• PAGE ONE
• INDEX
• HOME

Withdrawal of duty-free treatment to soda ash -- India refutes US charge on GSP gains

G. Srinivasan

NEW DELHI, Feb. 21

EVEN as the US soda ash industry lobby acting as a cartel has moved the Federal Government for withdrawal of duty-free treatment to India's exports of certain items under the Generalised System of Preferences (GSP) on grounds that India had failed to pro vide equitable and reasonable access to its soda ash market, New Delhi has refuted the charge.

India's trade mission in Indian Embassy in Washington led by Mr Ajai Malhothra filed its response on February 16, 2001 on the Federal Register (FR) notice of January 19, 2001 of the US Trade Representative (USTR) seeking public comments in support of or in opposition to withdrawal, suspension or limitation of duty-free treatment under the GSP programme for certain selected products imported from India, mainly engineering items.

Currently, as much as $1.1 billion of Indian exports qualify for GSP benefits with the US and the likely effect of withdrawal of benefits to some products would be $260 million, official sources indicated.

Official sources told Business Line here that in the material forwarded under the rubric ``Supplementary Information'' in the January 19, 2001 FR notice, the reason for issuing it has been linked to the American National Soda Ash Corporation (ANSAC) soda ash case.

Decision on the GSP issues emanating from the FR notices, including that of January 19, 2001, would be made around

April 1.

It all supervened in 1996 when ANSAC, acting as a cartel, sent a consignment of 23,000 tonnes of soda ash into India and the Alkali Manufacturers' Association of India (AMAI) took exception to this consignment from a cartel and moved a plea to the Monopo lies and Restrictive Trade Practices Commission (MRTPC) which put an injunction on imports from ANSAC as a cartel.

But in its ruling, MRTPC did not proscribe import of soda from coming into the country from individual companies as cartelisation was only frowned upon as being against the law of the land.

In its latest response to the FR, New Delhi contended that the MRTPC injunction, which was subsequently backed by the Supreme Court of India relates only to export of soda ash by ANSAC as a cartel and does not restrict its six individual companies from e xporting so.

India maintained that soda ash is not a trade issue but an anti-trust case as both India and the US have well-honed anti-trust laws.

India further argued that the domestic market offers ``a very reasonable and equitable'' access to US soda ash products and India is an importer of 1.6 lakh tonnes of soda ash per year.

New Delhi argued that it has been continuously improving its market access as regards a wide range of items, including optical fibre, telecommunication equipment, parts for electronics and camera, leading to a significant increase in Indo-US bilateral tr ade volume.

In September last, India signed a memorandum of understanding (MoU) substantially bringing down the bound tariff on textile products to provide greater market access to American textiles and clothing.

Industry sources maintain that when the USTR called for a public hearing in 1999, the US soda ash cartel shifted gear on the case by stating that the rate of import duty in India for soda ash is too high for individual companies to export to.

But as far back as in 1990, the European Commission banned ANSAC from importing soda ash into the European Union as a cartel as this would adversely affect the domestic industry.

The abrupt revival of the case before the USTR, the sources said, is a direct consequence of renewed pressure and aggressive lobbying by ANSAC.

``When the laws of the US do not permit cartels importing products into that country as this is construed as an unfair trade practice, how is it that the authorities back up similar lobbies from expecting others to flout their own anti-trust laws,'' the sources said.

The industry sources say that should the Indian Government succumb to the US pressure for faster lowering of

import duty on soda ash, which is currently pegged at 35 per cent even as the permissible rate of WTO is 40 per cent, this would enfeeble the Indian industry if similar tactics of the overseas lobbies and their arm-twisting strategies are allowed to succ eed. As 95 per cent of the country's soda ash industry is concentrated in Gujarat, which has been recovering from the ravages of the earthquake, the US Government should not yield to the domestic industry's pressure to penalise exports of developing coun tries, the sources added.