Anti-dumping measures: excuses are not enough
Wednesday, 27 January 2010
Jamal Ahmed Chowdhury
According to a report published in the daily express on January 17, 2010 two important tax measures- anti-dumping and countervailing duty, that government can impose as per WTO rules to restrict and discourage excessive and cheap import as a means to safeguard the domestic industries could not be implemented due to lack of co-ordination between the government's information cells and the local manufacturer. The report also quoted a senior Official of Bangladesh Tariff Commission (BTC), the government wing responsible for imposing the said tax measures, as saying: "BTC has received eight applications in last 14 years from local manufacturers who have sought protection of the state to survive but none of them provided all required information to the commission".
We, in the past, heard from top bosses of the tariff commission in seminars and symposiums that they cannot take action against the dumping of foreign goods because the complaints that they receive from the local business community is not supported by adequate proof. Is it enough to put the balls in court of the sufferers and remain silent on an issue that involves long term business impact? Is that enough of an excuse for inaction on the part of an authority which is supposed to protect the interest of the country?
Anti dumping law was incorporated in the WTO as a shield to protect domestic industries against any unfair competition. This is a means to prevent predatory pricing. Article VI of the WTO agreement deals with various anti-dumping issues. According to the anti-dumping law, dumping occurs when the prices of goods imported into a country are less than their "normal value" in the domestic market of the exporting country. The differences in the two prices are called the "Dumping Margin".
In other words, if the product being sold in the international market is priced lower than the domestic selling price in the exporter's country, the product is said to have been dumped. Such dumping is prohibited under the WTO rules. Countervailing duty, the twin brother of anti-dumping duty, is also imposable on products that are subsidised by government for the purpose of giving the exporter a comparative price advantage in the international trade. The anti-dumping guidelines of the WTO agreement contain details on complex technical issues like how to determine "normal Value", "injury" or "threat to Injury", how to carry out anti-dumping investigations, etc.
To initiate an anti-dumping action three things must be proved: there is a case of dumping; there is injury or threat to injury to the domestic industries; there is a casual link between the dumping and the injury. According to article 5 of the anti-dumping agreement, an investigation for existence, degree and effect of any alleged dumping shall be initiated upon a written application by or on behalf of the domestic industry. According to article 5(4) application is supposed to have been made by and on behalf of the domestic industry if it is supported by those domestic producers whose total output is more than 50% of the total production of the like product of those either opposing or favoring the application. However, no investigation shall be initiated if the application is not expressly supported by the domestic producers representing at least 25% of the total production of the domestic industry. The application has to contain the certain information "as reasonably available" to the applicant including the volume and value of the domestic production, description of the dumped product, names of the country of export, identity of each known exporter, prices at which the products are sold in the country of export at the time when exported or prices at which the products are sold to a third country by the exporter or the constructed value of the product and information on export prices. The application also needs to contain the volume of allegedly dumped import, effect of these imports on the domestic industry etc.
It is evident from above requirements that to lodge a complaint about dumping the relevant industry must have a very good information database and also must have access to information on the prices of the product as well as the cost of the product in the country of origin. The requirement clearly denotes the vast range of information that a domestic producer requires to lodge an application for anti-dumping action. This is undoubtedly a daunting task for the individual industry or industries like ours where the business organisations are not yet well structured, domestic producers are small and industries are highly fragmented, information management system is still at its infancy, information availability is quite remote, knowledge of international business and commercial laws and rules of our business community are too inadequate.
This is where the government must play a vital role. It must come forward to assist our domestic producers; help them with information and infrastructure support if they really wish to protect the domestic industries against the dumping. It must arrange for proper education and training at least for the business associations and trade bodies on the technical aspects of the anti-dumping laws. Can not we as general citizen of the country ask the tariff commission what level of education and training have they imparted to our trade bodies, associations and entrepreneurs to make them aware of the legal protections available under WTO rules?
