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Published: 12:11 AM, 21 June 2020 Last Update: 12:13 AM, 21 June 2020

Bangladeshi & Indian businesses demanding anti-dumping duty on each other

https://dailyasianage.com/news/232929/bangladeshi--indian-businesses-demanding-anti-dumping-duty-on-each-other

M S Siddiqui

In the globalized world, cross border excess is easier and government can use to protection measures to such as, anti-dumping duties, countervailing duties and safeguard measures as per World Trade Organisation (WTO) rule. Dumping means selling of product in other markets at a price below the cost of production. Anti-dumping duty is imposed after due investigation into alleged dumping of product from one country to another. The anti-dumping duty is attract for an acts of exporters such as (a) significant price undercutting (the extent to which the price of the imported product is lower than the price of the domestic producers), (b) price depression (the extent to which the domestic producers experienced a decrease in its selling prices over time), and (c) price suppression (the extent to which increases in the cost of production could not be recovered in selling price by the domestic producers). The Clothing Manufacturers Association of India (CMAI) represents leading firms Indian leading fashion houses has urged the government to consider levying a temporary additional Covid import duty on import of garments for a period of 12 months. CMAI had been engaging in dialogues with the government over the challenges and impact of duty-free imports of garments from Bangladesh, and back-door entry of Chinese fabrics on the MSME-dominated domestic garment industry for some time now. "The additional duty will result in a level-playing field for domestic manufacturers, and help them compete with the Bangladesh garment industry, which has currently at least 15% cheaper production cost," said CMAI in a press statement. In response to the act of CMAI, The Bangladesh Textile Mills Association (BTMA) has written to the country's textiles, finance and commerce ministries, demanding that they work to impose anti-dumping duties on Indian yarn imports. The move by CMAI is mostly due to stockpile of yarns as export remained almost halted due to the coronavirus pandemic and now the country has started to export the item to Bangladesh at dumping prices in an attempt to reduce the size of that inventory. Bangladesh's competitor countries like India and Pakistan had taken different undue initiatives, including exporting yarns, fabrics and other textile raw materials at dumping prices, to retain their market shares on the

global market during the coronavirus pandemic. Considering the international prices of cotton and the cost of other components for production, the BTMA claimed that India was exporting its 40-count combed yarn at rates lower than the production cost. The data of export of garments to India revealed that India imported readymade garment items from Bangladesh worth US$ 201 million in fiscal year 2017-18 and $365 million in FY 2018-19. On the other hand, Bangladesh imported textile and clothing items including raw cotton, cotton yarn, cotton fabric, cotton textile and other yarn and fabrics worth $3.79 billion in FY 2017-18 and $3.94 billion in FY 2018-19 from India. BTMA however, termed the proposals placed by the Indian apparel makers unacceptable, saying that the volume of Bangladesh's import of textile products from India was 1,300 times higher than the volume of Bangladesh's RMG export to the country. There cannot be any significant impact on textile market in India. The BTMA observed that Bangladeshi textile exports - which equate to around US$560 million - is short change comparative to India's volume of trade in Bangladesh, with imported raw cotton, cotton yarn and fabrics said to earn them an estimated US$7.7 billion each year. India on many occasions stopped export of yarn, cotton and other items to Bangladesh despite specific agreements, putting industries in Bangladesh in critical situation. The major part of supply of garments into India is imported by global brands as part of their global import for their own retail chain shops and their import price for different chain shops throughout the world have similarity of price. Bangladesh is exporting garments export worth about US$35 billion to different countries of the world and the cost and sell price are very transparent. Any investigation or audit can detect any attempt of dumping of garment to any other market. The spinners of Bangladesh produces yarn worth $12 billion and the local millers supply 85% raw materials to the knitwear sector and 35% to the woven sector. According to BTMA, Bangladeshi millers sell the widely consumed 30 carded yarn at a price between $2.80 and $2.90 per kg, whereas the same quality Indian yarn is sold between $2.60 and $2.70 per kg in Bangladesh. Moreover "The Indian yarn is highly subsidized as the Indian government provides incentives in the cotton purchase and production of yarn at the mill level." The Bangladeshi manufacturers had faces with undue competition due to the below-cost import of yarn from India in many occasions. Moreover, due to Covid 19, yarn worth $1.4 billion has remained unsold at the factory level over the last two months. In this critical situation and against the aggressive promotional policy adopted by the competitors, Bangladesh would have to adopt a sustainable policy, including imposition of anti-dumping duty on yarn import and increasing cash incentive on free on board prices to 10 per cent from the existing 4 per cent, to protect its spinning and weaving mills, the BTMA said. These type of trade wars prompt any of the parties go to WTO for dispute settlement. Anti-dumping agreement (Article VI of GATT) is a difficult agreement as each articles of determination of dumping, determination of injury, definition of domestic industry like products, initiation and subsequent investigation, provisional measures, price undertaking, judicial review, consultation and dispute settlement have specific jurisprudence as per WTO rule. The capacity of Bangladesh against India is far behind to fight any case of anti-dumping in World Trade Organization (WTO). Bangladesh have very few experiences of such case of anti-dumping should not try to lodge case against India. The settlement of such case in WTO may take many years. India so far has initiated 400 cases of anti-dumping, and 20 cases of safeguard measures against many developed and developing countries including Japan, USA, and a number of countries from the European Union, South and south East Asian countries.

Though a number of low priced goods are entering the country causing sufferings for domestic manufacturers, Bangladesh has so far not been able to establish a case against these unethical business practices. Recent cases were on Hydrogen Peroxide (HP). AD on the chemical was imposed by Pakistan and India in 2015 and 2017 respectively. India had also imposed AD on jute goods from Bangladesh. In 2004, Bangladesh had won the Anti-Dumping Duty (AD) case of lead acid battery exported to India. Lead Acid Battery was an exceptional case for which investigation was initiated in 2002. Bangladesh went to appeal tribunal and after consultation in 2004, the duty was withdrawn. BTMA urged the government to impose anti-dumping duty on Indian and Pakistani yarns to protect local manufacturers from cheap imports of the item from the neighbouring countries. The association made the proposal to the government one week after Indian apparel manufacturers had proposed to impose duty on import of readymade garment items from Bangladesh to protect their domestic industry. Under the circumstances, imposition of anti-dumping duty on the import of yarn from neighbouring countries and provision of 10 per cent cash incentive on FoB prices would help the spinning and weaving mills to combat the risks posed by low-cost imports amid the COVID 19, as BTMA suggested. Bangladesh should impose anti-dumping duty on Indian yarn so that the friendly country India come forward to negotiation table to discuss about both export of yarn to Bangladesh and import of garment to India. Both the countries may determine the demands of trade associations of both countries on negotiable table. The writer is a legal economist. Email:mssiddiqui2035@gmail.com