Australian authorities defended the decision saying cheaper Filipino pineapples would continue to “injure” the country’s existing pineapple canning industry, forcing exporters to pay the levies until 2027.

The Philippines is the world’s second-largest exporter of the spiky fruit, according to the Food and Agriculture Organization of the United Nations.

The case posed a test to the two nations that upgraded their bilateral ties to a strategic partnership last year and committed to eliminate “unnecessary barriers” in trade including anti-dumping duties.

This quiet conflict also shows that as Canberra trades with its Southeast Asian neighbours – which is set to rise under a new economic strategy announced this year – the complexities of commerce between niche producers like Australia and low-cost ones in Asia in certain areas like food would continue to surface, experts say.

“There are always going to be some trade issues that emerge between friends and partners, and this is where the international rule-based trading system is really beneficial. It provides balance and predictability,” Nathan Gray, senior fellow at the Institute for International Trade in Adelaide, said.

“The challenge when we think of increasing trade is that it’s not the countries engaging in trade, but the companies within the countries that undertake the participation in trade.”

Golden Circle, a local producer in Queensland which was no longer Australian-owned after being acquired by American multinational Kraft Heinz, first kicked off the anti-dumping case against Filipino pineapples in 2006 claiming the canned fruit was “dumped” or sold at an unfairly low price in Australia.

Also arguing against the claim alongside Filipino manufacturers like Del Monte then was H.J. Heinz Company Australia before it merged with Kraft in 2015. Heinz itself was importing cheaper Filipino canned pineapples into Australia.

For 15 years, Golden Circle successfully maintained that cheaper canned pineapple from the Philippines and other places such as Thailand, Indonesia and China could lead to its consumers switching loyalty until 2021, when the Australian anti-dumping commission said the company operated in its own premium market and was not threatened by low-priced products from these countries.

“Despite the prices of imported goods from the subject countries and other countries being lower than the Australian industry, this does not appear to have impacted the price Golden Circle achieves,” a commission report said.

But in the ensuing appeal, the Australian review panel reversed that ruling saying instead it did not operate in its own “premium” market segment and was therefore not immune to potentially “injurious” competition from cheaper imports.

Golden Circle’s pineapples have long been popular as a key ingredient for Australian-styled burgers and pizzas.

Leading Filipino producer Dole wrote to the panel that the contradictions in these findings or “straw man claims” undermined the integrity of the Australian dumping commission’s “conversion to support for the assertions of the Australian industry”.

Newly elected industry minister Ed Husic at the time of the appeal signed off on the reimposition of the duties.

The Philippine government also voiced its disappointment, saying the country could not be solely responsible for hurting the Australian industry represented by Golden Circle, as there were other low-cost pineapples in the Australian market including those from Indonesia.

Moreover, Golden Circle had been retreating from canned pineapple production due a low supply of local fresh pineapples, it added.

Golden Circle has been using non-Australian pineapples like those from Indonesia in its cans.

“The Philippines urges Australia to, once and for all, terminate the imposition of this 16-year anti-dumping measure on consumer pineapples from the Philippines,” the government said in a letter.

Manila has reiterated its requests in subsequent bilateral discussions. Most other Filipino products face few barriers into Australia, although there was domestic opposition to Filipino bananas previously.

A spokeswoman from Australia’s foreign affairs and trade department said Australian officials have continued to work constructively with their Philippine counterparts regarding trade remedies matters.

“Australia’s independent Anti-Dumping Commission treats all investigations and review processes in a transparent, independent, evidence-based and impartial manner, including in relation to pineapples,” she said.

Deepening economic ties with the Philippines is central to Australia’s latest Southeast Asia Economic Strategy to 2040.

The dark ‘grey’ side of anti-dumping cases

The purpose of Australia’s anti-dumping measures was not to raise prices of imports to solely protect producers like Golden Circle but to make sure foreign competitors did not have an unfair advantage as a result of government subsidies or other incentives that lower the normal cost of production at the expense of a domestic industry in Australia, like pineapple cannery, Gray said.

Golden Circle, which opened in 1947, said the canned pineapple from the Philippines as well as Thailand were at such low prices that made it difficult for it to raise rates in response to increases in production costs.

But this is the dark – or grey – side of anti-dumping laws, Moulis Legal senior lawyer Charles Zhan said in an analysis.

There have been times “Australia’s anti-dumping system has been adjusted and trade restrictive methods were employed, as substitute “weapons” against the effects of trade liberalisation”, Zhan said.

As more tariffs were eliminated through free-trade agreements, the tougher the anti-dumping responses by Australia, he said.

In other words, a free-trade agreement could seem like a paradox, where a promising trade deal could eventually lead to complaints by Australian industries especially against exporters from a country that has seemingly lower costs.

These differences in economic systems and in market regulation could provide fodder for unpleasant trade conflicts, Zhan added.

Indonesia’s win against Australian anti-dumping measures placed on its A4 paper at the World Trade Organization in late 2019 was such a case.

The WTO ruled Australia disregarded the actual and legitimate costs of pulp incurred by Indonesian producers and instead used other surrogate costs to justify the measures.

This method has also been employed against various trading partners like China.

However, Australia honoured the findings of its mistake in the Indonesian case and lifted the A4 anti-dumping measures.

“Australia has a strong reputation as an honest broker in these fora, and has regularly sought to mediate disputes. This is where the balance lies in any trading relationship,” Gray said.

Australian economist John Quiggin told This Week in Asia that he was cynical about the effectiveness of anti-dumping rules as they could form “an easy way” of helping businesses get ahead in low-cost import competition.

He said it might be time to “get rid of anti-dumping measures for selected trading partners that Australia was trying to cultivate”.

As trading partners and their producers fight it out, the ultimate victims, however, were consumers, Australia’s Productivity Commission said in a review of the practice in 2009.

It is consumers who pay the price for any anti-dumping measures, and “lead to less efficient resource use across the economy”, it said.

Meanwhile, there is some reprieve for consumers as cheaper Dole canned pineapples have found their way onto the shelves of Australian supermarkets, though it is the only Filipino brand to feature.