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.