No countervailing duty on jute goods, please!

The two leading producers of jute ---India and Bangladesh respectively--- in the world are sure to have their commercial interests clash at some points. Ever since India wrested the laurel of top position of jute producer from Bangladesh, the countries have varying priorities. While India has gone for advanced technologies to revive fortunes of the jute sector, Bangladesh has gone the other way. Its moribund jute industry cannot compete with that of its big neighbour. But unfortunately, the limited volumes of jute goods Bangladesh exports to India also face an adverse duty regime at the destination. It appealed unsuccessfully to revoke the anti-dumping duty (ADD) on the export of its products to that country. As if it was not enough, now the Directorate General of Trade Remedies (DGTR) in India has been looking into the possibility of imposing a fresh countervailing duty (CVD) on jute goods from Bangladesh...

The move initiated, according a report carried out in the FE on Sunday last, by the DGTR, however, is in response to a complaint lodged by the Indian Jute Mills Association (IJMA) that the jute goods exported from Bangladesh are produced by factories, the capital machinery of which is largely subsidised by the Bangladesh government. Had it been the case, the jute industry here would not be so sick now. In such disputes, the best practices to follow are the rules set by the World Trade Organisation (WTO). Unilateral imposition of measures in such cases is discouraged. What is particularly significant here is that the imposition of a fresh duty, CVD that is, will be a violation of the Indian Customs Tariff Act 1975 which prohibits simultaneous imposition of both ADD and CVD. The Indian customs rules are clear on this issue and contravening it will be deemed a legal breach.

In this context, the dispute over Bangladesh's export of lead acid battery can provide an insight into similar bilateral trade disagreements. This was the first instance, after the establishment of the WTO in 1995, of a smaller nation ---one that was a least developed country (LDC) then--- challenging a much bigger and stronger economy at the highest level of international legal process. Indeed, the Indian government agreed to a negotiated solution to the problem in 2006, thanks to the deterrent effect of the WTO. The anti-dumping duty was terminated but it also sent the message loud and clear that the big economies should follow the norms and rules of international trade while dealing with smaller economies.

It is not only Bangladesh's jute industry that is facing a tough time to stay afloat. There are other smaller industries that cannot realise their full potential because of the hostile trade regime made more hostile in the post-Covid and Ukraine war era. Even the Western buyers of garments from Bangladesh refuse to pay a deserving higher price for apparel produced in the country's green factories, the transition of which from the traditional types was at significant costs. Sure enough, norms and rules of international trade are, more often than not, twisted or defied to suite the powerful economies. But this goes against the mutual interests of trade partners. Let the WTO look into such discordant international trade and commerce, particularly involving weaker parties.