October 15, 2007

 

WTO declares US shrimp bonds illegal

 

 

Global trade body calls US bond norm on exports 'a clear violation' of international laws. 

 

In an interim report, the World Trade Organisation (WTO) ruled that the US rules insisting on customs bond to cover the duties on exports of shrimp to the US a clear violation of the global laws on anti-dumping. 

 

Upholding the complaints filed by India and Thailand, the WTO ruled that the customs bond requirement as applied to the imports from India and Thailand was not consistent with the anti-dumping agreement, and was forcing an additional burden on the exporters of these countries. 

 

In 2004, the US required exporters to remit a bond equivalent to 10.17 percent of the total value of exports of the previous year for shrimp exports to the US.

 

Exporters have long complained that the bond was an trade barrier which hampered exports.

 

The WTO panel asked the US administration to file its comments and appeal on the interim order before November 20. The panel will give its final verdict in December. 

 

Indian seafood exporters are rejoicing, with A J Tharakan, president, Seafood Exporters Association of India (SEAI) saying that Indian exporters have technically won the case. 

 

India had fought the case very strongly, informing the WTO that the customs bond and anti-dumping duty had severely affected the country's exports to the US market.

 

In March, India stated that the US bond and duty not only caused a fall in exports to the US but the number of exporters as well. The country argued that since it affected the volume of business and export earnings, it should be treated as a trade barrier. 

 

The WTO panel also observed that zeroing, the method used for calculating the anti-dumping duty by the US Department of Commerce (DoC), was also against international laws and resulted in artificially inflating duties on imports. 

 

The international law on zeroing says requires that the export value of each company should be considered separately for finalising anti-dumping duties. 

 

However the US followed a method to take the average price and calculating one single duty on all exporters. This resulted in duties on companies which did not dump their products. 

 

India's exports to the US dropped by 30.77 per cent to 43,851 tonnes and earnings fell 20.50 per cent to Rs 1350.47 crore in 2006-07.

 

Before the duty was imposed in 2004, there were 258 Indian companies exporting to the US. Now, less than a quarter of that number is exporting to the US.