The billionth baby was not the only statistic that should have worried Indian policy makers earlier this month. Little noticed but as much a cause for concern was a report that India has shot up the ranks in terms of the number of anti-dumping measures imposed, from number 12 three years ago to number five.
This fact, which is based on provisional data, should not come as a major surprise. Trade economists now tacitly acknowledge that this safeguard instrument under the WTO rules is increasingly emerging as a prominent non-tariff barrier -- especially among developing nations -- to cope with troublesome import competition. And though India tops the Asian charts in this regard, at 89 anti-dumping duties, the country is still way behind the US at 200.
The cause for worry stems from the fact that, like the growth in population, India is making swift progress just where it should not. If anything, the country is bucking a trend. A paper presented by World Bank economist J Michael Finger showed that for the US alone, the number of anti-dumping initiations have dropped sharply from more that 60 in 1992 to 20 in 1997. For all industrial nations the figures for the same period were 198 and 77.
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As importantly, India has emerged as an exception among several developing nations as well. Brazil, for instance, saw anti-dumping initiations drop from 30 in 1994 to 19 in 1997 and Mexico saw a fall from 23 to five in the same period.
India stands out rather dramatically in all this because the graph for anti-dumping initiations by it rises almost vertically -- from just five in 1992 to 20 in 1997 and, according to data put out by the commerce ministry earlier this month, 79 in 1999.
In 1997, the country accounted for over 17 per cent of initiations among developing countries with petitioners ranging from giant companies like SAIL, Tisco and Bombay Dyeing to small-scale manufacturers and industry associations. It is also significant that the sharp rise in the number of anti-dumping cases coincides with the slowdown in economic growth.
Of course, it can be nobody's case that countries do not indulge in dumping -- the CIS is particularly well known on this score, though China has the most anti-dumping cases initiated against it. All the same, these are not numbers that Indian industry should be proud of. Nor is it a trend that the government should encourage. To understand why, answer the question: who really benefits from anti-dumping measures? Usually a domestic manufacturer who cannot compete with cheaper imports. So who loses? Almost invariably it is the consumer who finally bears the cost of the anti-dumping duties (like tyre makers who pay higher costs for carbon black imports).
Finger drew an analogy with a soccer pitch on which only one team -- the one that benefits from such restrictions -- has the benefit of a goal in which to score. The team that would bear the costs has no goal and therefore no chance to score. Thus, "the investigatory process [in an anti-dumping case] allows goals only by import-competing interests. In the score that determines the outcome, the interests of users of imports and others that would bear the costs of the import restrictions are simply not counted," Finger writes.
In short, then, anti-dumping does not serve the larger good, especially in a country which is trying to de-regulate and liberalise its economy as India is. No one has computed the overall cost of anti-dumping duties on the Indian economy yet. But a study by the International Trade Commission of the impact of anti-dumping and countervailing duties on eight US industries between 1980 and 1993 threw up some startling facts that could serve as an indicator.
According to the ITC, anti-dumping and countervailing duties translated into a net loss of $1.5 billion in GDP in 1991. Small wonder, then, that businesses that depend on imported inputs like the computer industry have been lobbying the government for a say in import-restricting measures.
It is not as though Indian companies are unaware of the invidious effects of anti-dumping measures. But even off the record, companies are unwilling to accept that they're willfully raising a non-tariff barrier. The justifying argument that is in currency runs something like this. It's all very well to lower trade barriers, but the government does little to help provide a level playing field that could allow them to compete with the world. Thus, Indian companies literally have to pay the price of inadequate infrastructure, the lack of a coherent exit policy for labour, and niggling rigidities in the inter-state market, all of which put Indian companies at a substantial disadvantage vis-a-vis global competition.
There could be some validity in this contention. Only recently, managers at Telco complained that they sometimes have to dispatch a vehicle just to search for the trucks carrying components for their Jamshedpur plant from Calcutta. In a competitive automobile market where just-in-time deliveries are the norm, that could certainly translate into a major competitive disadvantage. Who could then blame Telco if it were, theoretically speaking, to initiate an anti-dumping case against, say, Japanese truck imports when they're allowed? (Telco's biggest defence against such a possibility is that it is one of the few companies that has world-class capacities in commercial vehicles.) There is no doubt that the government has to shoulder some of the blame for Indian industry's reputation as a protectionist junkie. But faster reform could be a far more effective cure than anti-dumping measures.