping or countervailing duties on those goods.'

It was submitted that cash securities cannot be required before or during the period of consultation referred to in Article 10 paragraph 2. It was asserted that no attempt was made by Australia to consult with New Zealand before 3 November.

The applicants relied on these alleged breaches of the Subsidies Code and NAFTA to found the argument that, because of the breaches, the Minister could not later impose countervailing duties in conformity with those international agreements. Thus the Minister could not be satisfied in relation to the Timber that the imposition of countervailing duties under the Act would not be inconsistent with Australia's obligations under the two international agreements. Hence s.14 of the Act would prohibit the Minister from causing a notice being published under sub-s.10(1) without which there can be no countervailing duties and therefore nothing to which interim cash securities could ever be referrable.

I summarise the submissions of the respondents as follows:-

(a) The power to require cash securities arises from s. 42 alone. The power may be exercised whether liability to duty exists at the time the security is taken or not. Provided the cash securities are taken to protect the revenue of the Customs that is enough to support the exercise of the power.

(b) If the s.42 power requires the Department to attempt to determine any subsidy or other financial assistance granted by the New Zealand Government the Department did not address itself to irrelevant matters or fail to take into account relevant matters. It is legitimate for the Department to take into account the effects of the subsidy on the local timber industry in determining the nature and extent of cash securities.

(c) Section 14 does not incorporate the international agreements into the municipal law of Australia. That section has no application to the decision involved here. It does not purport to have any relevant operation except perhaps to any subsequent decision to impose countervailing duties. Alternatively, Australia did not breach any of the provisions of the international agreements relied on by the applicants but substantially complied with them.

The submission of the applicants that s.42 can apply only in respect of liability to countervailing duty existing at the time securities are requested or taken can be disposed of briefly. That s.42 may apply in respect of duty that is not necessarily payable when security is taken or that may never become payable is clear from its evident purpose and from other sections of the Act including sub-paras. 8(1)(b)(ii), 9(1)(b)(ii), 10(1)(b)(ii) and sub-s.13(2). Plainly s.42 permits the requirement and taking of securities to protect the revenue of the Customs to satisfy duty if and when levied: R. v. Comptroller-General of Customs; Ex parte Woolworths Ltd.(supra: at pp. 319 and 320). It is important to remember that s. 42 is incorporated in and is part of the Act so that it is as if the sections of the Customs Act had been actually printed into it: see Cadbury-Fry-Pascall Pty. Limited v. Federal Commissioner of Taxation [1944] HCA 31; (1944) 70 C.L.R. 362 per Williams J. (at p. 388) and the cases there cited.

I turn to what is the principal question in the case namely, whether the Department's action in deciding to impose cash securities was for the protection of the revenue of the Customs. This question must be considered in the particular context in which the decision was made. As the terms of the Notice of 3 November 1982 themselves provide, the cash securities were to be taken pending the completion of the inquiries initiated by the Department to determine the existence, degree and effect of an alleged subsidy or other financial assistance.

The true nature of the power conferred by s. 42 can be gleaned from the Act itself without reference to the international agreements.

The s.42 power to take securities is supportable in this case only if it was exercised for the protection of the revenue of the Customs. That is not a power at large. It is a power in aid of the ultimate imposition of countervailing duties. Those duties generally cannot be retroactive in respect of goods that have been entered for home consumption. Section 13 contains exceptions to this prima facie rule, including the important provision in sub-s.13(2) that countervailing duty may be retroactive in respect of goods that have been entered for home consumption if security was taken under s.42 in respect of any countervailing duty that might become payable under s.10.

The taking of security under s.42 is an interim or provisional measure taken by the Customs to protect the revenue against any ultimate imposition of countervailing duty in respect of goods entered for home consumption in the meantime. The Act does not itself define the circumstances in which security may be taken or the matters to which the Customs must have regard in determining whether security should be taken, but it does not follow that the power is uncircumscribed or limitless. It must be exercised bona fide, reasonably and within the limits and for the objects intended by Parliament. The object is to protect the revenue arising from Customs duty, but that does not support the imposition of a penalty or a discriminatory tax upon an importer. In R. v. Comptroller-General of Customs; Ex parte Woolworths Ltd. (supra) Starke J. said of s.42 of the Customs Act (at p. 341):-

'Security certainly may be required for the protection of the revenue, but that does not warrant any forfeiture of the importer's money, or any penalty upon him. It is a new form of exaction, and would require explicit statutory authority. No such authority is found in the Customs Act, or elsewhere.'

