India moves to impose CVD on Bangladesh jute goods contrary to WTO rules

Jasim Uddin | Published: 00:37, Jul 12,2020


India’s plan to initiate an anti-subsidy investigation to impose countervailing duty on imports of jute products from Bangladesh has no legal merit and lacks evidence, trade officials found.

Bangladesh’s subsidy to the jute sector is not causing any harm to the Indian domestic industry, they found.

On the other hand, according to the General Agreement on Tariffs and Trade of the World Trade Organisation, a country cannot impose both anti-dumping and countervailing duties on the same product.

Since April 2017, Bangladeshi jute products have been facing anti-dumping duties ranging between $19 and $351.72 on each tonne of export to India.

Commerce ministry officials said that a study of the Bangladesh Trade and Tariff Commission under the ministry found a number of issues which the Indian authorities had not taken into account before making the move.

The commerce ministry in the last week of June sent a pre consultation questionnaire to the Directorate General of Trade Remedies of the Indian commerce and industry ministry seeking explanation in regards to the issues before the planned consultation.

Earlier in May, the DGTR invited Bangladesh for consultation, as required prior to starting an anti-subsidy investigation, for imposition of the duty on imports of jute products, including jute sacking bags, jute sacking cloth and jute yarn, from Bangladesh.

The consultation is yet to be held as the commerce ministry requested India to defer the consultation considering the current COVID-19 pandemic.

The commerce ministry’s WTO cell director general Md Hafizur Rahman on Saturday said that India had not yet responded to the pre-consultation questionnaire sent by the ministry.

‘We have raised a number of concerns in the form of questions about the move and we will also send a position paper on the issue to the Indian side by the end of this month,’ he said.

Hopefully, India will not initiate the investigation process after taking the questions and concerns into consideration, he said.

A country can impose countervailing duty on import of subsidised products from any other country to offset injury caused to local products due to the import of subsidised imports.

The country, however, has to prove that the subsidy given in the exporting country is causing or threatening material injury to the domestic industry.

Trade officials said that, as per the WTO rules, Bangladesh could offer subsidy to a sector as a least developed country and the government had been giving subsidy to the sector in compliance with the WTO rules.

India claimed that Bangladesh’s jute export to India had increased while sales of their jute products along with the market share had declined due to the subsidy.

The officials said that these claims were not true as Bangladesh’s export volume had fallen while the prices of Bangladeshi jute goods had gone up.

The subsidy does not create any injury to the Indian jute sector, they said.

Bangladesh requested the DGTR to carefully verify whether the subsidy caused any harm to the Indian industry and to examine the link between the subsidy and the claimed harm.

The move is also not supported by the WTO rules as Sub section 5 under Article VI of the GATT says no product shall be subject to both anti-dumping and countervailing duties to compensate for the same situation of dumping or export subsidisation.

India itself has adopted the principle in its Extracts from the Customs Tariff Act, 1975 which says that no article shall be subject to both countervailing duty and anti dumping duty to compensate for the same situation of dumping or export subsidisation.

India in April, 2017 imposed anti-dumping duty on import of jute products, including jute yarn, twine, hessian fabric and jute sacking bags, from Bangladesh for five years.

Since then, export of jute goods has been declining to the country. Bangladesh annually exports jute and jute products worth around $200 million to India.

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