Anti-dumping action
The manner in which Indonesian footwear companies are coping with the anti-dumping action initiated by the European Union (EU) shows the ignorance of many businessmen regarding the Geneva- based World Trade Organization's rules. Such ignorance could cost Indonesia a great deal in the form of lost export markets caused by anti-dumping measures by importing countries.
Anton J. Supit, the vice chairman of the Indonesian Footwear Association, recounted on Friday how several companies refused to meet an anti-dumping investigation from the EU on the misbelief that evading investigations would protect them from dumping charges. Many footwear companies refused to receive the investigation team because their accounting reports did not conform with generally-accepted principles.
The business community should fully realize that as they become increasingly significant players in the international market their business practices will come under tougher scrutiny by competitors. Indonesia's competitors, especially those in major importing countries, will resort to anti-dumping measures to protect their markets. But this does not mean that importing countries can impose any measures they like because they must follow the rules and procedures set by the WTO. But Indonesian businessmen could become easy victims of dumping accusations if they do not fully comprehend the rules and act accordingly to prevent anti-dumping charges.
Ignorance and inability to understand and implement the rules could make Indonesia lose on two fronts: Businessmen could lose markets overseas due to anti-dumping duties; they could also have their domestic market shares eroded by foreign products dumped in Indonesia. Over the last six years alone, 37 Indonesian export goods have been subject to anti-dumping charges filed by 10 importing countries. However, subsequent investigations have not found enough evidence to introduce anti-dumping measures on 13 of the commodities. But 16 others were later subject to counter- veiling duties, while the charges on the eight other goods are still under investigation.
The most effective and efficient way to cope with anti-dumping problems is to take preventive measures because once anti-dumping charges are filed, even though they may later prove to be false, they cost the charged companies a lot because they must reply to questionnaires, meet investigation teams or even hire lawyers in later proceedings. Hiring lawyers, regardless of their international reputation, is much more expensive than maintaining practices to prevent anti-dumping charges.
The best preventive measure calls for businessmen to understand and implement Article VI of the 1994 General Agreement on Tariffs and Trade (GATT) on anti-dumping and countervailing duties to eliminate any opportunity for importing countries to lodge anti-dumping charges. One of the most important measures is for companies to keep well-documented accounts of costs, invoices and other related records because anti-dumping measures can be taken only if the export price is below its normal value in the domestic market and only if the exports cause injury to a domestic industry in the importing country.
The GATT article is so elaborate on the rulings and procedures for initiating anti-dumping charges, investigations and actions that it would be very difficult for countries to abuse anti- dumping actions for disguised protectionism against import competition. The WTO's clear-cut procedures also set conditions for ensuring that all interested parties, including consumers, are given an opportunity to present evidence to defend their respective positions.
It is, we think, high time for trade associations and the industry and trade ministry to make concerted efforts to help companies understand the WTO rulings and procedures on anti- dumping and implement them in their business practices. It is also their duty to keep the Indonesian ambassador to the WTO apprised of Indonesian market shares in various countries because it is dramatic market gains that usually prompt importing countries to initiate anti-dumping cases.