The power to take security pursuant to s.42 must take its colour and content from the primary power to impose countervailing duties which it supports. Countervailing duties by their very nature are duties imposed on the importer of goods equal to the exporter's Government subsidy to prevent the dumping of the goods. If a countervailing duty were greater than the subsidy it would be a penalty or forfeiture or an ordinary impost acting as a trade barrier. The necessity for a countervailing duty to equal or balance the exporter's Government subsidy is not only inherent in the very nature of such a duty but is recognised expressly by the Act in sub-s.10 (4) which provides, so far as relevant:-

'(4) ...the countervailing duty in respect of goods is a sum equal to the amount of the subsidy, bounty, reduction or remission of freight or other financial assistance that has been paid or granted, directly or indirectly, upon the production, manufacture, carriage or export of the goods.'

When the Department is considering the taking of security for the protection of the revenue it must have in mind that the security to be taken is in aid of any countervailing duty that may ultimately be imposed and that, relevantly to this case, a countervailing duty cannot be imposed unless the Minister is satisfied that a subsidy or other financial assistance has been paid or granted in the country of export upon the export of those goods and that by reason thereof material injury to an Australian industry would or might have been caused if the security had not been taken under s.42 (para.10(1)(a) and (b) and sub-para.10(1)(b)(ii) ).

The Department cannot be expected to prophesy the precise amount of any subsidy that the foreign Government has or may have paid or granted. But before requiring security it must address itself to the question whether a subsidy has been paid or granted and, if so, its amount or extent and whether by reason thereof material injury to the relevant Australian industry has been or may be caused. Some reasonable attempt must be made by the Department to determine these matters before requiring security. The effect of requiring security can be far reaching. The imposition of countervailing duty and any earlier taking of security necessarily affects Australia's relations with the trading partner concerned and people engaged in trade both in Australia and the other country. Such actions here affect fiscal policy and private interests there. They are serious steps and must not be taken lightly.

What happened in this case? The relevant officers of the Department were aware that two different subsidy schemes were in operation in New Zealand at the same time, one of which applied to some of the exporters ("The Old Scheme") and the other applied to other exporters ("The New Scheme") with quite different financial consequences. They disregarded the former. Insofar as they considered the latter, they concerned themselves not with the amount of the subsidy, which is a direct tax rebate of 10.5%, but with a different notion entirely extraneous to the subsidy paid or payable by the New Zealand Government. What they did was to measure in a rough way the extent to which prices in Australia of the Timber imported from New Zealand would need to be increased to produce the same after-tax financial consequences to the New Zealand exporters if there had been no subsidy. The officers of the Department did not assess the amount of any relevant subsidy or financial assistance. They determined the amount of duty needed to produce the consequence that, notwithstanding the subsidy or financial assistance afforded by the New Zealand Government, the New Zealand exporters would not be able to sell the Timber competitively in Australia. The test propounded by the officers of the Department was based essentially on the material provided to them as long ago as July 1982 by the Australian timber industry plainly to prevent the relevant type and grade of timber from New Zealand competing in the Australia market. I say this not by way of criticism. No doubt the Australian industry thinks its attitude is justified. All I do is to state my findings of fact relevant to the case in hand.

The figure of 19.09% could not have been correct. It has no relationship to The Old Scheme which is still in operation. Insofar as it related to The New Scheme it was not an attempt to calculate the amount of the subsidy at all but an attempt to determine something quite different. The cash securities are unrelated in amount to any subsidy or financial advantage provided by the New Zealand Government.

