Training Programme on Trade Remedial Measures
New Delhi, 23-25 April 2009
A
Brief Report including Participants’ Feedback
Introduction
CUTS Institute for Regulation & Competition (CIRC) has organized this
three-day programme with support from the Department of Commerce, Government of India. Twelve persons from
different industries and government departments participated in this programme. The agenda is annexed with this
report.
This programme was focussed on anti-dumping, anti-subsidy and safeguards measures. It was to strengthen
professional skills on how to address issues relevant to trade remedial measures which will help maintaining
position in domestic and foreign markets, especially at this time when trade protectionism is growing.
Economic recession is leading to greater protectionism around the world. Given the current economic situation,
many industries may not be able to compete with imports. India has laws and rules on all the three trade
remedies available under the WTO framework, i.e. anti-dumping duties, countervailing (anti-subsidy) duties and
safeguard measures. The rationale of this programme was to provide practical inputs on issues such as
calculation of dumping margin and injury and protection of one’s exports from the imposition of trade remedial
measures in export markets.
The programme content was as follows:
WTO basic principles and an overview of GATT and specific trade remedy agreements Indian anti-dumping and
countervailing duty law and practice Concepts and issues in dumping margin calculations Issues of injury and
causal link Overview of requirements for filing applications before Designated Authority Manner of data
compilation by Indian exporters for foreign investigating authorities Indian safeguard duty law and practice and
product-specific safeguards on imports from China Strategies and approach to anti-dumping, anti-subsidies and
safeguard measures against Indian exports to major trading partners
Inaugural
Dipak Chatterjee, Director General of CIRC introduced A V Ganesan, Former Member of
the Appellate Body of the WTO and G K Pillai, Commerce Secretary to the Government of India. He then stated that
CIRC had put together this programme due to the difficult economic times ahead. According to him, Trade Remedial
Measures (TRM) are only a temporary relief to deal with unfair competition and ultimately industry will have to
improve itself to deal with competition in the future. The second reason for organising this programme was to
educate the Indian industry on the procedure to be followed while making applications to the Department of
Commerce (DoC) for the imposition of TRM. If the industry has not followed the correct procedures while making
applications to the MoC, their application may be rejected. He then thanked G K Pillai and DoC for supporting
this Programme.
G K Pillai reinforced what was said by Dipak Chatterjee when he stated that since the Indian industry was not
aware of all that is required to make an application, they did not come prepared and therefore this programme
was all the more important. He also asked the industry to keep in touch with the Government and inform it in
case they faced problems while exporting. He added that we generally impose more anti-dumping (AD) measures than
safeguard measures despite the fact that the imposition of the latter takes less time. Such use of non-tariff
barriers (NTBs) by developing countries to protect their markets is not appreciated by the developed countries.
A V Ganesan stated that tariffs were no longer an issue but that NTBs were proliferating in developed countries.
But, he said, the DoC could not help industry in the improvement of the quality of its products. However,
sometimes, the industry instead of upgrading its products for the external market sells them in the domestic
market, for example spurious drugs are sold in India. He also mentioned that we should make developed countries
fulfill conditions peculiar to the Indian market to sell their products in India rather than just imposing
additional duties.
Dipak Chatterjee made two important points. Firstly, he stated that since our industry knew how to sidetrack
laws, it does not inform the DoC if it came across unfair laws in its export markets. However this can only take
the industry up to a certain point and sooner or later the concerned authorities in the market will come down on
our industry. Hence, the industry should inform MoC of the NTBs it faces. Secondly, he stated that the industry
should be creative and come up with NTBs that cannot be challenged or it will be time-consuming to challenge
them. The idea is to come up with ingenuous NTBs to prevent the coming in of products when they harm our
industry.
One of the participants said it was difficult to contact the Government. However Dipak Chatterjee and G K Pillai
responded that things were changing and some officers were receptive. For the others, one would have to be
persistent.
