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Wednesday, Aug 28, 2002

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Industry & Economy - Anti-dumping

Time to review dumping duty margin norms

G. Srinivasan

NEW DELHI, Aug. 27

AS industries in developing countries confront a plethora of disadvantages as compared to their counterparts in developed countries, a two-day national seminar is being held here from tomorrow to obtain inputs and suggestions that could be taken up by India during the negotiations on anti-dumping and subsidies in the ongoing Doha Development Round.

Highly placed sources told Business Line here that many export products in developing countries are produced by labour-intensive, small and medium enterprises. Imposition of countervailing duties or even the threat of imposition of such duties has a deleterious impact on the functioning of such units, including fall in production, large unemployment, decline in incomes and increase in poverty levels. Besides, the high cost of capital, low level of infrastructure development, inadequate integration and organisation of the economy, poorly developed information networks characterise industries in developing countries.

Although provisions under Agreement on Subsidies and Countervailing Measures (ASCM) provide for certain de minimis levels of subsidisation and negligible level of volume of subsidised imports below which the countervailing duty investigation is required to be terminated in respect of a product originating in a developing country, these have been "inadequate" in ensuring that developing countries secure a share in the growth in global trade.

The sources cited figures to reveal that out of the 67 cases in which various countries took countervailing duty action during the period January 1, 1995 to June 30, 2001, more than 65 per cent was against developing countries. Some proposals New Delhi has advanced in this regard include, among others, (a) a new provision for countervailing duties on imports from developing countries being restricted only to that amount by which the subsidy exceeds the de minimis level; (b) Article 27.10(b) should be amended to provide for countervailing duty not being imposed in the case of imports from developing countries where the total volume of imports is negligible, i.e., 7 per cent of total imports;(c) Article 27.2 should be amended so that the prohibition in Article 3.1(a) does not apply to export subsidies granted by developing countries where they account for less than 5 per cent of the f.o.b. value of the product.

Referring to anti-dumping probes, the sources said the frequent use of anti-dumping actions against exports from developing countries by major trading countries has become a matter of serious concern. The lack of clarity in certain provisions has compounded the problem. Certain provisions, especially those pertaining to de minimis dumping margin and the threshold volume of imports below which no anti-dumping duty should be levied, need to be revised in view of the changed global trade and economic scenario for exports from developing countries.

Accordingly, India seeks that the extant de minimis dumping margin of 2 per cent of export price below which no anti-dumping duty could be imposed needs to be raised to 5 per cent for imports from developing countries. Besides, the major users have so far applied this prescribed de minimis only in newly initiated cases, not in review and refund cases. Again, the sources said the threshold volume of dumped imports, which should normally be regarded as negligible, must be increased from the extant 3 to 5 per cent for imports from developing countries. The sources said the stipulation that anti-dumping action could still be taken even if the volume of imports is below this threshold level, provided countries which individually account for less than the threshold volume collectively account for more than 7 per cent of the imports, should be deleted.

An official release said that these negotiations are currently being undertaken in the Negotiating Group on Rules (NG Rules). The negotiations on WTO rules provide an opportunity to address issues emanating from anti-dumping and countervailing duty action against our exports by seeking possible amendments in some of the provisions of the two agreements. Alongside, it would need to be ensured that the flexibility available to protect our domestic industry from injurious dumping is not curtailed. The national seminar, to be inaugurated by the Union Commerce & Industry Minister Mr Murasoli Maran, would seek to identify specific provisions for amendments with eminent experts and practitioners in the field making presentations for the benefit of all stakeholders, the sources added.

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