Last week, the Finance Ministry imposed provisional safeguard duty on imports of aluminium flat rolled products and aluminium foil into India from China and imports of dimethoate technical. Provisional anti-dumping duty was also imposed on imports of all fully drawn or fully-oriented yarn/spin draw yarn/flat yarn of polyester (non-textured and non – POY) and imports of flax fabric from specified countries.
India is one of the countries using the anti-dumping duty to protect domestic industries rather liberally. The definitions of ‘like products’, ‘normal value’ ‘material injury’, ‘domestic industry’ etc. are so wide under the anti-dumping law that invoking the provisions is not too difficult. Most of the investigations have resulted in levy of anti-dumping duty.
Many suppliers, especially from China, have not bothered to be present in the investigations. The Directorate General of Anti-Dumping has faced a few appeals after notification of the duty but has rarely faced embarrassing moments. None of its decisions or the decision making processes or the appeal procedures have been challenged at the World Trade Organisation. Few have been able to fault the law or the procedures followed in India on anti-dumping.
The law and procedures have been followed scrupulously during investigations of safeguard duty also. But, by its very nature, safeguard actions are few and far between. The reason is, in general, safeguard action is not an action to protect domestic industry against predatory pricing practice of an exporter but an action to safeguard the domestic industry from a surge in imports.
Safeguard duty is (or ought to be) product specific whereas the anti-dumping duty is (or ought to be) exporter specific. The law on imposition of safeguard duty prescribes more stringent onus to establish ‘serious injury’ to domestic injury, whereas the law on anti-dumping demands evidence of only ‘material injury’ to domestic injury.
The anti-dumping law requires the domestic industry to establish only ‘dumping’, ‘material injury’ and ‘causal link between dumping and material injury’, whereas in case safeguard duty the domestic industry needs to establish not only ‘surge in imports, ‘serious injury’ and ‘causal link between surge in imports and serious injury’ but also present a credible ‘adjust plan to get more competitive’.
In simpler terms, the domestic industry does not plead any unfair trade practice of dumping but only pleads for time. It asks to be safeguarded till it makes adjustments like adopting new technology, backward or forward integration, building better infrastructure like power plant or captive jetty and so on. So, the safeguard duty usually lasts for a limited period, till the domestic industry makes the adjustments.
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Between 1995 and 2004, the safeguard investigations were launched only on 15 occasions, the items targeted being acetylene black, carbon black, flexible slabstock polyol, hard board (high density fibre board), propylene glycol, phenol, acetone, white/yellow phosphorus, gamma ferric oxide (GFO) /magnetic iron oxide (MIO), methylene chloride, epichlorohydrin, vegetable oils (edible grade), industrial sewing machine needles, bisphenol A (BPA) and tapioca starch.
Many of those who got protection later petitioned for and got anti-dumping duty for five years, e.g. phenol, flexible slabstock polyol, acetone etc., rather than really make the adjustments and get competitive.
So, it is a bit surprising that safeguard duty should make a re-appearance now, after being on the sidelines as the less preferred mode of protection.
e-mail: tncr@sify.com