Kochi: India has moved the World Trade Organization (WTO) disputes panel against a directive by the US customs border protection that seeks a customs bond on shrimp exports to the US.
The bond, a cash guarantee given to the US customs border protection for an amount calculated at 100% of the duty payable on total exports during the previous one year, is over and above the anti-dumping duty of 10.17% imposed on Indian shrimp.
According to the US customs, the bond is to make sure there is enough money in case there is an increase in the duty, which is reviewed periodically. The first of these reviews is under process and a preliminary determination under this review has already raised it to 10.54%.
The bond, coupled with the duty, appears to have taken a toll on Indian shrimp exports to the US, which are down to $252 million (Rs1,058.40 crore) in 2006 from $485 million in 2005. Even the number of exporters to the US came down from 228, at the start of the duty four years ago, to 74 as on 31 January 2007, the start of second administrative review of the duty.
A.J. Tharakan, national president of the Seafood Exporters Association of India (SEAI), which had taken up the issue before the US court of international trade, confirmed that the government recently filed the papers before the WTO disputes panel. Senior Supreme Court counsel K. Venugopal is to represent India in Geneva when the case comes up for hearing in a month or two.
India had raised the issue before WTO in June 2006 and in October had requested establishment of a panel to look into the matter. Though the US had objected to the formation of a panel, a renewed request saw the WTO constitute a panel on 26 January.
It was against this backdrop that India made its latest move, said Tharakan. Brazil, China, the EU, Japan and Thailand had reserved their right to participate in the panel proceedings as third parties.
The bond is called a “continuous” one since it was valid for multiple transactions for a term, generally a year. India claimed in its submission that the bonds were a barrier to international trade.
The matter had also been taken up before the US Court of International Trade which last month had allowed SEAI’s petition. The association had argued that the bond requirement was a violation of international trade practices and not in accordance with the law, said Tharakan.