Kochi: The disputes panel of World Trade Organization (WTO) will hear India’s plea against the US imposition of customs bond on Indian shrimp on Wednesday.
The bond, over and above the 10.54% anti-dumping duty on Indian shrimp, has drastically brought down shrimp exports to the US by more than 23% to $238 million (Rs952 crore) in 2006-07 from $310 million the previous year. The number of exporters too has fallen from 107 to 74 as the combination of anti-dumping duty and the bonds have made exports commercially unviable for several units in the industry, says A.J. Tharakan, national president of the traders body, Seafood Exporters Association of India (SEAI).
The commerce ministry has requested the association to assist it in the case. SEAI’s secretary general Elias Sait will represent it during the hearing in Geneva this week between Wednesday and Friday.
The bond is a cash guarantee collected by the US customs against any further rise in the anti-dumping duty that is reviewed annually. During the preliminary determination of the last review conducted in 2006, the anti-dumping duty on Indian firms’ exports was raised from 10.17% to 10.54%. The bond is calculated at 100% of the duty payable on total exports during the previous one year for an exporter.
The bond is valid for multiple transactions for a term, generally a year, after which the exporter will have to take a fresh bond the next year. This will mean that exporters will have a number of bonds till the final decision on the anti-dumping duty is taken in 2009.
The duty was imposed in 2003 after the Southern Shrimp Alliance (SSA), a group of local shrimpers, moved the US department of commerce, arguing that India was under-pricing its shrimp in the US. The department initiated proceedings and imposed the duty as it felt that India was ‘dumping’ shrimp on the US by selling at a lower price compared with other countries.
More than the anti-dumping dity, India has argued that the customs bond was against the guidelines and norms of WTO and was a clear case of an international trade barrier. On 6 June 2006, India made a request before the WTO for consultations with the US authorities on the customs bond issue, which was later circulated among WTO members. A meeting was held in Geneva in July and September last year in Washington. Since there was no agreement on the issue, India formally made a request before WTO for setting up a panel to look into the matter.
WTO’s dispute settlement body considered India’s request in October but the US authorities objected to the formation of a panel. Following this, India renewed its request in November and finally WTO constituted the panel in January 2007. A recent meeting of the exporters decided to send SEAI’s Sait to Geneva, since the commerce ministry had entrusted the body to assist the panel of lawyers headed by leading Supreme Court lawyer K.K. Venugopal.
The seafood exporters’ body had also independently taken up the matter before the US Court of International Trade. The association had argued before the court that the bond requirement was a violation of international trade practices and not in accordance with the law. “The date for the hearing in this case is yet to be decided,” said Tharakan of the exporters’ body.