Pakissan.com; Bed-linen: the anti-dumping game

Bed-linen: the anti-dumping game

March, 29 : The imposition of 13.1 per cent anti-dumping duties on imports of Pakistani bedlinen by the European Union, which was notified on March 5 and became effective on March 17 , is the continuation of the now much familiar strategy of Brussels to discriminate against developing country exporters, particularly those from South Asia.

The name of the game is harassment which must go on by one means or the other and the dumping being the easier tool whose initiations bring about declines in import share of the targeted countries.

These declines were to the extent of over 20 per cent in case of cotton fabrics during 1994-1998 period. Hence, the question arises: who is dumping whom? To be precise, the anti-dumping drama is the best way to disguise the policy of protectionism and also force the developing country exporters to open their markets to the textile products of European firms.

Along with the anti-dumping action, the EU has also stalled a third generation trade agreement (which provides more concessions) with Pakistan which Islamabad thinks is an abuse of the World Trade Organisation (WTO) rules.

The decision, which Pascal Lamy informed Humayun Akhtar, was earlier hinted at when Khurshid Kasuri visited Brussels. This decision and the resort to anti-dumping action coming in the backdrop of the EU's pledge to grant special trade concessions to Pakistan following Islamabad's decision to join the war on terrorism make a strange cocktail of politics and trade.

Pakistan, it seems, is left with no option but to challenge the EU anti-dumping levy at the WTO appellate tribunal but it has not done so as yet apparently for reasons of high cost that such litigations entails.

In its 25-page report, the EU Council accused Pakistan of dumping its bedlinen during the period from October 1, 2001 to September 30, 2002. From January to November in 2002, Pakistan had exported $312 million worth of bedlinen to EU, showing an increase of 27 per cent over the same period in the preceding year.

Pakistan is the EU's largest supplier in volume terms with 98,000 tons sold in 2002 under HS number 6302 (bedlinen) and has an about 25 per cent share of the European market.

Earlier, the EU had levied anti-dumping duties on Pakistan's bedlinen in 1997 but withdrew it in January 2002 after conducting its own investigations. In late 2002, the EU again started investigations but called it off half-way after its investigators visiting Pakistan received life-threatening letter. The present imposition of anti-dumping duties is the outcome of the same incomplete investigations.

The hard fact is that anti-dumping measures are these days deemed as the most effective trade measures through which interests of the domestic industry can be protected in certain circumstances.

The number of anti-dumping investigations are increasing day by day. More and more countries are using this tool to protect their domestic industry against imports, thus making a mockery of so-called free trade that the WTO is there to propagate and enforce.

The bed linen and cotton fabrics are favourite targets of the Committee of the Cotton and Allied Textile Industries of the EEC (Eurocoton) which is also the industry lobby in the European Union.

The Eurocoton is fond of playing the dumping game to corner the importers. It all started in January 1994 when, on a complaint by Eurocoton, the EC Commission initiated investigation into alleged dumping of bed linen from India, Pakistan, Thailand and Turkey. The investigation terminated on July 10, 1996 without any punitive measure.

On September 13, 1996, Eurocoton revived the complaint. This time against Egypt, India and Pakistan. It resulted in the imposition of anti-dumping duties (provisional from June 13, 1997 and, then, final duties from December 4, 1997). India challenged the offending measure under the dispute settlement procedures of the WTO.

The matter went right up to the Appellate Body which faulted, on several counts, the EC methodology of determining dumping margins. The EC had no option but to reconsider. As a result, on August 8, 2001, it decided to "suspend" the duties imposed on India and that these were to ultimately expire after six months unless a review was initiated before then.

It is also worth noting that, on January 30, 2002, the Commission had terminated the duties on bed linen from Pakistan and suspended them with respect to Egypt.

It so happened that the same Eurocoton again lodged a request for review of the suspension of the duties with respect to India, leading to the EC Commission's revival of the investigation - this time on the basis of data for the period from January 1, 2001 to December 31, 2001, saying these caused injury to the EC domestic industry.

The action was pursued despite an important decision taken at WTO's Fourth Ministerial Meeting at Doha which categorically stated: "members will exercise particular consideration before initiating investigations in the context of anti-dumping remedies on textile and clothing exports from developing countries previously subject to quantitative restrictions ...."

It is interesting to note that the Eurocoton was also behind four-year long investigations into so-called dumping of cotton fabrics by China, Egypt, India, Indonesia, Pakistan and Turkey. The case continued in various forms from January 20, 1994 to October 5,1998 and then lapsed without leading to any definite decision and definitive duties.

Only provisional duties did last for some period: first from November 20, 1996 to May 18, 1997 and then from April 7, 1998 to October 5, 1998.

It is amazing to note that textile and clothing sector has seen 197 initiations of anti-dumping actions during 1990-99 period. The European Community has been, by far, the biggest user of anti-dumping cases in the textile sector. Equally noticeable is the fact that the initiations of investigations were launched on "motivated" complaints by the same industry association - Eurocoton. All the complaints turned out to be wrong, with no positive determination by the investigating authorities.

That most of the investigations were prolonged over two years or even longer is also contrary to the spirit of the Tokyo Round Code under which these were required to be concluded within one year after their initiation.

Likewise, the Uruguay Round Agreement on Anti-dumping also requires that investigations be concluded within one year and in no case more than 18 months after their initiation.

The history of anti-dumping action dates back to the beginning of the 20th century. Canada was the first country to adopt an anti-dumping law in 1904. Quick to follow were the US, Australia and the UK. When the GATT was drafted, it included provisions for imposing company-specific anti-dumping duties against price discrimination in import trade.

The EU was obliged to end 16 per cent quotas from 1995 to 1998 in the first stage set by the Agreement on Textiles and Clothing (ATC), 17 per cent from 1998 to 2001 and 18 per cent from 2002 to 2005.

But the way the EU has been resorting to anti-dumping actions frequently motivated "The Financial Times" in one of its editorials, as early as 1996, to comment: "Intentionally or not, brandishing the dumping weapon (which) looks like an attempt by the EU to apply coercion ... raises doubts about the sincerity of the EU's commitments to removing quotas".

Another aspect which needs to be given fresh consideration is the claim that the new multilateral trading system is genuinely rule-based. If a country has a grievance, it can seek relief from Dispute Settlement Body of the WTO. In theory, it is correct. In practice, it is not because the costs are too prohibitive to let a developing country seek relief on merit.

The DAWN

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