Session 1 Basic Principles of GATT and an Overview of the Trade Remedy Agreements of WTO, A V Ganesan
In his lecture, A V Ganesan gave an explanation of the history and the basic principles of the GATT
and WTO. He went on to say that TRM were like safety valves in the midst of liberalisation. The Anti-dumping
Agreement (ADA) was invoked much more than the Agreement on Subsidies and Countervailing Measures (ASCM) and the
Safeguards Agreement (SA) the provisions of which were much more stringent and difficult to apply. He added that
ADA is meant to remove injury by dumping rather than protect the domestic industry. He also pointed out that
industry must prove the causal link between dumping and injury. He clarified that dumping and margin were
individual exporter-related concepts but cumulation was allowed in case of injury, which should be within the
investigation period. There was a question regarding the availability of data related to price of goods
exported. He stated that it could be found in industry journals, published reports and from consultants.
Coming to ASCM, A V Ganesan said it was an agreement against the behaviour of governments. He further said that
subsidies were of three types, prohibited, permissible and actionable. As regards SA, he stated it was a clamp
on the quantity i.e. exporting member is told of the quantity it can export. In reply to a question, he said
that it was easy to impose provisional safeguard duties but that the exporting country could also impose
countermeasures. Responding to another question, he said that two simultaneous actions under the agreements
could be taken but two remedies could not be imposed simultaneously on the same product. Similarly two reliefs
could not be given for the same injury.
A participant wanted to know the manner of calculating cost in the case of non-market economy such as China.
Another participant raised a question as regards the status of the bailout package of the US Government and
whether it could be classified as a subsidy. The status of DEPB (duty entitlement pass book) scheme was also
discussed and divergent opinions emerged. One participant said that the DEPB scheme would amount to subsidy.
Another said that this scheme neutralise custom duty rates. A V Ganesan said that this and other such schemes
amounted to reimbursement of direct and indirect taxes but the fact remained that they were given for export
promotion. However, since they had not been challenged in the WTO, it was not clear whether they violated WTO
law.
Session 2 Indian Anti-dumping and Countervailing Duty Law and Practice, Sharad Bhansali
Sharad Bhansali underlined that trade remedial measures are exceptions to the principle of
nondiscrimination and are therefore strictly regulated. According to him, there should be a separate law on AD
but in India it is part of the Customs Tariff Act. Explaining the concept of dumping, he said it was a legal
fiction or an arithmetical exercise based on law and existed when normal value (NV) was greater than export
price.
He specified that even a single producer could ask for imposition of AD duties. He also stated that 90 percent of
world trade was dumped but AD was here to stay despite criticism from economists. Domestic and international
prices do not play a role in determination of dumping and all cheap imports are not dumped. He mentioned that
the investigations were done with a predestined result and that there was tremendous pressure to arrive at a
dumping margin. Causal relationship between dumping and injury was very casual and not all injury had to be
caused by dumped imports. What is required is an assessment of the actual impact of injury on the industry.
Since AD duties are exporter- and country-specific, they are a very specific and targeted duty.
Responding to a question on cost of production, he said that the Profit and Loss Account would have the cost of
production for each type of products.
When there was a question regarding standard return on investment for Indian industry for purposes of injury,
Sharad Bhansali stated that there was no specific return on investment in India but generally 50-70 percent was
taken. A decline in return on investment was a legal requirement but no numerical value was given.
Coming to the lower duty rule, he stated that wherever the US had helped in the establishment of the AD system,
AD duty was equal to dumping margin but wherever EC had helped in the establishment of the system such as in
India, the lower of the dumping or injury margin was applied. However this system was not without problems.
Session 3 Concepts and Issues in Dumping Margin Calculations, A K Gupta
According to A K
Gupta, dumping amounts to discriminatory pricing. He then explained the types of dumping such as input and
regional dumping, calculation of Selling and General Administrative (SGA) expenses, ordinary course of trade,
constructed export price, comparison of NV and export price and zeroing. Making a clarification, he said that
products had to be priced on prevailing prices and not on cost; thus stock losses could not be brought in. A
participant said that since zeroing implies reducing negative dumping margins to zero and then calculating the
average, it would amount to attributing dumping margin to a product whose margin was negative. A K Gupta was of
a similar view. Additionally, he mentioned that the Indian Government had taken a very strong stand against
zeroing at the WTO.
He also stated NV was company-specific in the whole world and that the Indian Supreme Court was the only one in
the world to hold that NV was country-specific.
