The World Trade Organization has just completed its preliminary hearing in a dispute concerning India, the United States, and shrimp, and traders in the country believe that India could win if it takes up an issue called ‘zeroing’.
The US has levied an anti-dumping duty of 10.54% on shrimp from India and it has done this after ‘zeroing’ out, or disregarding Indian shrimp that is sold above fair value (a fixed price that defines how much the product could be worth in the market in which it is being sold).
Anti-dumping duties are levied when a country believes that its own traders or producers are placed at a disadvantage by importers selling products at unreasonably and impossibly low prices. The final hearing of the WTO in the US-India-shrimp case is posted for 24 July.
Indian shrimp traders point to the example of their peers from Ecuador (shrimp from this country had also been slapped with an anti-dumping duty by the US) who challenged the US practice of zeroing.
The WTO ruled in favour of Ecuador earlier this year and the US department of commerce passed its preliminary order scrapping the 3.58% anti-dumping duty levied on Ecuador.
It is expected to ratify the WTO ruling in August. The anti-dumping duty on shrimp from India is 10.54%. Last year, Ecuador exported shrimp worth $2 billion (or 15% of the total shrimp consumed in the US).
In its petition to WTO, India has raised the issue of customs bonds imposed by the US on shrimp exports from the country. These are calculated at 100% of the duty payable on total exports in the past year and levied by the US customs as a sort of advance collection against any further increase in anti-dumping duties.
P. Bharmanandam, proprietor of Devi Seafoods, which accounted for 19% of the $238 million of shrimp India exported to the US last year, says that India should also take up the issue of zeroing before WTO.
If the practice of zeroing is abandoned, the value of anti-dumping duty levied by the US on Indian shrimp would reduce, he adds. And that, in turn, would reduce the value of customs bonds.
India should have taken up the issue of zeroing first, and then worried about the customs bond, says an executive at Hindustan Lever Ltd, until last year, among the top three exporters from India of shrimp (to the US). He requested he not be identified because the company policy doesn’t allow executives to speak to the media.
WTO has consistently ruled against the practice of zeroing in other cases concerning the US. One such involves steel from Japan. While Thailand has moved an appeal before the WTO against zeroing, other affected countries such as India, Brazil, China and Vietnam should take up the issue, said exporters
Indian traders are also waiting to see if Ecuador will again move the WTO seeking reimbursement of the anti-dumping duty paid.
In a related development, the US has announced the money collected as customs bonds and duties and available for payouts to the domestic shrimp industry this year was low at $30 million compared to over $100 million last year. India accounts for only $9 million of this.
Last year, shrimp companies in the US had filed claims for over $300 million and from the payout of over $100 million, 20 top companies cornered around 56% which had earned the wrath of the Southern
Shrimp Alliance, a body of local shrimpers in the US which had moved the petition for imposition of anti-dumping duty against the six countries.