Without the appropriate support it is really difficult for the small entrepreneurs, who are prime sufferers of the dumping of foreign goods, to understand the complex anti-dumping laws and seek appropriate remedy. Tariff Commission needs to be very pro-active in this respect. The argument of the Tariff Commission favours no merit. There is no justifiable reason as to why the Tariff Commission or the concerned authority should not, by themselves, come forward to initiate anti-dumping investigations while the applications of the domestic producers are, according to them, not accompanied with full evidence.
It is clear that the concerned authority need not wait for application from the domestic industry. They can on their own initiate anti-dumping investigation provided they have evidences. It is imperative that if the concerned authority is honest in their approach they need not blame the domestic producers who have little access even to domestic information not to talk of the global market.
Maintenance of a very highly structured central information database with adequate market intelligence and containing all relevant information on imports, particularly the volume and prices of the import of each of the products, their prices in the country of origin, export prices to third country(s), indicative production costs etc., is a must. The information should be readily available to and accessible by our domestic producers.
Unless authorities and institutions of the state proactively come forward with necessary assistance and support, mere lamenting on the issue that the domestic producers are not coming up with adequate evidence of dumping is of no value.
Another issue of importance is that we do not have enough experts on the international laws, particularly the WTO agreement, that have significant impact on our business activities. Every year private and public and private universities of the country are producing hundreds of MBAs and other business graduates, but hardly any of them are taught the laws and rules relating to the subject. Therefore, development of appropriate human resources needs to be appropriately addressed.
It is a pity that since signing of the WTO agreement, we have in the name of globalisation, generously liberalised our trade, reduced the tariff structure, removed the non-tariff barriers to import, but we have not yet introduced the anti-dumping law in our local statute although this is a WTO approved means to safeguard domestic industries against any unfair competition. Our nascent domestic industries are finding it difficult to survive competing with the low-priced imported products. We do not advocate for protectionism but it is our legal right under the WTO agreement to provide protection to our domestic industry against any unfair import pricing. Over the years we are listening that the draft anti-dumping law is in its final stage, but the reality is, it is yet to see the light of the day.
(The writer is a fellow of the Institute of Cost and Management Accountants of Bangladesh. He can be reached at Choudhuryjamal@yahoo.com)
According to a report published in the daily express on January 17, 2010 two important tax measures- anti-dumping and countervailing duty, that government can impose as per WTO rules to restrict and discourage excessive and cheap import as a means to safeguard the domestic industries could not be implemented due to lack of co-ordination between the government's information cells and the local manufacturer. The report also quoted a senior Official of Bangladesh Tariff Commission (BTC), the government wing responsible for imposing the said tax measures, as saying: "BTC has received eight applications in last 14 years from local manufacturers who have sought protection of the state to survive but none of them provided all required information to the commission".
We, in the past, heard from top bosses of the tariff commission in seminars and symposiums that they cannot take action against the dumping of foreign goods because the complaints that they receive from the local business community is not supported by adequate proof. Is it enough to put the balls in court of the sufferers and remain silent on an issue that involves long term business impact? Is that enough of an excuse for inaction on the part of an authority which is supposed to protect the interest of the country?
Anti dumping law was incorporated in the WTO as a shield to protect domestic industries against any unfair competition. This is a means to prevent predatory pricing. Article VI of the WTO agreement deals with various anti-dumping issues. According to the anti-dumping law, dumping occurs when the prices of goods imported into a country are less than their "normal value" in the domestic market of the exporting country. The differences in the two prices are called the "Dumping Margin".
In other words, if the product being sold in the international market is priced lower than the domestic selling price in the exporter's country, the product is said to have been dumped. Such dumping is prohibited under the WTO rules. Countervailing duty, the twin brother of anti-dumping duty, is also imposable on products that are subsidised by government for the purpose of giving the exporter a comparative price advantage in the international trade. The anti-dumping guidelines of the WTO agreement contain details on complex technical issues like how to determine "normal Value", "injury" or "threat to Injury", how to carry out anti-dumping investigations, etc.