Session 4 Issues of Injury and Causal Link, Sharad Bhansali
Sharad Bhansali touched upon
calculation of injury margin and the final relief given. The calculation of injury margin is not linked to AD
and involves two concepts – Non Injurious Price and Landed Value. In response to a question, he clarified that
the law does not allow consideration of opportunity cost in the calculation of these values. Responding to a
question regarding the course of action to be taken in case NV and export price were the same but domestic price
was lower, Sharad Bhansali said that since there was no dumping, AD duties or even safeguard measures could not
be imposed. In response to a query on currency fluctuations, he said that export price is taken in USD and
domestic price is converted from national currency to USD and then the exchange rate of the day of the contract
(date of realisation in India) is taken into consideration.
He said that India followed the lesser duty rule and had asked to make it mandatory in the WTO but the USA
disagreed. He also explained price undertakings, reviews, types of duties and anti circumvention laws. Coming to
the investigation process, he said that India did not have a timeline but that it was generally done in one
year.
He then defined subsidies and responded to a query that benefits offered in SEZs were countervailable subsidies.
He explained few other subsidy schemes which would not stand the test in WTO. According to Dipak Chatterjee, the
DEPB system had been made in such a way that it was a subsidy.
According to a participant, many Indian judges were not good at accounts and numbers even though they were
brilliant in law. Therefore this needs to be developed and not only the judiciary but the bureaucracy also needs
to be trained in India.
Another issue that merits further discussion is the causal link between dumping and injury which is handled in an
extremely casual and cavalier manner. This is because if one does not prove that a substantial part of the
injury is caused by other factors, we cannot presume causal link between dumping and injury, as the WTO
Appellate Body requires proof of partial injury by dumping.
Additionally, as regards like products, the Indian position was that the two products should be similar in all
respects unlike the WTO position according to which the two products should be identical in all respects.
Reiterating what A K Gupta had said the previous day, he said that in the case of Reliance PTA, the Supreme Court
had enunciated the rule of one country one NV for one type of product in situations where no exporter from the
country responds. As a consequence, NV is countryspecific in India and nowhere else in the world.
India follows the lesser duty rule unlike USA. The advantage with the American system is that there is no use of
discretion.
Session 5 Overview of Requirements for filing Applications before Designated Authority, Neeraj
Varshney
Neeraj Varshney stated that the AD law looks at the phenomenon of price and that
dumping was price discrimination between two international markets. He then spoke on the information to be given
to Department of Commerce (DoC) when an application is filed. The information has to be given on an application
proforma. The starting point is the product under consideration (PUC) which needs to be defined.
Coming to circumvention, he said it amounted to making a cosmetic change in the product to circumvent the duty
imposed.
To a question as to how do interested parties find out that an investigation has commenced, he stated that the
commencement of an investigation was advertised in the Gazette, on the DoC website and notified to all known
parties to get their views. The petitioner is required to give information on interested parties to the DoC so
that the latter may intimate them. He said that investigations could be started suo moto or on a petition but
that the former was rare. He also looked at like product, volume and value of imports and de minimis criteria.
He said those representing 25 percent of the production could make an application; in this context domestic
production is a wider term than domestic industry. He also explained NV in non-market economy countries.
According to him volume and value of imports was a fundamental requirement and availability of accurate
information remained an issue. Moreover, it was a complicated exercise to get evidence of NV. One would have to
ask our missions abroad for help, consult journals or see data websites.
Session 6 Manner of Data Compilation by Indian Exporters for Foreign Investigating Authorities, R S
Ratna
R S Ratna stated that safeguards could be global or bilateral/regional. In case the
exports of one member of a Free Trade Agreement (FTA) are harmful for another member, the latter should impose
bilateral and not global WTO safeguards. Preferential Trade Agreement (PTA) safeguards can be taken on
originating goods only and that too where preferences are available. The remedy is to suspend the tariff
concessions provisionally maximum to Most-Favoured Nation (MFN) levels. In FTA safeguard, the duty is zero and
it can be increased to MFN level.
There must be existence of subsidies in export price and causal link between subsidy and injury must exist to
impose Countervailing Duty (CVD). In safeguards, there is no unfair trade practice (UTP) involved. Injury is
caused by the exports of an efficient producer. Therefore, safeguard measures are not permanent and aim to give
time to the domestic injury to adjust.
