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The Chief Editor

Monthly Management Accountant

Assalam-O-Elekum,

I am submitting an article titled as “Anti-dumping: A Tool to Improve the Trade or Discourage the Trade” for your perusal and onward
publication of the article, if found suitable, in your next monthly issue of the journal. Please confirm at: Profaisal313@yahoo.com

Name : Muhammed Faisal

Father’s Name : Muhammed Shafi

Registration No. : 960486

Residential Address : 5/504, Liaquatabad; Karachi

Residential Phone No.: 4855449

Official Phone No. : 111-444-111 (ext. 275)

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ANTI-DUMPING: A TOOL TO IMPROVE THE TRADE OR DISCOURAGE

THE TRADE
Anti-Dumping-WTO Rules:
WTO Agreement on Anti-dumping provides for anti-dumping measures by an importing country if an export country sells a given product to the
importing country at a price which is less than the “normal value”. Normal value is the price at which the product sells in the importing country. When
there is no sale of a like product in the exporting country, the normal value is determined either by comparison with the price of the like product when
exported to a third country or the cost of production in the exporting country plus administrative, selling and general costs and profits. The WTO
agreement gives detailed guidelines for determination of normal value.

A crucial test for justifiability on anti-dumping measures is the existence of causal link between the alleged dumping and the alleged injury to the
domestic industry of the importing country. The complainant country has to establish that imports from a certain country are made at dumping prices,
and that injury to the domestic industry has been caused by such specific imports at dumped prices. It is possible that a domestic industry has been
injured and the injury factors are not only the dumped prices of an exporting country but other factors like a general recession in the market, changes in
the cost of production factors and the like. The important thing is to prove that injury has been caused only because of the dumping by an exporting
country. If there are other factors, these have to be isolated and the impact of alleged dumping alone has to be worked out.

For the initiation and subsequent investigation of dumping complaint, an application has to be made on behalf of the domestic industry. Such
application has to provide evidence of dumping, alleged injury to domestic industry and a causal link between the dumped imports or alleged injury.
Simple assertion, unsubstantiated by relevant evidence, is insufficient.

Once dumping has been established, an anti-dumping duty can be levied only to the extent of the dumping margin which is the difference
between the dumped price and the normal value. In the interest of ensuring procedural fairness and transparency in anti-dumping investigations, the
importing country has to notify the government of the exporting country about the initiation of a dumping investigation. All interested parties have also
to be notified and given opportunity to present evidence in respect of the investigations. They also have to be provided the evidence and views of others
to be able to offer rebuttal evidence and argument. Finally, public notice has to be given to all interested parties of the imposition of provision or final
measures so that a judicial review can be sought on the provisional or final determination of dumping and the levy of anti-dumping duty.

Implementation of the Rules in Pakistan:

Most countries have their own anti-dumping regulations, as part of their national legislation. These have to be consistent with the WTO
agreement on the subject. Pakistan's Anti-dumping Duties Ordinance is the national legislation promulgated in December 2000 to implement in this
country to the relevant WTO agreement. Pakistan is a founding member of GATT 1947, the predecessor of WTO and one of its original 123 members.
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The procedures laid down in the ordinance and Anti-dumping Rules, 2001, which are strictly in consonance with the WTO anti-dumping agreement.
The intent of the law is to introduce transparency in the trade process and to protect domestic industry from the negative effects of dumping.

The Anti-Dumping Duties Ordinance 2000 provides for the determination of dumping and injury to domestic industry, the initiation and conduct
of anti-dumping investigations, the use of provisional measures and the imposition and collection of anti-dumping duties. The new law amended and
consolidated existing laws relating to the imposition of anti-dumping duties.

When it is determined that any product imported into Pakistan have been dumped and caused injury to the Pakistan industry then under the
Ordinance, the National Tariff Commission of Pakistan through notification in the Official Gazette has the authority to impose anti-dumping measures
on the product the Commission will also publish the anti-dumping duty, if decided, to be imposed.

In ordinary course of investigation it is expected that the Commission will complete a dumping charge investigation within 12 to 18 months and a
domestic injury claim within 36 months. An investigation is followed by a preliminary determination of dumping and injury not earlier than 60 days but
not later than 180 days after the completion of the investigation. However, the Commission will terminate an investigation if the dumping margin is less
than 2 % of the export price or the volume of dumped imports accounts for less than 3% of total imports of like products. The Commission may also
initiate an investigation on its own if it has sufficient evidence of dumping and injury.

