The Hindu : Fog of dispute settlement at WTO

Online edition of India's National Newspaper
Monday, Apr 14, 2003

Business

Business

Fog of dispute settlement at WTO

The public perception in India has been that the EC was punishing India for the strong stand it took against the Singapore issues in Doha, says Chakravarthi Raghavan

A THREE-MEMBER bench of the Appellate Body handed down a ruling last week, partially upholding India's appeal on a compliance panel ruling against India over its findings of dumped exports of cotton-type bed linen from India, and levy of anti-dumping duties on all the imports. But Indian exporters (and others like them) should hold their breaths: it does not mean that the EC cannot re-investigate, re-determine and re-assert the anti-dumping duties. It only means another round in the long saga that began in 1994.

At one level the AB report and its reasoning in partially accepting the Indian appeal, and turning down others, forces on the EC a reassessment on the basis of facts it has gathered to find that Indian exports from the examined and non-examined cases were either not dumped or were all dumped, and on that basis decide to levy or remove the countervailing duties or undertake another investigation etc.

At another level, the AB ruling shows the extremes of legal interpretations and evidentiary arguments involved in such anti-dumping investigations and imposition of duties etc, followed by disputes panels and appeal processes, compliance and challenges, under the very loosely worded WTO agreements in general, and the anti-dumping one in particular, and the length of time and costs to be incurred by a developing country to establish its `rights' — a time period during which the trade from the exporting country would have lost the market and would have difficulties in regaining it.

In relation to the Dispute Settlement Understanding, panel and appellate processes, the AB in effect is now seen as merely `tinkering' through its interpretations and not going to the root of the problems of vague rules, the bad faith implementation of the WTO agreements by the majors, and the manipulative processes they use.

Eurocotton's vendetta

According to Mr. Munir Ahmad, Executive Director of the International Textiles and Clothing Bureau (ITCB), the case is part of what he calls "the vendetta'' launched as early as 1994 by Eurocotton, the Association representing the EU textiles and clothing industry, which enjoys the patronage and support of the EU Executive Commission trade directorate. At one stage or the other a range of developing countries engaged in spinning and weaving activities — and exports of cotton and synthetic fabrics, and of bed-linen, the simplest next stage of clothing exports — have been targeted by Eurocotton. India had been particularly singled out for its role in the Uruguay Round in bringing about the end of the MFA-regime.

In respect of cotton-type bed linen investigations against India, this is the fourth complaint, investigation and finding.

As a result, says Mr. Ahmad, the exporting countries have cumulatively lost some 15 per cent of their market shares — for which the EC does not have to pay any compensation, and even the most radical of the proposed changes to the AD rules, under implementation measures, is only that there should be no back-to-back investigations against developing countries and at least one year should elapse after end of one investigation and conclusion before another is accepted.

Other observers note that while the AB in this case iterates the principles of res judicata in that India should not be allowed to re-agitate its original complaints (the same argument was used against Brazil in its aircraft subsidy case), and the AB tinkers with this by making `distinctions' with earlier rulings, there is no res judicata applied by the investigating authorities of importing countries in the start, end and restart of complaints of dumping.

Given the history of the EC and textiles and clothing AD investigations, trade observers say, it is time for developing countries to insist that the EC should not be allowed to start any investigations for the rest of the ATC (Agreements on Textiles and Clothing), and Eurocotton should be placed on the same footing as `vexatious litigants' in domestic courts — prevented from starting complaints and litigations without specific permission.

The processes were launched in 1994 by Eurocotton, even before the entry into force of the WTO and its ATC, as soon as it became clear that the managed and protected trade in textiles and clothing would end at the end of ten years.

On cotton fabrics, synthetic fabrics and cotton-type bed linen the countries targeted were: China, Egypt, India, Indonesia, Pakistan, Thailand and Turkey.

While one by one the EC had to give way, India has remained a major focus — with some remarks of EC officials and others in India and elsewhere suggesting that the attitude might depend on how accommodative India is to the EC views and demands on a range of issues in the Doha round.

The European Commission's original findings and decision to impose countervailing duties on cotton-type bed linen imports (involved in this particular case) were taken and issued on November 28, 1997. The EC at that time had also imposed such duties on imports from Pakistan and Egypt.

All the textiles and clothing products and their imports and quotas on them were governed by the Multifibre Agreement, which expired when the WTO came into force, but with old quotas and other arrangements continuing under the ATC, with a phasing out of quota arrangements (at a pace more or less determined by the importers) and all quotas phased out by December 31, 2004. This put into some perspective the long period of protection from imports that the textiles and clothing industry had enjoyed under GATT-sanctioned derogations, and the ten-year lengthy period for removal of protection after the WTO, and the simultaneous use of the anti-dumping investigations and duties.

By the time the disputes were taken up, panel rulings were given, and some of its erroneous findings set aside by the appellate body, and the DSB (Disputes Settlement Body) adopted the recommendations, it was March 12, 2001, and the EC was to implement it by August 14, 2001 (a date set by mutual agreement among all the parties). A principal issue involved in the findings of dumping, and the margin of dumping related to what in technical jargon is called `zeroing' for establishing the margins of dumping.

In the subsequent actions taken by the EU to implement the ruling on January 28 and April 22, 2002 — 5-9 months after the agreed period for implementation — the EU terminated the anti-dumping measures against Pakistan and decided not to extend those against Egypt when the previous order expired on January 28, 2002.

The `investigations' against India on the basis of original facts were continued, and findings given in April 2002 for continuing the duties, whereupon India got a compliance panel set, which ruled against India and on at least one part of the ruling, the AB has set aside the panel ruling.

In terms of the Indian case against the EC over the cotton-type bed linen case, and the AB ruling, and the legal issues raised, the EC undertook an investigation of complaints of dumping by exporters from India and examined, not all the imports but hose from five enterprises, found 3 to be dumping and 2 (with 53 per cent of the exports) as not dumping, and concluded all exports from India were `dumped', and applied the `margin of dumping' in the three cases to all the imports, and then levied anti-dumping duties on those investigated and found to be dumped and the others also.

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