Coming to issues of data collection, he said that the data required for AD, CVD, WTO safeguard and bilateral
safeguard investigations is different. If the authorities of the importing member want to start an investigation
against the exporter, they send a questionnaire to him/her. He also explained how the export data of exporter
and the import data of importer were not the same and that most organisations like the WTO relied on import
data. This is because actual physical imports have taken place and customs authorities collect revenue on
imports; thus import data is more authentic. The data disparity could be due to re-exports, high sea sales,
over/under invoicing, company to company transfers or circumvention through certification, etc.
He also said that the importing country’s data could be useful for the exporter and could be found on the
internet or through a consultant. Possible solutions were to look for places/sites/agencies where authentic and
official data was available, official reports of importer and its export data.
Session 7 Indian Safeguard Duty Law and Practice and Product-specific Safeguards on Imports from China, A
K Gupta
Safeguard duty deals with fair priced imports. AD duty and CVD are actions taken against
something wrong and therefore, they do not amount to protection. When a participant asked why dumping was wrong,
A K Gupta responded that international economics could not justify lower profits in the export market as
compared with those in the domestic market.
There are two safeguard laws – general and transitional product- and China-specific under the Accession Protocol
of China. Concessions do not have to give to China in the latter case. He further explained that safeguards deal
with the problem of a sudden increase in imports due to unforeseen circumstances, in a relatively short period.
Since safeguard is a protection, it should be used sparingly and equivalent concessions should be given to
partner on whom safeguards are applied. An adjustment plan within the safeguard duty period is required except
in the case of China-specific safeguards. Safeguards can be in the form of duty or Quantitative Restrictions
(QR) law. To another question whether duty and QR could be imposed simultaneously on the same imports, he
responded that such imposition is WTO-compatible and once India comes up with a QR law for safeguards, a
combination of duty and QR may be used. He added that AD and safeguard duties could co-exist.
Coming to injury he said that the standards in India were higher than in USA and Europe and the scrutiny in India
was very high as it was difficult to convince Indian authorities of injury.
India does not have a QR law for safeguards and industry should ask for it.
As AD duty is not a revenue-generating exercise for the Government, it should be distributed as consumer welfare.
Serious injury is more than material injury but what is “serious” is not clear. Increased imports can be
quantified but serious injury is subjective. According to R K Gupta, serious would include going from profit to
loss.
Replying to a question, A K Gupta said that the law did not fix any period for which one must wait before filing
an application but that it depended on circumstances.
On another query, he replied that even though WTO law allowed both retrospective and prospective duties, the
Indian law allowed only the latter which was a fallacy in the law. Additionally, he said that clear evidence of
irreparable damage to domestic industry is needed to refund provisional duties if unjustified. A participant
asked how such clear evidence could become invalid in future so as to result in refunding of duties? According
to A K Gupta, since safeguards can be extended a number of times, many sunset and mid-term reviews can take
place.
Session 8 Strategies and Approach to Anti-dumping, Anti-subsidies and Safeguard Measures against Indian
Exports to Major Trading Partners, Krishnan Venugopal
Krishnan Venugopal explained the
strategies to be used by exporters before the commencement of TRM investigations. The exporters could modulate
their export strategy so as not to invite TRM for example not export at dumped or subsidised prices or they
could explore other markets for their exports. However the use of exchange rate policy is difficult from the
standpoint of producing industries apart from being highly politically sensitive.
As regards strategies during an investigation, he stated that exporters should be highly proactive upon
initiation and do a cost-benefit analysis of cooperating with the authority as compared with exclusion from the
market; start liasing with the Indian Government and Embassy and competitors to evolve a common position;
appoint firms with expertise in cost accounting and law in the market of importing member; hire economists and
accountants in importing member to do injury analysis with respect to domestic industry and ensure no response
by companies that have large dumping or subsidisation margin.
Elaborating on circumvention strategies against TRM, he said that exporters could do the assembly operations in
or transfer part of the manufacturing process to third or importing country. They could also alter the
characteristics of the product so that it is no longer a like product.