The Department addressed itself to materially irrelevant considerations and failed to consider materially relevant considerations. It misconceived the nature and extent of the protection to which the revenue of the Customs is entitled, namely countervailing duties that might ultimately be imposed in accordance with due process of law and which might be lost if the Timber was entered here for home consumption without security being taken. I do not say this critically of the Department because countervailing duties have never been imposed in this country, so the Department's experience with them must necessarily be very limited. Nor is there any suggestion of any absence of good faith by the Department or any of its officers. Once cash securities are taken in an amount substantially unrelated to any countervailing duty that may ultimately be imposed there is a departure from the protection of the revenue and the imposition of a penalty upon the importer.

It is true, as counsel for the respondents said, that s. 10 requires the Minister to consider injury to an Australian industry and its nexus with the subsidy or financial assistance given by the foreign Government and that the officers of the Department considered these questions before deciding to require cash securities. But that is to confuse a condition precedent to the exercise of a power with the content of the power itself. The ultimate power is to impose countervailing duties and they must not exceed the amount of the subsidy. That is fundamental to the notion of the power. It is entirely antithetic to the power that it be exercised in order to protect local industry by driving foreign goods out of the Australian market. The mere existence of a subsidy does not entitle the Australian Government to impose countervailing duty under the Act. The Minister must be satisfied of material injury to an Australian industry by reason of the subsidy. Then the occasion for the exercise of the power arises, but the power is to neutralize or counteract the subsidy, not to penalise foreign traders.

The same considerations apply to the exercise of the power to require security preliminary to the imposition of countervailing duties, except that equivalence in amount between the security and the subsidy is not essential, but some reasonable attempt must be made by the Department, doing the best it can on the information before it, to achieve equivalence. This was not done here.

When considering the actions of the officers of the Department in relation to requiring securities, no pedantic or narrow approach is called for. I have not examined the action of the Department microscopically, rather I have taken a broad and, I hope, fair approach, but the conclusions to which I have come seem to me inescapable.

Before leaving this aspect of the case I should say that no argument was advanced by the respondents based on sub-s. 10 (7) of the Act which provides:-

'(7) If the Minister is satisfied that adequate information as to the amount of subsidy, bounty, reduction or remission of freight or other financial assistance in relation to goods cannot be obtained, the amount of subsidy, bounty, reduction or remission of freight or other financial assistance shall, for the purpose of this section, be such as is determined, in writing, by the Minister.'

Thus far I have not referred to the international agreements. The Act relates to special duties of Customs namely, anti-dumping and countervailing duties. The imposition of those duties necessarily affects Australia's relations with its trading partners and traders themselves . The very nature and content of the Act itself, including s.14, permits the Courts to have regard to the international agreements to determine the nature of countervailing duties and of securities that may be taken to safeguard the revenue against the ultimate imposition of those duties.

The Second Reading speeches of the responsible Ministers in the House of Representatives when presenting the Bills that became the 1975 Act and the Customs Tariff (Anti-Dumping) Amendment Act 1981 point plainly to the conclusion that they were designed to adopt many of the provisions of the Subsidies Code and the Anti-Dumping Code. I refer to those speeches to identify the mischiefs to which those Acts were directed.

An examination of Article 6 of GATT, especially para. 3, and of the Subsidies Code, especially Articles 2, 3, 4 and 5 reinforces strongly the views I have otherwise formed and which I have earlier expressed.

In these circumstances it is unnecessary for the Court to consider the arguments of the parties relating to the construction, operation and effect of s. 14 of the Act and the detailed provisions of the Subsidies Code and NAFTA. Normally I would do so, but as they involve complex and delicate questions of Australia's relations with other countries including New Zealand, it is better that I say nothing about them.

I am satisfied that the applicants have established their case for an order of review under the Judicial Review Act in respect of the decision to impose cash securities on the grounds mentioned in paragraphs 5(1)(e) (including paragraphs 5(2)(a) and (b) ) and (f).

I direct the applicants to bring in short minutes of orders to give effect to my reasons for judgment. I accede to the submission of counsel for the respondents that the applicants should be allowed only one set of costs between them as their interests in this proceeding are substantially the same.