Changes required in anti-dumping law
By Akber Sheikh

The WTO Agreement focuses on the liberalisation and openness in trade whereby the trade regulatory and protectionist measures have been eliminated. Trade defence mechanisms have been included as a balancing factor to protect domestic producers from unfair trading practices of foreign competitors.

Among the trade defence instruments allowed to WTO member countries, Anti-dumping measures relate to dumping i.e. supplying to a foreign market at less than fair value is seen as militating against fair trade and therefore as anti-competitive.

WTO does not take cognizance of dumping parse; rather its focus is on the reaction of member countries to dumping. The WTO Anti-Dumping Agreement requires that a member country's designated investigating authority conduct anti-dumping investigations fairly and that the quantum of anti-dumping duty that is levied is not more than the margin of dumping and more preferably that the anti-dumping duty is not more than what is necessary to counter injury to the domestic injury of the importing country. While the WTO is concerned with the fairness and propriety of anti-dumping investigations and the levy of anti-dumping duty in proper measure at the higher end, it remains much within the province of WTO member countries to indulgently overlook dumping.

It is interesting to note that while on the one hand Anti-Dumping measures have been increasingly used as a veiled form of protectionist measures for their domestic industry mainly by developed countries; on the other hand prudence has been exercised to overlook dumping in the context of net gain/loss to their economy.

Many countries disregard dumping when its adverse effects on the domestic industry are outweighed by benefits to industrial users, consumers and re-exporters of the dumped product. As competing interests are involved within the national domain itself, a cost-benefit or public interest consideration is vital in reaching a decision whether and in what measure to impose anti-dumping duty.

In many WTO member countries anti-dumping investigative bodies only submit their findings to the government. Any anti-dumping action is taken only after the matter has been considered in all its ramifications at the governmental level. The decision arrived at is more of a policy decision rather than one arrived as a matter of form. Many countries impose anti-dumping duties as a legislative measure, which apart from concurring with the principle 'no taxation without representation' affords a well-debated and deliberated response. The European Union, Canada and Korea amongst other countries have provisions in varying degrees for a public interest inquiry (that takes into consideration the effect of dumping on all interested parties) and accommodation of national interest (wherein anti-dumping duty is forgone for considerations of national interest irrespective of injury to the domestic industry), pursuant to which anti-dumping duty may be reduced or even not be imposed.

Many WTO member countries like Japan exercise discretion even with respect to the initiation of an anti-dumping investigation. The New Zealand anti-dumping law provides for the Minister for Commerce to revoke anti-dumping duty in whole or in part. In the United States there is a specific provision for settlement of anti-dumping duty cases based on the rationale that doing so is in the broader global interests of the U.S. notwithstanding the objections of the U.S. industry.

Consistent with the philosophy and objective of the WTO Anti-Dumping Agreement not to take any more anti-dumping duty action than is necessary to remove the occurrence of material injury, the Anti-Dumping laws of many countries including Canada, Australia, EU, New Zealand, Japan, Mexico and Korea ensure that anti-dumping duty is not greater than is necessary to prevent material injury to the local industry. The provision for charging of anti-dumping duty at the level of non-injurious price is called the lesser duty rule.

A self-operating Anti-Dumping regime may be tolerable in the context wherein there is an indigenous manufacturing base that is home-oriented and only supplies abroad what is an exportable surplus and where there is inter se competition between the players in the domestic industry with anti-trust and anti-monopoly controls in place. A balancing of interests in the case of Pakistan becomes all the more important as for our export oriented industries foreign destinations are almost the only source of demand. For other countries, particularly India which is one of our main competitors in foreign markets, their domestic market is served first and the export market is only a secondary source of demand. Secondly, manufacturers in Pakistan that provide inputs to the export-oriented industries, operate more like a cartel than in competition with one another. Our Anti-Dumping regime is open to misuse by such manufacturers for obtaining protection from competitive imports, most of which are ultimately re-exported and do not even come within the ambit of dumping as per the WTO anti-dumping regime. For these reasons, while deciding on our anti-dumping response we cannot afford to remain oblivious particularly to public interest and the affect on the economy as a whole.

Our anti-dumping law does not take vital aspects into account. The Anti-Dumping Duties Ordinance, 2000 completely overlooks the necessity of balancing competing interests as well as the needs of the economy. Under the present dispensation the National Tariff Commission proceeds in a mechanical way to impose anti-dumping duties in the full amount of margin of dumping as determined by it without appreciation of factors such as the economic effect of the imposition, the net benefit or loss to the economy and to the different stakeholders etc. Decisions pertaining to initiation, imposition etc. are arrived at as a matter of course and not after due consideration of all aspects. At the critical juncture of economic development in which Pakistan is placed it is imperative that our anti-dumping law should be revised to provide the Government discretionary powers to enable it to take policy decisions on the report of the National Tariff Commission.

Discretion to the relevant ministry should be available in following aspects.

* The initiation of investigation.

* The imposition/non-imposition of anti-dumping duties and their level in the former case, after taking into account public and national interest.

Besides these aspects, the Anti-Dumping Duties Ordinance, 2000 should be revised to provide for

* Governmental discretion for declaring non-responding exporters as "non-cooperative":

Since Pakistan's imports are very small compared to production/total exports of certain exporters, in many cases the exporters do not respond to the detailed questionnaires and are, consequently, declared non-cooperative, attracting very high rate of Anti Dumping Duty, which at times proves to be more detrimental to industrial importers and re-exporters in Pakistan than to the exporter. Only after the Minister of Commerce has given consideration to the "Public Interest" and accorded approval should the exporters be declared non-cooperative.

* Determination of non-injurious price to enable imposition of duty as per the lesser duty criterion.

* Exemption of Anti-Dumping Duty on temporary imports for re-export: -

Clarity with respect to non-applicability of anti-dumping duty on bonded imports that do not enter the commerce of Pakistan (as in the case of Tax Free Export Zones) and are destined to be re-exported after value-addition, such as imports under the DTRE scheme. The WTO Anti-Dumping Agreement as well as our law provides for this non-applicability, but as the National Tariff Commission has taken a contrary view, an elaboration/amendment in the law is needed for the sake of clarity. The EU, Australia and India among other countries have specific provisions in this regard.

* Drawback of anti-dumping duty charged on imports simpliciter upon their re-export particularly after value-addition.

Anti-dumping duty should be included among refundable duties on which drawback is given upon export.

Only a balanced and studied anti-dumping law would ensure that our anti-dumping actions are responsive to our economic imperatives.