The Government can threaten retaliation through TRM against domestic industry of investigating member or through
Dispute Settlement (DS) proceedings against it. It can also lobby with the foreign affairs ministry of the
investigating country or threaten cross-sectoral retaliation.
He stated that circumvention is not a viable strategy and it has high implementation costs.
A participant enquired if there were any special provisions for developing countries in subsidies – he responded
that Special and Differential Treatment (S&DT) provisions were meaningless in practice.
He went on to state that DS could also be a pressure tactic. However, firstly it did not award retrospective
compensation since the measures were struck down for the future and secondly it could nullify negotiated gains
which could be dangerous for developing countries whose industry may therefore not prefer to go in for DS.
Additionally he stated that the DS system was powerbased and could not be made completely neutral. It could be
made more transparent since uncomfortable arguments are swept under the carpet.
Closing
Dipak Chatterjee introduced R Gopalan, Additional Secretary to the Department of
Commerce, Government of India and the Designated Authority on Anti-dumping.
A participant raised a question about consideration of consumer interest in India like in the European Union
while taking trade remedial measures and R Gopalan replied that the Ministry of Finance takes it into account
through public interest. To a query that AD and safeguard duties are mutually exclusive, he replied that it was
not fair to have both duties. Another participant wanted to know whether basic customs duty plus AD duty can
exceed bound rate and he replied in the affirmative stating that bound duty is based on most-favoured-nation
principle of the WTO whereas AD duty being against unfair trade practices does not follow that principle.
Another question was whether any analysis was being done on the fact that trade remedial measures could divert
and create trade for another country. R Gopalan said that the purpose of trade remedial measures is to counter
unfair trade practices and that there is little that the DoC can do about trade diversion.
A discussion on the DEPB scheme took place. While one participant felt that it is a good scheme, another asked
why continue with it if it is countervailable. To this R Gopalan replied that only a small fraction of this
scheme has been countervailed. However Dipak Chatterjee said it had been countervailed many times but its
replacement had not been found as state level taxes were acting as a hurdle. He added that in this scheme,
benefit to exporters comes from government’s revenue.
Dipak Chatterjee concluded the programme by thanking the Department of Commerce for its support and the
participants for their active participation.
Participants’ Feedback
Following the successful completion of eight sessions, CIRC requested
the participants to assess this programme and share their feedback through a structured questionnaire. The
participants were requested to quantify different facets of the structure of this programme as well as of
different sessions with respect to their effectiveness, etc. The results drawn from that assessment are as
follows.
| Table 1: Structure of the Programme |
| Sl.No |
Name of the
Participants |
Quality of the
presentations |
Length
of the
sessions |
Quality
of the
resource
materials |
Event
organisation |
Venue |
Total |
| 1 |
Sudhir Kumar
SIEMENS Ltd., IA&DT.
Thane, Maharashtra |
7 |
2 |
7 |
7 |
6 |
29 |
| 2 |
Deepika Luke
Junior Economist,
Corporate Economics
Cell, Aditya Birla Group |
8 |
8 |
5 |
6 |
7 |
34 |
| 3 |
D. N. Mathur
Deputy Industrial
Advisor
(Pharmaceuticals),
Deptt. of
Pharmaceuticals
|
9 |
5 |
9 |
8 |
8 |
39 |
| 4 |
S. K. Mukherjee
Addl. Economic
Advisor, Min. of
Commerce & Industries,
Deptt. of Industrial
Policy & Promotion |
10 |
8 |
9 |
9 |
8 |
44 |
| 5 |
Anurag Saxena
Director, Deptt. Of
Commerce |
7 |
6 |
5 |
6 |
6 |
30 |
| 6 |
Ravi Shankar
Dy. General Manager,
Aditya Birla Group |
7 |
6 |
6 |
6 |
6 |
31 |
| 7 |
Jasbir Singh
Industrial Advisor,
Deptt. of Chemicals &
Petrochemicals |
9 |
7 |
9 |
9 |
9 |
43 |
| 8 |
Ritesh Kumar Singh
Manager (Trade
Policy),
Aditya Birla
Management
Corporation Pvt. Ltd.