The Commission may impose provisional measures in the form of security deposit in an amount equal to the provisionally determined dumping
margin for a period not to exceed 4 months. The Commission may, however, extend this period to 6 months upon request by exporters if they represent a
significant percentage of the trade.

The National Tariff Commission (NTC) of Pakistan has taken some anti-dumping cases since the last quarter of 2002. In the first case NTC
imposed on Mac Steel, a South African firm, the producer/ exporter of tinplate, anti-dumping duty at the rate of 27 percent on C&F value, earlier in
November 2002. In the second case NTC imposed on Sorbitol 70pc Solution from France and Indonesia, provisional anti-dumping duty at the rate of 96
percent and 91 percent, respectively. In the third case NTC has levied provisional anti-dumping duty at the rate of 13.77 percent on glacial acetic acid
(GAA) exported by a Taiwanese firm , Chang Chun Petrochemical Company following a complaint by local industry.

Implementation of the Rules on the World:

There has been a rash of anti-dumping and countervailing measures by the industrial countries against imports from Pakistan and other countries
like India, especially in the textiles and clothing sector. Here is a table presented which is constructed by the WTO. This table shows the Anti-dumping
initiations by reporting countries against exporting countries.
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AD Initiations: Reporting Member

Exporting Country
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Libya 0
Liechtenstein 0
Lithuania 0
Luxembourg 0
Macau 0
Macedonia 0
Malawi 0
Malaysia 0
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Pakistan is particularly affected as over 65% of Pakistan’s exports are of textiles and clothing. As the quantitative restrictions on imports of these
products are to be eliminated by the end of 2004, after the phase-out of the MFA, the importing countries have a tendency to resort to anti-dumping and
countervailing measures. The objective is to support their domestic industries and employment. A major factor in the industrial countries of the West is
the increasing cost of production compared with low cost and low wage production in the developing countries. Instead of phasing out their less
competitive production, the industrial countries choose to restrict imports through the anti-dumping and countervailing measures. It takes a long time to
complete the anti-dumping investigations but they impose provisional duties and the exporting countries have to bear the loss in their exports pending a
final determination of the anti-dumping levies. The exporting countries do have recourse to the WTO Dispute Settlement Body but that process is also
time consuming and costly. Clearly, the system needs reform on an urgent basis.

Anti-Dumping Claims Against Pakistan:

The EU had been carrying out anti-dumping investigations on export of bed linen since December 2002 and decided to impose ban on Pakistani
textile products. EU's decision was in abuse of rules of the World Trade Organization (WTO). Pakistan protested strongly against the decision that the
EU had no right to take such drastic action before the completion of the dumping investigation initiated by it. Despite Pakistan's insistence that there
had been no dumping of bed linen, the EU was convinced of the contrary and was poised to slap fines on Pakistani exports. Similar steps were also
taken against Pakistan in 1997, which later proved incorrect. Pakistan had offered the EU a voluntary price mechanism in which certain products would
not be exported below the prescribed price but EU rejected this suggestion and argued that such arrangements were considered too difficult to manage by
European customs authorities. Through a critical and crucial round of talks between Pakistan and the European Commission, the EU agreed to consider
Pakistan’s request.

The US imposed in 1999 an annual import restraint of 5.26 million kilograms on combed cotton yarn from Pakistan. The decision was based on a
US investigation covering the period 1996- 1998. Pakistan filed a complaint to WTO’s Textile Monitoring Body (TMB) against the US decision TMB
found that the US had failed to establish the existence of serious damage or threat of serious damage to US yarn producers. A WTO panel issued a
ruling concluding that import restrictions imposed by the US on Pakistani combed cotton yarn since 1999 violated the WTO Agreement on Textiles and
Clothing (ATC). The panel also called on the US to remove its quota restrictions promptly.

The Egyptian Government has imposed 29 percent anti-dumping duty on Khyber Match Factory (Pvt) Ltd. and other exporters from Pakistan,
and 26 percent duty on Mohsin Match Factory (Pvt) Ltd. on import of matches from Pakistan. The issue of anti-dumping duty on Pakistani matches was
raised in August 2002 on a complaint made by Nile Match and Egyptian Match Company to the Egyptian Investigation Authority.

India claimed that Pakistani Sugar Exporters practiced dumping into India. But the low price of sugar was the result of some factors firstly
Pakistan has substantially raised export subsidy on sugar, secondly being the next door neighbor India proved to be an ideal destination saving
transportation costs, thirdly the lower import duty of five per cent in India was an added benefit.