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Wednesday, Aug 04, 2004

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Fight the shrimp case

INDIA'S SEAFOOD EXPORTERS must fiercely contest the recent US Department of Commerce announcement imposing a preliminary anti-dumping duty ranging from 3.56 per cent to 27.49 percent on Indian shrimps. The development has irked seafood exporters here no end because not only is the levy of punitive duty unreasonable per se, but also the process smacks of highhanded arbitrariness. The preliminary probe into shrimp imports to the US is reported to have indicated that such consignments were sold "at less than fair value". On the face of it, there is nothing to suggest that Indian exporters were charging unfairly low prices for their supplies. The basis of evaluating what is "fair market value" is not transparent and appears to be flawed in the current instance because the investigators compared companies, products and markets that were strictly not comparable. For determining dumping in the US, it would be inappropriate to use data relating to India's exports to a third country, say, the European Union to which India exports glazed shrimps (shrimp with water). India's best bet would, therefore, be to attack the very basis of comparison.

It is common knowledge that in most developing countries, the cost of production of labour-intensive products is low because of the availability of cheap labour with traditional skills. The visit to India of the International Trade Commission to make on-the-spot verification of facts and figures should be expedited so that at the stage of final determination New Delhi's case becomes unassailable. Meanwhile, it is poor consolation that apart from India, other countries — Brazil, Thailand and Ecuador in addition to China and Vietnam, earlier — have been penalised with anti-dumping duties, with Brazil suffering stiff rates; the silver-lining is that the negative effect of the US move on Indian exports would not be considerable given that other supplier-countries such as Brazil and China will bear heavier imposts. That, of course, should in no way make Indians complacent, but fight the case to its logical end. Interestingly, as much as 90 per cent of the US demand for shrimps is met through imports; but the Department of Commerce chose to entertain the complaint of domestic producers, with full knowledge that any impost of the nature of anti-dumping would be clearly anti-consumer. Representatives of importers, processors and distributors have already criticised the tax.

The imposition of preliminary anti-dumping duty on shrimp once again focuses attention on the dilemma faced by all nations — how to harmonise domestic compulsions with international obligations. For policymakers, it is often a vexatious and thankless task. Whether the Presidential elections in the US have had anything to do with the imposition of duty is hard to tell; it should surprise no one that politically appropriate noises are made to woo domestic lobbies, however small they may be. In the instant case, India may not be worse-off than other suppliers to the US market. But New Delhi must fight the case because not only is the US too big a market to be ignored, but simply to call the bluff of American investigators.

More Stories on : Editorial | Aquaculture | Exports & Imports | Anti-dumping

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