To initiate an anti-dumping action three things must be proved: there is a case of dumping; there is injury or threat to injury to the domestic industries; there is a casual link between the dumping and the injury. According to article 5 of the anti-dumping agreement, an investigation for existence, degree and effect of any alleged dumping shall be initiated upon a written application by or on behalf of the domestic industry. According to article 5(4) application is supposed to have been made by and on behalf of the domestic industry if it is supported by those domestic producers whose total output is more than 50% of the total production of the like product of those either opposing or favoring the application. However, no investigation shall be initiated if the application is not expressly supported by the domestic producers representing at least 25% of the total production of the domestic industry. The application has to contain the certain information "as reasonably available" to the applicant including the volume and value of the domestic production, description of the dumped product, names of the country of export, identity of each known exporter, prices at which the products are sold in the country of export at the time when exported or prices at which the products are sold to a third country by the exporter or the constructed value of the product and information on export prices. The application also needs to contain the volume of allegedly dumped import, effect of these imports on the domestic industry etc.
It is evident from above requirements that to lodge a complaint about dumping the relevant industry must have a very good information database and also must have access to information on the prices of the product as well as the cost of the product in the country of origin. The requirement clearly denotes the vast range of information that a domestic producer requires to lodge an application for anti-dumping action. This is undoubtedly a daunting task for the individual industry or industries like ours where the business organisations are not yet well structured, domestic producers are small and industries are highly fragmented, information management system is still at its infancy, information availability is quite remote, knowledge of international business and commercial laws and rules of our business community are too inadequate.
This is where the government must play a vital role. It must come forward to assist our domestic producers; help them with information and infrastructure support if they really wish to protect the domestic industries against the dumping. It must arrange for proper education and training at least for the business associations and trade bodies on the technical aspects of the anti-dumping laws. Can not we as general citizen of the country ask the tariff commission what level of education and training have they imparted to our trade bodies, associations and entrepreneurs to make them aware of the legal protections available under WTO rules?
Without the appropriate support it is really difficult for the small entrepreneurs, who are prime sufferers of the dumping of foreign goods, to understand the complex anti-dumping laws and seek appropriate remedy. Tariff Commission needs to be very pro-active in this respect. The argument of the Tariff Commission favours no merit. There is no justifiable reason as to why the Tariff Commission or the concerned authority should not, by themselves, come forward to initiate anti-dumping investigations while the applications of the domestic producers are, according to them, not accompanied with full evidence.
It is clear that the concerned authority need not wait for application from the domestic industry. They can on their own initiate anti-dumping investigation provided they have evidences. It is imperative that if the concerned authority is honest in their approach they need not blame the domestic producers who have little access even to domestic information not to talk of the global market.
Maintenance of a very highly structured central information database with adequate market intelligence and containing all relevant information on imports, particularly the volume and prices of the import of each of the products, their prices in the country of origin, export prices to third country(s), indicative production costs etc., is a must. The information should be readily available to and accessible by our domestic producers.
Unless authorities and institutions of the state proactively come forward with necessary assistance and support, mere lamenting on the issue that the domestic producers are not coming up with adequate evidence of dumping is of no value.
Another issue of importance is that we do not have enough experts on the international laws, particularly the WTO agreement, that have significant impact on our business activities. Every year private and public and private universities of the country are producing hundreds of MBAs and other business graduates, but hardly any of them are taught the laws and rules relating to the subject. Therefore, development of appropriate human resources needs to be appropriately addressed.
It is a pity that since signing of the WTO agreement, we have in the name of globalisation, generously liberalised our trade, reduced the tariff structure, removed the non-tariff barriers to import, but we have not yet introduced the anti-dumping law in our local statute although this is a WTO approved means to safeguard domestic industries against any unfair competition. Our nascent domestic industries are finding it difficult to survive competing with the low-priced imported products. We do not advocate for protectionism but it is our legal right under the WTO agreement to provide protection to our domestic industry against any unfair import pricing. Over the years we are listening that the draft anti-dumping law is in its final stage, but the reality is, it is yet to see the light of the day.
(The writer is a fellow of the Institute of Cost and Management Accountants of Bangladesh. He can be reached at Choudhuryjamal@yahoo.com)