When anti-dumping means anti-globalisation

EXPERT EYE

In the wake of reduced rate of customs duty not only in the developed countries but also in the developing countries such as India and other ASEAN countries, a new phenomenon has come about in which the affected countries are trying to protect their domestic industry from the onslaught of imports that come at below the cost of production in the exporting country.

A similar problem is one of under valuation, which means getting imports from abroad at a price less than the comparable prices of the same or similar goods in the same country. The distinction between under valuation and dumping is one of degree. When the value declared for import is lower than that of the comparable goods imported, it is under valuation. But when the goods are so much undervalued that the value declared is even lower than the cost of production in the exporting country, then it is dumping.

The principle behind anti-dumping laws is to protect the domestic industry from import of goods at a price which is below the normal value of the goods in the domestic market of the exporter or even cost of manufacture in that country.

Anti-dumping duty is leviable under Section 9A of the Customs Tariff Act, 1975, read with the rules which are framed under Section 9A(6).

Almost all the countries accuse others of imposing anti-dumping duty. Even India has been accused of the same. What has made the pitch look more like a battlefield is the over enthusiastic use of this most potent weapon in the protectionists' arsenal even by the developed countries to protect their own inefficient industries.

Indian steel has always found difficulty in entering the US market due to anti-dumping duties on some varieties of steel. Even Europe felt the heat and threatened to take counter measures against the American anti-dumping duty on steel. The WTO declared the Byrd Amendment, the American Protectionist Law to allow cash payments from the exporters to the affected domestic industry, as illegal. Subsequently, the law was repealed by Congress. But the repeal will take affect from October 2007.

In the meantime, this law is being used by the US to collect protectionist cash from the shrimp exporters. This is the latest action of the US on the anti-dumping front to prevent the import of shrimps from China, Thailand, India, Brazil, Ecuador and Vietnam. This measure to protect the domestic producers of shrimps did not fully succeed even after imposing 5 to 10% anti-dumping duty, because exports from these countries still remained profitable. Not satisfied with this, the Southern Shrimp Alliance representing American shrimp sellers and processors, wanted upward review on the duty.

Looking into the account books of hundreds of small exporters could not be easy, but in case they failed to reply or cooperate, they would have to pay nearly 50% as anti-dumping duty. To avoid such a reprisal, the foreign exporters agreed to pay up to 2% of the value of the goods, which could be legally collected as a settlement money and distributed to the Southern Shrimp Alliance.

The war on the anti-dumping front has become as widespread as globalisation itself. The attempt of the WTO to thwart such protectionist tendency can succeed if greater power is given to it to make its order effective immediately and not after two years or so as in the case of Byrd Amendment.

America's effort to continue with either anti-dumping duty or collect protectionist cash is a complete reversal of its avowed allegiance to globalisation.

Anti-dumping duty is anti-globalisation at a higher dose of duty, but its absence again may allow the domestic industry to suffer injury. So it is a matter of balance.

Email: smukher2000@yahoo.com