Shrimp exports get WTO boost

Global trade body calls US bond norm on exports 'a clear violation' of international laws.

In an interim report, the World Trade Organisation (WTO) ruled that the US rules insisting customs bond to cover the duties on exports of shrimp to the US a clear violation of the global laws on anti-dumping.

Upholding the complaints filed by India and Thailand, the WTO panel of judges ruled that the customs bond requirement as applied to the imports from India and Thailand was not consistent with the anti-dumping agreement, and was forcing an additional burden on the exporters of these countries.

The US customs, in 2004, had instructed exporters to remit a bond equivalent to 10.17 per cent of the total value of exports of the previous year for shrimp exports to the US. This had made exports costlier. The WTO panel asked the US administration to file its comments and appeal on the interim order before November 20. The panel will give its final verdict in December.

"We have technically won the case," said A J Tharakan, president, Seafood Exporters Association of India (SEAI) with a sigh of relief. He said the final judgment would also be in line with the order.

India had fought the case very strongly as the panel was in favour of the US administration in the preliminary rounds of arguments. India informed the WTO that the customs bond and anti-dumping duty had severely affected the country's exports to the US market during the last couple of years.

In a 3,000 page evidence report, filed in March, New Delhi had stated that because of the imposition of the duty and the stringent bond requirement, there had been a remarkable fall not only in exports to the US but also in the number of exporters.

The country argued that since it affected the volume of business and export earnings, it should be treated as a trade barrier.

The WTO panel also observed that zeroing, the method used for calculating the anti-dumping duty by the US Department of Commerce (DoC), was also against international laws and resulted in artificially inflating duties on imports.

This put the companies of a host of Asian countries such as India, China, Thailand and Vietnam in a difficult spot to export to the US.

The international law on zeroing says that for imposing duty, the price of each company should be considered separately for finalising anti-dumping duties.

But contrary to this, the DoC follows a method to take the average price and calculating duty on all exporters. This resulted in imposing duty on companies, which are actually not dumping their products at very low price tags.

India's exports to the US dropped by 30.77 per cent to 43,851 tonnes and earnings fell 20.50 per cent to Rs 1350.47 crore in 2006-07. The number of exporters to the US had also dropped drastically.

According to leading exporters, before the duty was imposed in August 2004, there were 258 Indian companies exporting to the US. The number has dropped to 81 now with only 60 are actively engaged in exporting. India and Thailand had lodged a complaint in this regard with WTO on June 6, 2006.

The US had recently slashed the anti-dumping duty on shrimps imported from India by 3.32 per cent to make the weighted average duty to 7.22 per cent.

In March 2007, DoC stipulated the preliminary average duty for India at 10.54 per cent, up 0.34 per cent, as per the preliminary results of the first administrative review.