Dhaka to appeal to WTO against India’s anti-dumping duty on jute products

The government is in the process of appealing to the World Trade Organisation (WTO) to get India to remove anti-dumping duties on imports of Bangladeshi jute products. 

The Indian government imposed anti-dumping duty ranging from $97.19 to $351.71 per tonne on all jute companies in Bangladesh in January 2017. 

At the time, 30 Bangladeshi companies were exporting jute products to India and 12 of them appealed to the Indian government to review the duty imposition. 

During the appeals, four companies managed to bring down the anti-dumping duties to zero or $20.68 per tonne, while eight others lost on their appeal. 

In the latest round, on November 11, 2019, India's Central Board of Indirect Taxes and Customs denied the review appeals of three Bangladeshi companies.

An anti-dumping duty is a tariff imposed by a country on imports that it thinks are priced below the fair market value of similar goods. A government can impose anti-dumping duty when it believes that the goods are being dumped in the domestic market to protect local businesses.

Bangladeshi exporters say that the country's jute mills and jute-spinning mills have been badly affected by the Indian government's action as the neighbouring country is the major export destination of their products.

The situation has not improved over the years despite successive appeals by Bangladeshi exporters to remove the protectionist Indian tariff.

Bangladeshi exporters say that their only hope now is to appeal to the World Trade Organisation to intervene and resolve the crisis.

A jute and textile ministry official said on condition of anonymity, that, "There are two options for the Bangladeshi side right now. First, negotiate with the Indian government through diplomatic channels, and the second, appeal to the WTO seeking legal intervention against Indian anti-dumping duty."

A high official of the ministry of commerce said, "The ministry is processing an appeal and recently they arranged a meeting on the issue."

Md Kamal Hossain, director general of the WTO cell of the Commerce Ministry told The Business Standard, "The appeal is under process. We will formally appeal to the WTO when the process is complete."

Sources at the Bangladesh Jute Spinners Association said the government has to decide whether to appeal to the WTO against the Indian imposition of anti-dumping duty on jute products.

The Tariff Commission of Bangladesh has prepared a draft of the appeal in association with the ministry of jute and textiles, and that is now on the table of the commerce ministry, the spinners association sources added.

The sources said the ministry of commerce can now apply to the legal aid cell of the World Trade Organisation. The trade organisation will examine the validity of the appeal, and then provide legal assistance for processing the formal appeal.

From 2011 to 2015, the office of the Directorate General of Anti-Dumping and Allied Duties of India asked for information from 158 Bangladeshi exporters to verify if they were dumping jute products in the country. But only 26 companies from Bangladesh provided their information. At the same time, the Indian directorate collected information from 99 Indian companies and user's associations that imported Bangladeshi jute products.

The Bangladeshi companies were asked whether the products being exported to India were also exported to countries, what the local market price for the product was, and cost of production.

"As a new exporter, we submitted a review application to the Indian authorities and provided documents of six export consignments. Of them, five consignments were in 2016 and one was in 2017. Unfortunately, they took the last one only in consideration and refused our appeal," said Mahmudul Huq, deputy managing director of Janata Jute Mills Ltd.

"They didn't do justice to us. We were deprived even before the judgment was started," he added.

"We spent around $25,000 to appoint an Indian lawyer but that didn't change anything," Mahmudul said.

Meanwhile, the companies that won in the appeal are unlikely to get any benefit from the removal of duties. 

Mahmadul added that, "India allowed us to export hessian fabrics at zero duty. But we cannot enjoy this facility because we are using the full capacity of our factory to meet our EU market demand."  

"We have no option but to ask the government to appeal to the WTO," he added. 

"The Indian authorities violated some legislative procedures. If we appeal to the World Trade Organisation, the Indian government may remove the barrier," said Shahidul Karim, secretary general of the Bangladesh Jute Spinners Association.

"Jute spinners have lost almost all of their business in the Indian market. They used to export about 1.20 lakh tonnes of yarn annually before the anti-dumping duty was imposed, but now that has dropped to below 65,000 tonnes," said Shahidul Karim.

"We are very confident about getting a judgment from the WTO that will be in favour of Bangladesh," he added.

Ali Ahmed, the chief executive officer of the Foreign Trade Institute of Bangladesh, echoed the jute exporters. "Official or bilateral negotiations won't help. Appealing to the WTO is the only option," he told The Business Standard.

Md Rashedul Karim Munna, managing director of Creation Private Limited, said, "We should explore new markets for our jute products."

Around 30 companies export jute yarn, jute sacking bags and jute bag cloth (unstressed) to India.

According to the Export Development Bureau of Bangladesh (EPB), exports of jute goods during the last fiscal year amounted to $816.20 million.

In the first four months of the current fiscal year, the export of jute goods has reached $314.50 million.