On the eve of the new year (December 30, 2022), India extended anti-dumping duties (ADD) on various jute products from Bangladesh and Nepal for an additional five years.
This decision has taken many in Bangladesh by surprise, particularly jute exporters.
It is also worth noting that 60% of Bangladesh’s total jute product exports are sent to India.
Bangladesh made repeated requests
Since India imposed anti-dumping duties on Bangladeshi jute products in 2017, top Bangladeshi officials, including the Prime Minister and Commerce Minister, have repeatedly requested that India withdraw the duty on Bangladeshi jute products.
In July 2022, the Commerce Secretary of India indicated to the Bangladesh High Commissioner to India, Muhammad Imran, that the anti-dumping duty on jute would be removed before the Bangladeshi Prime Minister’s visit to India in the first week of September 2022 and be reflected in the joint statement as a deliverable.
Additionally, during Bangladesh Commerce Minister Tipu Munshi’s visit to India on December 22-23, 2022, he also requested that India withdraw the anti-dumping duty on Bangladeshi jute goods. The Indian authorities had assured that they would look into the issue, according to the Minister’s briefing after his visit.
However, despite these repeated requests at various levels of government, the issue remains unresolved.
The nature of anti-dumping duty on jute products
On January 5, 2017, India imposed anti-dumping duties ranging from $6.03 to $351.72 per tonne on imports of jute goods, including jute yarn or twine (multiple folded/cabled and single), hessian fabric, jute sacking bags, and jute sacking cloth from Bangladesh and Nepal for a five-year period ending on December 31, 2022.
According to the recent notification from the Indian finance ministry, the anti-dumping duties will be extended for an additional five years, unless revoked, superseded, or amended earlier from the date of publication of this notification in the official gazette of the central government.
The duties will be payable in Indian currency.
As per Article VI of the General Agreement on Tariffs and Trade/GATT 1994, “dumping” refers to the introduction of a product into the commerce of another country at a price less than its standard value.
WTO members are allowed to impose anti-dumping measures if, after an investigation in accordance with the Agreement, it is determined that:
(a) Dumping is occurring,
(b) The domestic industry producing the like product in the importing country is suffering material injury, and
(c) There is a causal link between the two.
Impacts of anti-dumping duty on jute goods
The imposition of anti-dumping duties on jute goods has had a negative impact on Bangladesh’s exports to India, as the country’s export items were already limited.
The imposition of the ADD had an immediate impact on Bangladesh’s jute and jute-goods exports to India, resulting in a decline in trade in the following year. In the fiscal year 2018-19, overall exports from Bangladesh decreased to $816.27 million from $1.085 billion in the previous fiscal year.
The Bangladesh Jute Mills Association (BJMA) Secretary, Abdul Barik Khan, stated to The New Age, “Such a duty has a negative impact on our exports of jute goods as we exported more than 1.45 lakh tonnes of jute goods to the Indian market earlier. After the imposition of anti-dumping duty, the exports of the items have fallen to about 35,000 tonnes”.
Due to the imposition of anti-dumping duties by India, many Bangladeshi jute mills have had to shut down operations.
According to recent statistics from the BJMA, out of its 202 members, only 132 jute mills are currently in production, and thousands of jute mill workers have lost their jobs as a result of the closures.
Normally, the costs of producing jute goods in Bangladesh are lower compared to those in other countries, making the country a strong exporter of jute products.
The extension of the anti-dumping duty may affect the overall competitiveness of Bangladesh’s jute products in the global market, as the cost of exporting to India, a key market for jute, will increase. This may result in lower demand for Bangladeshi jute products and a shift in demand towards other countries.
Additionally, the decision may also affect the livelihoods of jute farmers, as well as workers in the jute manufacturing industry in Bangladesh, which relies heavily on the Indian market for its exports.
It is also worth noting that this decision by India could also prompt other countries to impose similar measures, further exacerbating the negative impacts on the Bangladeshi jute industry.
Finally, despite India and Bangladesh considering each other as important and closest neighbors, the trade gap between the two countries is widening significantly.
In FY 2021-22, for example, Bangladesh imported commodities worth US$14.58 billion from India, while its exports to that country were valued at only US$1.8 billion. In the fiscal year 2020-21, the figures were US$9.69 billion (import) and US$1.09 billion (export) respectively.
Read more: Bangladesh-India trade relations, explained
India’s recent decision to impose anti-dumping measures on jute products will only impede any progress made towards closing the trade deficit between the two countries.
What remedial measures can be undertaken?
During his visit to India, the Commerce Minister of Bangladesh, Tipu Munshi, expressed concerns over any decision made by India without mutual consent, stating that Bangladesh will seek dispute settlement at the World Trade Organization (WTO).
As a member of the World Trade Organization (WTO), any country can challenge the imposition of anti-dumping measures through the Dispute Settlement Understanding (DSU) mechanism. This allows for the raising of all issues related to compliance with the Anti-Dumping Agreement’s requirements before a panel established under the DSU.
Considering the close relationship between Bangladesh and India, it may be ideal if the issues can be resolved through diplomatic or bilateral means before taking the matter to the WTO.
However, the decision made by India without mutual consent has led to limited alternatives for Bangladesh.
The government of Bangladesh may consider this as one of the means of last resort to protect its own interest.
BJMA Secretary Abdul Barik Khan suggested that the Bangladesh government should establish an anti-dumping authority and review the decision made by the Indian government regarding the imposition of the anti-dumping duty.
