Provisional Levy Prior To Dumping Probe Allowed

The government has permitted the slapping of a provisional levy upon the initiation of investigations into complaints of cheaper imports. The move, a part of the budget proposals for 1997-98, is a result of lobbying by domestic companies seeking protection against dumping.

This has been done by amending the relevant clause in the Customs Tariff Act and by invoking the safeguard clause made available under the aegis of the World Trade Organisation. Officials said the move was modelled along international practice.

The provisional levy, which cannot be imposed for a period more than 200 days, has to be refunded in the event of the final investigations failing to show up a genuine case of anti-dumping.

 

This brings a significant change in the existing anti-dumping mechanism since the new law regarding safeguard duty will not require goods to be dumped at below the normal value, but can be invoked for any article imported into the country in such increased quantities and under such conditions so as to cause or threatening to cause serious injury to domestic industry....

The level of imports that can be seen to be causing injury has not been specified. Exceptions have been made in this regard for developing countries.

The new section 8b (1) in the Customs Tariff Act says: Provided that no such duty shall be imposed on an article originating from a developing country so long as the share of imports of that article from that country does not exceed 3 per cent, or where the article is originating from more than one developing country, then, so long as the aggregate of the imports from all such countries taken together does not exceed 9 per cent of the total imports of that article into India.

The safeguard duty chargeable under this section will be over and above any other duty that the imported articles attract under the law, and will, unless revoked earlier, cease to have effect after expiry of four years from the date of such imposition.

The government has also retained the option to extend the period of imposition of the levy if it decides that the domestic industry has been forced to adjust to the threat of imports. The duty will, in no case, be in force beyond a period of 10 years.

The new law is in view of the proposed liberalisation of import curbs on consumer goods which will become necessary with the lifting of the balance of payments cover granted to India by the World Trade Organisation.

Commerce ministry officials have been looking at the possibility of setting up a review mechanism to keep track of imports.

Fears have been expressed in certain quarters that opening up of the consumer goods sector will lead to a flood of imports and affect the balance of payments. This law can be invoked in such situations. However, levels need to be chalked out to ensure that the provision is not used as a non-tariff barrier.

Under the General Agreement on Tariffs & Trade earlier, perceived threats to domestic industry from imports were given due consideration under Article XIX. However, it had to be shown that the import of a product was increasing in absolute or relative terms and the increase was a result of unforeseen developments or Gatt obligations.

The new safeguards law is expected to be monitored by a proposed directorate to be set up within the commerce ministry. Senior commerce ministry sources said the decision had been taken by the ministry and the cabinet's approval was likely to be sought. The proposal envisages transferring several posts from the ministry and the directorate general of foreign trade to the new body, which will be under the commerce ministry. The proposal is to have separate divisions including investigation and costing wings in the directorate.

Pressure on govt

The introduction of the safeguard duty was brought up recently by arch rivals Reliance Industries and Bombay Dyeing to impose an anti-dumping duty on imported purefied terephthalic acid (PTA) from certain South Korean firms.

The Steel Association of India had also lobbied with the government for checking cheap imports of hot-rolled coils, especially from Russia, while Drug Manufacturers' Association had asked for an anti-dumping levy on import of drugs and pharmaceuticals from South East Asia.