Mumbai |
8 |
4 |
8 |
3 |
3 |
26 |
| 9 |
Rahul B. Somrot
Sr. Manager, Trade
Finance, Ranbaxy |
7 |
7 |
7 |
7 |
7 |
35 |
|
Total |
72 |
53 |
65 |
61 |
60 |
311 |
* Rate on a scale of 1-10, where 10 represents Excellent and 1 represents Poor
** Total participants: 12
*** Nine participants have given their feedback. |
From Table 1 we can rate the percentage of satisfaction on the structure of the programme. They
are given in Table 2 below.
| Table 2: Percentage of Satisfaction on the Programme Structure |
| Sl.No |
Structure of the Programme |
Maximum
points |
Points given by
the participants |
Percentage of
satisfaction |
|
Category |
|
|
|
| 1 |
Quality of the presentations |
90 |
72 |
80 |
| 2 |
Length of the sessions
|
90 |
53 |
58.89 |
| 3 |
Quality of the resource
materials |
90 |
65 |
72.22 |
| 4 |
Event organization |
90 |
61 |
67.78 |
| 5 |
Venue |
90 |
60 |
66.67 |
|
Total |
450 |
311 |
69.11 |
* Rate on a scale of 1-10, where 10 represents Excellent and 1 represents Poor
** Total participants: 12
*** Nine participants have given their feedback. |
In case of “length of the sessions” some participants said that it could have been increased by reducing the
number of sessions. Some also said that in some sessions there were repetitions and that should be avoided
through better prior briefing of the resource persons. In short, a majority of the participants said that it
would be better to have this programme in two days with lesser number of sessions with more duration of a
session.
In respect of ‘effectiveness’ the participants rated different sessions in a scale of 10. These figures are given
in Table 3 below.
| Table 3: Effectiveness of Different Sessions |
| Sessions |
| Sl.
No |
Name Of The
Participants |
I |
II |
III |
IV |
V |
VI |
VII |
VIII |
Total |
| 1 |
Sudhir Kumar |
7 |
7 |
8 |
7 |
5 |
7 |
7 |
8 |
56 |
| 2 |
Deepika Luke |
8 |
7 |
5 |
8 |
5 |
10 |
7 |
10 |
60 |
| 3 |
D. N. Mathur |
9 |
9 |
9 |
9 |
9 |
9 |
9 |
9 |
72 |
| 4 |
S. K.
Mukherjee |
10 |
10 |
10 |
10 |
6 |
10 |
10 |
10 |
76 |
| 5 |
Anurag Saxena |
6 |
6 |
6 |
– |
– |
8 |
8 |
9 |
43 |
| 5 |
Anurag Saxena |
6 |
6 |
6 |
– |
– |
8 |
8 |
9 |
43 |
| 6 |
Ravi Shankar |
7 |
7 |
6 |
7 |
7 |
7 |
7 |
7 |
56 |
| 7 |
Jasbir Singh |
10 |
8 |
8 |
8 |
5 |
9 |
8 |
9 |
65 |
| 8 |
Ritesh Kumar
Singh |
9 |
8 |
7 |
8 |
5 |
10 |
7 |
8 |
62 |
| 9 |
Rahul B.
Somrot |
7 |
7 |
7 |
7 |
7 |
7 |
7 |
7 |
56 |
|
Total |
73 |
69 |
67 |
64 |
49 |
77 |
70 |
77 |
546 |
| * Anurag Saxena did not rate Session IV and V. |
Overall rate of satisfaction was 7.8 out of 10. A majority of the participants was more than 75
percent satisfied about the effectiveness of different sessions. The following table represents
session-wise percentage of satisfaction.
| Table: 4 Percentage of Satisfaction on the Effectiveness of Different Sessions |
| Sessions |
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
|
| Percentage of satisfaction |
81 |
76 |
74 |
80 |
61 |
85 |
77 |
85 |
|
The following are some suggestions for future programmes on this subject:
The course material should be made
short and more informative for the Indian audience.
There should be more emphasis on case studies.
More
case laws should be discussed.
A majority of the participants said that they would like to participate in similar programme to gain more
advanced knowledge on this subject and understand its applicability.
A number of participants suggested that this programme should be held in Mumbai at a regular interval.
