FEBRUARY 14, 2020

By Rajeev Mishra, Associate Partner, Sachin Shenvi, Associate Director and Sayoni Chaudhuri, Consultant, Mazars India LLP

India and its experience with Trade Remedy Investigations

THE Directorate General of Trade Remedies (DGTR) is a regulatory body which conducts Trade remedy investigations to address concerns of the domestic industry pertaining to unfair trade practices adopted by overseas exporters by the way of imposition of additional duties based on the measure best suited to address the injury inflicted by imports on the Domestic Industry (DI).The primary objective of the DGTR is to ensure a level playing field for domestic manufacturers vis-à-vis imports.

India has always been known for its extensive use of Trade Remedial measures. This is evident from the fact that India has initiated a total of 696 investigations (634 Anti-dumping cases, 13 Anti-subsidy cases and 49 Safeguard cases) since its inception in 1992 until December, 2019¹. The numbers clearly postulate the ongoing efforts undertaken by the authorities to protect the interests of the DI on one hand and on the other to protect it from the spillover effects of unfair trading.

Below are some of measures taken by DGTR in recent times to effectively conduct Trade Remedial investigations:

(a) It has initiated outreach programmes to sensitize stakeholders about different types of trade remedial measures available to them.

(b) It has launched an online portal known as ARTIS (Application for Remedies in Trade for Indian Industry and other Stakeholders) to further enhance transparency, efficiency and to encourage the domestic manufacturers to file applications to initiate an investigation.

Therefore, it wasn't a surprise that the Government has proposed various amendments to Trade Remedial measures in the Union Budget 2020-21 presented on February 1, 2020.

Proposed changes in the provisions of Trade Remedial Measures pronounced in the Union Budget 2020-21

Hon'ble Finance Minister Mrs. Nirmala Sitharaman stated in her budget speech that "we are also strengthening provisions relating to safeguard duties which are applied when surge in imports causes serious injury to domestic industry. Amended provisions shall enable regulating such surge in imports in a systematic way. The provisions for checking dumping of goods and imports of subsidized goods are also being strengthened for ensuring a level playing field for domestic industry. These changes are in line with the international best practices" ²

(A) Introduction of Tariff Quota as a safeguard measure

Section 8B of the Customs Tariff Act 1975 empowers the government to form regulations to initiate an investigation and impose asafeguard duty in case of influx of imports in huge quantities which causes serious injury to the DI.The scope of section 8B is further expanded to include safeguard measures in form of Tariff Rate Quota (TRQ) and other measures such as non-tariff barriers (NTB's)in its ambit.

These measures would not only help to regulate the surge in imports in an orderly manner but also provide the DI a level playing field vis-à-vis imports. These measures would also allow the importers and end users with an opportunity to pay lesser amount of duty on the limited "quota" which is better than a blanket tariff rate which is mostly on a higher side.

(B) Amendments in Anti-Dumping (AD)Rules

The Government has notified new rules known as Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Amendment Rules, 2020 ³ amending the existing Rules.

Following are some of the provisional changes in the newly notified Rules:

-  The definition of "related parties" which defines the scenarios under which a producer is deemed to be related to exporters and importers for the purpose of the investigation is further refined under clause (b) of Rule 2

- Period of investigation is clearly defined

-   Scope of imposition of Anti-dumping duty extended to exporters or producers who were not part of the original investigation

- Changes have been made to Rule 25 and sub Rule (1) which deals with circumvention of Anti-dumping duty to enhance the scope under which a circumvention investigation can be initiated and additional scenarios have been added under the definition of circumvention of Anti-dumping duty.

- Changes have been made in the mechanism to be followed by the investigating authority in cases where a product imported from multiple countries is subjected to investigation.

(C) Amendments in Anti-Subsidy (CVD) Rules

The Government has notified new rules Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidised Articles and for Determination of Injury) Amendment Rules, 2020 ⁴ amending the existing rules.

Following are some of the provisional changes in the newly notified Rules:

-  Changes have been made in clause (B) in rule 2 to refine the definition of domestic producers for the purpose of the investigation.

-  Addition of the definition of "related parties" which defines the scenarios under which a producer is deemed to be related to exporters and importers for the purpose of the investigation.

-  Definition of 'like article' and 'period of investigation' have been added to the Rules under new clause (ca) and (cb) respectively.

-  Insertion of an Explanation after sub-rule (5) under Rule 6 which stipulates the conditions under which an investigating authority can publicize the details of an application for investigating.

- A new rule 6A has been added which empowers the investigating authority to hold consultations amongst all parties prior to initiating an investigation. This also provides an equal opportunity to the exporting country to be part of such consultation to reach a mutually agreed solution without going through the process of investigation.

-  Rule 24 which pertains to review of imposition of countervailing duty is further refined to clearly define the time limit for such imposition, the process to be followed for review and time limit for conclusion of the review.

-  A new Rule 25 has been added to the Rule which deals with the provisions governing circumvention of countervailing duty, scenarios to determine circumvention, procedures to carry out an investigation and subsequent review and imposition of duty as applicable. Under the existing Rules there was no provision to empower the investigating authority to initiate an investigation for circumvention of countervailing duty.The objective of this amendment is to empower the authority to carry out a circumvention investigation and lay down the procedures to impose appropriate duties if required.

Conclusion:

It is clearly evident from the changes proposed in the provisions of Trade remedial measures in the Union budget 2020-21 that the Government wants to build a robust mechanism of investigations, administration and implementation of trade remedial measures. The strengthening of provisions governing Trade Remedial measures showcases the intent of the government to promote "Make in India" by providing a level playing field to the domestic industry vis-à-vis imports. It is also pertinent to note that the proposed amendments also present an equal opportunity to the producers and exporters of the product under consideration to reach an amicable solution prior to conducting of an investigation. The government has made sure that it is not seen as been completely biased in favour of the domestic industry while protecting their interests. This is a welcome step to a more integrated, systematic, robust and transparent investigation process.

(Views expressed above are strictly personal)

¹ Directorate General of Trade Remedies- Shaping International Trade"; Annual Report 2018-19. Available at: http://www.dgtr.gov.in/sites/default/files/Annual%20Report%202018-19.pdf, Accessed on Feb 4, 2020; Press Information Bureau; Government of India, Ministry of Commerce and Industry; Available at: https://pib.gov.in/newsite/PrintRelease.aspx?relid=197476;

² Union Budget Speech, 2020; Para – 137, Available at: https://www.indiabudget.gov.in/doc/Budget_Speech.pdf, Accessed on: Feb 1, 2020.

³ Notification No.9/2020-Customs (N.T.) dated February 2, 2020

⁴ Notification No.10/2020-Customs (N.T.) dated February 2, 2020