Financial Daily from THE HINDU group of publications
Monday, Feb 16, 2004
Industry & Economy - Electrical Goods
Columns - Wide Canvas
Row over battery imports
Ranabir Ray Choudhury
The letter contained 17 specific points on which Dhaka based its decision to move the WTO disputes settlement body, the burden of the argument being that New Delhi's move had violated Article 1 of the Agreement on Implementation of Article VI of GATT 1994 (the "ADP Agreement") which provides that an anti-dumping measure "shall be applied only under the circumstances provided for in Article VI of GATT 1994 and pursuant to investigations initiated and conducted in accordance with the provisions of (the ADP) Agreement".
Among other things, Dhaka's letter pointed out that New Delhi had failed to terminate the investigation notwithstanding its earlier determination that the volume of imports from Bangladesh was negligible; that the investigation had been initiated notwithstanding the unsubstantiated claim of the applicants that the application was "by or on behalf of the domestic industry"; that New Delhi had failed to make an objective examination based on positive evidence of the volume of imports and the effect of imports on prices in the domestic market for like products; and India's inclusion of imports from Bangladesh in the cumulative assessment of the effects of imports (including those from China, Japan, and Korea) notwithstanding its earlier determination that the volume of imports from Bangladesh was negligible.
The letter also held that India had failed to evaluate all relevant economic factors and indices having a bearing on the state of the battery industry; that no assessment had been made of any known factors other than the imports which may have been injuring the domestic industry; and that New Delhi had failed to make an objective examination of the causal link between imports and the alleged injury to the domestic industry.
On December 7, 2001, the Directorate-General of Anti-Dumping and Allied Duties under the Ministry of Commerce and Industry had gazetted the final findings of its investigation into complaints by Indian parties regarding the business damage being done to them by cheap imports of lead acid batteries from Japan, Korea, China and Bangladesh. According to the document, a written complaint had been made by Exide Industries Limited and Amara Raja Batteries Limited, on behalf of the domestic battery industry, "alleging dumping of lead acid batteries originating in or exported from Japan, Korea, China and Bangladesh".
The anti-dumping authority noted in its finding that since both the petitioners accounted for a major proportion of lead acid battery production in India, they had the standing to file the petition on behalf of the domestic industry. The report also said that Amco Batteries had supported the petition and provided relevant information. Specifically, it was argued that the administrative ministry concerned and other sources corroborated the claim of the petitioner companies that they accounted for more than 25 per cent of the domestic industry as defined in the anti-dumping rules, which led the authority to accept the claim of the petitioner companies that they represented domestic industry in the matter at hand.
An interesting point mentioned in the final report relates to the argument that the anti-dumping imposts on batteries were improper in view of the currency of the SAARC Preferential Trading Arrangement (SAPTA) of which both Dhaka and New Delhi are signatories.
The burden of the argument was that the procedures of SAPTA should be exhausted before initiating procedures under any other forum because the lead acid battery exports from Bangladesh to India were being effected under the provisions of SAPTA. New Delhi's stand was that the ongoing investigation was for determination of whether exports were being made to India by the countries involved below the normal value on the basis of evidence available before the authority concerned.
There was no allegation by the domestic industry of injury caused by imports on account of concessions given under SAPTA and that no request had been made by domestic industry for withdrawal of such concessions on lead acid batteries.
Even if such a complaint had been made involving SAPTA, the Government of India made it clear that there was no provision under the anti-dumping rules to exempt SAPTA nations from anti-dumping investigations.
As for the volume of battery imports from Bangladesh when compared to total imports of like products, the "final finding" said that the preliminary findings, on the basis of information supplied by official agencies, had discovered that imports from Bangladesh accounted for less than three per cent of the value/volume of battery imports to India and that, therefore, Dhaka was in the clear specifically on the de minimis ground.
Subsequent to this finding, domestic industry as well as exporters from China and Korea pointed out that the volume of imports from Bangladesh to India during the period of investigation was higher than the de minimis level, specially in the automotive sector which was the only type of lead acid batteries being exported to India from Bangladesh.
Pursuant to this objection, the anti-dumping authority did a fresh investigation and arrived at the conclusion that battery imports from Bangladesh formed around six per cent of total imports of like products, which was double the de minimis level of three per cent.
On the impact of battery imports on the state of the domestic industry, the anti-dumping authority stated clearly that domestic industry had suffered material injury from dumped imports and that there was a threat of further injury being caused by the continuance of such imports.
Some of the specific evidence before the authority supporting such a conclusion were: The rate of growth of imports of the product concerned was more than the rate of growth of domestic production during the investigation period; there had been a decline in the market share of domestic industry both in the automotive as well as industrial battery segments because of the substantial increase in imports; inventories of the petitioners had increased; and profitability of both the companies had significantly declined during the period under investigation.
The causal link between increased imports and injury to the domestic battery industry was also sought to be established by the authority in its final finding with the help of the argument that it was the dumped import at the dumped prices, which had forced the domestic industry to reduce its prices.
The report said that, in coming to this conclusion, factors such as contraction in demand specially in the automotive segment, change in the pattern of consumption, consumption preference for maintenance-free batteries, etc., had been taken into account.
With Bangladesh approaching the WTO, the dispute has been taken to a different plane. There is a possibility of the two neighbours thrashing out their differences in the course of the consultations.
If this does not happen, the dispute will go to the WTO dispute settlement mechanism, which will witness one more battle between the developing and least-developing world, perhaps much to the satisfaction of the developed economies which would, at any time, prefer a division-wracked poor world making their continued dominance over the international economy a trifle easier.
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