Antidumping action -- remedy or protection?

Antidumping action -- remedy or protection?

This is the second of two articles on antidumping actions
written by Herry Soetanto, director for multilateral cooperation
at the Ministry of Industry and Trade, and Alfons Samosir, the
ministry's deputy director for trade defense/remedy, based on a
presentation at a seminar in Jakarta on May 11.

JAKARTA (JP): Antidumping has become a serious trade barrier
for Indonesia's export products in penetrating the international
market, particularly in the aftermath of the economic crisis.

All parties concerned, including the government, should
therefore closely cooperate to overcome the problem.

The proliferation of antidumping measures has resulted in
great concern among WTO members, especially those which often
face dumping allegations.

Although many of the investigations have ultimately been
terminated due to reasons including insufficient evidence, trade
problems occur because the market is disrupted.

An investigation should only be initiated if the application
made by the petitioner includes evidence of dumping, injury
within the meaning of Article VI and a causal link between dumped
imports and the alleged injury.

Unfortunately, many investigations have violated the rules and
disciplines of the agreement. Another problem is the weakness of
the antidumping agreement.

A good example is the antidumping action taken by the EU
against unbleached cotton fabric originating from several
countries, including Indonesia, in 1994.

In January 1994, the EU issued a notice of initiation of the
antidumping proceedings against imports of cotton fabric
originating from China, India, Indonesia, Pakistan and Turkey.
Following the commission's decision of Feb. 19, 1996, the
antidumping proceedings against imports of cotton fabric
originating from the cited countries were terminated.

However, barely two days later, the EU once again issued a
notice of initiation of antidumping proceedings against imports
of unbleached cotton fabric originating from Indonesia and other
countries.

Due to insufficient support from EU industries to proceed with
the investigation initiated on Jan. 20, 1994, proceedings were
eventually terminated by withdrawing the complaint in exchange
for the initiation of new proceedings covering largely the same
range of products. It was a clear case of trade harassment.

The Indonesian delegate at the meeting of the WTO Antidumping
Committee questioned the reason and legal basis for the opening
and closing of proceedings, the withdrawal of the complaint and
whether it was in the interest of WTO members to allow such
practices from investigating authorities.

Indonesia was of the view that since the causality alleged by
Eurocotton was based on a simple assertion lacking relevant
evidence, the proceedings should be terminated because the
requirements in the Antidumping Agreement were not met.

The EU's actions in this case were clearly an abuse of the
antidumping rules.

Since most textiles and clothing products are still heavily
protected in the United States, the EU, Canada and Nordic
countries by Most Favored Nation quotas, most developing
countries believe that antidumping action taken against the
products leads to double protection.

The International Textiles and Clothing Bureau (ITCB-Geneva),
an intergovernmental organization, has strongly opposed the
antidumping actions taken by most developed countries, especially
the United States and the EU, on textiles and clothing products
which are already under quota restraints.

The Indonesian government fully recognizes the importance of
the antidumping issue in international trade. Like two sides of a
coin, antidumping could be used to protect domestic industries
from dumped imports and to defend Indonesian exporters from
dumping allegations abroad.

The ministry has since 1988 made great efforts in defending
Indonesian interests from antidumping actions taken against
exporters. The ministry's role in handling antidumping actions
are as follows.

* Technical assistance to exporters and government officials
in almost all provinces.

* Legal advice for exporters, particularly small scale
exporters, regarding the rules and procedures of the
investigation process.

* Diplomatic approach. The ministry can act as an interested
party and, through its commercial attaches in Indonesian
embassies abroad, can become actively involved in some
antidumping and countervailing proceedings such as hearing and
lobbies.

In some cases, commercial attaches can appeal to the
authorities of importing countries to reduce the level of
antidumping duties or request the termination of an investigation
for a new company. The attaches can also cooperate with other
embassies affected by an investigation.

* Dispute settlement. In the case of a violation of the rules
and procedures of the agreement on antidumping, the government
can bring the issue to the Dispute Settlement Body (DSB) for the
establishment of a panel.

The ministry is also the coordinator for all WTO issues and
has been actively involved in WTO negotiations to improve the
antidumping agreement.

After more than five years in operation, most developing
countries feel strongly that there are several provisions which
need to be improved for more balanced outcomes.

During the preparations for the ministerial conference in
Seattle in December 1999, several articles were proposed for
review and improvement.

These included Article 2.2 regarding the calculation of the
dumping margin Article 5 on repeated antidumping actions (closed
and opened investigation), and Article 15 regarding special and
differential treatment of developing country members.

The talks were dropped following the failure of the Seattle
Ministerial Meeting to reach an agreement on a mandate for
further negotiation.

Nevertheless, sooner or later, the issue will again be
proposed for negotiation in the WTO.