Introduction
Anti-dumping duty (‘ADD’) is a measure intended to rectify the distortive effects of dumping and re-establish fair trade. It is a protective shield to the domestic industry against the injury caused by the unfair trade practice of dumping. Anti-dumping measures are one of the most frequently used trade remedial measures world over with countries like India, the United States of America and the European Union being the leading users of this mechanism. In many instances, they have successfully shielded the domestic industries from the effects of dumped imports.
Anti-dumping measures are imposed subsequent to a detailed investigation to determine the existence of dumping and consequent injury to the domestic industry. Anti-dumping investigations take anywhere upto 18 months for conclusion, depending on the complexity of the case and the number of parties involved in the particular investigation. However, during such time till the anti-dumping measures are imposed, the domestic industry is left undefended and, depending on the particular facts and circumstances, the concerned domestic industry may be under severe economic pressure.
To address such a scenario, anti-dumping law in most jurisdictions supports the imposition of provisional ADD to protect the domestic industry, till the conclusion of the investigation. The USA’s Department of Commerce routinely imposes provisional ADD in almost all investigations. On the other hand, in India, the usage of provisional ADD has been rather limited. However, in the last one year, there has been an increased recommendation of provisional ADD by the Directorate General of Trade Remedies (‘DGTR’) in India in comparison to other years.
Since provisional anti-dumping measures are limited in usage in the Indian scenario, this article intends to discuss the law concerning provisional anti-dumping measures and the practice followed in India.
Legal provision regulating provisional anti-dumping duty
Provisional ADD is an interim measure that is imposed on imports of the article under investigation. It is imposed during the continuation of the investigation to protect the domestic industry in ‘critical circumstances’. The objective behind imposition of provisional ADD is to provide a protective shield to the domestic industry from dumped imports till the conclusion of the investigation, as a stop-gap measure.
Under the law of the World Trade Organization (‘WTO’), anti-dumping investigations are governed by the Agreement on Implementation of Article VI of the GATT (‘Anti-Dumping Agreement’ or ‘AD Agreement’). Article 7 of the AD Agreement permits Member countries to impose provisional ADD measures.
In India, provisions concerning the imposition of anti-dumping measures are contained in the Customs Tariff Act, 1975 (‘CT Act’) and the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 (‘AD Rules’). Section 9A(2) of the CT Act read with Rules 12 and 13 of the AD Rules empowers the Central Government to impose provisional anti-dumping duty.
It is relevant to note that the rate of provisional ADD that is imposed may differ from the rate of definitive ADD that is imposed after the conclusion of the particular investigation. As per Section 9A(2)(ii) of the CT Act, in case the rate of provisional ADD is higher than the rate of definitive ADD, importers are entitled to a refund of the difference between the two rates of ADD on imports made before imposition of the definitive ADD. However, in case the rate of provisional ADD is lower than the rate of definitive ADD, importers are not liable to pay the higher rate of ADD on imports made before imposition of the definitive ADD.
Timelines concerning imposition of provisional anti-dumping measures
An important aspect of provisional anti-dumping measures is that of timelines. Firstly, as per Article 7.3 of the AD Agreement and Rule 13 of the AD Rules, provisional ADD cannot be imposed before the expiry of sixty days from the date of initiation of the investigation.
Secondly, there is no outer limit for issue of preliminary finding (which form the basis of provisional anti-dumping measures) under the AD Agreement or the CT Act or the AD Rules. However, para 16.67 of the DGTR’s Manual of Operating Practice notes that preliminary findings should, wherever warranted, preferably be issued within 100 days from the date of initiation of investigation. These timelines were stipulated vide Circular No.2 dated 27 February 2018 and further revised vide O.M. No.4/7/2018 dated 12 April 2018. However, in the recent anti-dumping investigation on imports of Telescopic Channel Drawer Slider from China PR, the DGTR issued the Preliminary Findings even though more than 100 days had lapsed since the initiation of the investigation.
With respect to the maximum duration for which provisional ADD can be imposed, while Article 7.4 of the AD Agreement permits the imposition for upto four months, Rule 13 permits the imposition for upto six months.
Other practical aspects of imposition of provisional ADD
Unlike in the case of definitive ADD, neither the AD agreement nor the domestic framework envisages a need to provide a hearing before imposition of provisional ADD. Further, both frameworks do not envisage the necessity to issue a statement disclosing the essential facts under consideration before imposition of provisional ADD. Thus, the importers and exporters are not given an opportunity to comment on the facts and the investigating authority’s legal views before the imposition of provisional ADD.
It would appear to be that the philosophy behind these aspects is that since the measures are only provisional in nature and the views of all the interested parties can be factored before the issuance of the final determination, there is no need for affording a hearing or disclosing the essential facts before issuance of the preliminary findings (leading to the issuance of the provisional ADD).
Further, given that the domestic industry is facing serious injury, a view may be taken that scheduling a hearing and issuing the disclosure statement before imposing the provisional ADD would defeat the objective of affording protection to the domestic industry at the earliest instance, thereby delaying the proceedings. A view may also be taken that if a hearing is to be held and disclosure statement to be issued before the issuance of the preliminary findings, then such exercises would become repetitive before the issuance of the final findings. Thus, the mechanism of provisional ADD seems suited for the protection of the domestic industry.
However, one drawback is that during the time the provisional ADD is in force, the importers and exporters are burdened with ADD till the time the definitive ADD measures are imposed. In such a scenario, to balance importer/user interests with that of the domestic industry, it may be preferable for the government to instead collect provisional bonds rather than collect the ADD in the form of payment from the user/importer.
Conclusion
The mechanism of provisional ADD is quite different from that of definitive ADD. It can be helpful for protecting the domestic industry in critical circumstances where its existence is under threat. However, given the burden such measures can have on the importer/user industry, a balance must be struck between the competing interests by collecting a bond in lieu of payment of the provisional ADD. This would help the importer/user industry with its working capital requirements.
In fact, Article 7.2 of the AD Agreement itself foresees this possibility. Therefore, it would be helpful to the importer/user industry if the investigating/customs authorities considered collecting bonds rather than insisting on full payment of the provisional ADD.
[The author is a Principal Associate in the International Trade & WTO practice at Lakshmikumaran & Sridharan Attorneys]
