Kochi: A World Trade Organization (WTO) panel has concluded the final hearing in a case filed by India against the new bond rules imposed by the US on Indian shrimp exports.
The US Customs and Border Protection had issued a directive in 2005 imposing customs bond on shrimp exports from India. The bond, which is a cash guarantee collected by the agency against any further rise in the anti-dumping duty, came over and above the 10.54% anti-dumping duty.
India had challenged the imposition of the bond, calculated at 100% of the duty payable on total exports during the past year, saying it made shipments unaffordable for Indian exporters. A top official connected with the commerce ministry said the hearing before the WTO disputes panel was completed last week. The official, who spoke on the condition of anonymity, said India was represented before the panel by senior Supreme Court lawyer K.K. Venugopal. He said the US had “very little” to offer as counter-argument.
The panel is expected to give its verdict in September.
The anti-dumping duty imposed since 2004 is calculated on the basis of the export prices of shrimp to the US, compared with the price to another country. In case India exports shrimp to Japan at $25 a kg, taken as fair value, and sells the same to the US at $20, it is treated as dumping the material in the US and a duty is imposed on it. The current anti-dumping duty on Indian shrimp to the US is due for review next month.
A.J. Tharakan, national president of Seafood Exporters Association of India, said the US department of commerce had recently accepted the argument put forth by Ecuador, which faced anti-dumping duty. Ecuador had challenged the duty calculation methodology. Ecuador has now become the first country to win the total suspension of shrimp anti-dumping duties. It is also likely to get release of all bonds and refund of cash deposits from the US when the duty will be abolished on 20 August.
Ecuador had won the case at the WTO challenging the ‘zeroing’ methodology of US duty calculation where average prices are not taken into consideration and duty is calculated only on the basis of prices sold below the fair value.
This will mean that quantities of shrimp sold above the fair value of, say $20 a kg, are ignored and treated as zero and only those sold below that price are taken into consideration for calculating bonds.
Since WTO had ruled this illegal and asked the department of commerce to recalculate duties using the proper methodology, duties for Ecuador shrimp fell below the threshold level of 2%, which means that it will now have no duty.
Southern Shrimp Alliance, the US shrimpers body that had originally moved for imposition of anti-dumping duty, had appealed against revocation. Their plea has now been rejected. Tharakan says India needs to look into whether the WTO ruling would apply to other countries. A favourable WTO verdict in the bond issue, coupled with applying the Ecuador ruling for other countries, could brighten the prospects for Indian shrimp exporters, he adds.