Think fast — and on your feet

While the fate of a new round of trade negotiations will be decided only by the events of the next few days at Doha, it is clear that with China’s accession to the WTO, things will never be the same for India. India will immediately find it more difficult to counter the threat of Chinese imports (such as in dry cell batteries or toys) by just levying anti-dumping duties, the way it has in recent months. China, as a formal member of the WTO, can take India to the WTO’s dispute settlement board for unwarranted non-tariff barriers — and proving Chinese dumping is more difficult when you’ve got to do it before neutral third parties.

In any case, with greater pressure to open the economy and lower tariffs, the government will be hard-pressed to find WTO-compliant ways to protect local markets for Indian industry. While industry will berate the government for not doing enough, the onus to protect itself really lies with industry. It is industry that will have to provide the government proof of dumping, and to suggest ways to counter this — no governments, least of all those in countries like India, have the commercial ability to gather such data.

But before I give you two wonderful examples I came across some days ago, let me tell you about my experiences with FICCI and CII some months ago, at the height of the controversy over the ‘dumping’ of Chinese goods. Sure, a host of journalists argued, Chinese goods cost a fraction of India’s, but can you conclusively prove these are being dumped — ie, that they are being sold at below what they cost the Chinese to produce.

There was no proof, but the commerce ministry has all the data on Chinese costs, one worthy from one of these bodies said. In fact, the commerce ministry had nothing of the sort. Besides, since both FICCI and CII never tire of praising the Chinese miracle, and how cost-competitive that economy is, maybe their batteries are cheaper only because of their competitiveness, and not because of dumping! One chamber even said it had sent people out to China to study their markets but nothing had emerged out of this either.

So with FICCI-CII out of the way, let’s move to the sugar and bicycle industries, and see how their lobby efforts are progressing. After taking a beating from cheap imports, around six months ago, the Indian Sugar Mills Association decided to do some hard thinking. Whenever they had petition government to hike import duties, or find other ways to check what they called unfair competition, they were told this would not be WTO-compatible. The association then came up with the concept of ‘national treatment’, and got an audience with Prime Minister Vajpayee for all of ten minutes.

The WTO’s ‘national treatment’ clause, they told him, essentially says all imports have to be given the same facilities that local products get — but surely that applies in the reverse as well? That all the problems we have to put up with, are also applied to the imports. Since Indian sugar mills have to sell a certain part of their output to the ration-shop at below cost, apply the same norm to imported sugar.

Today, we can’t take sugarcane grown in one state to another and there are all manner of interstate levies to be paid, so apply this to imported sugar as well. And with the government anxious to protect the jute industry, all sugar has to be packed in gunny bags, so apply this to imported sugar as well. All of this made sense to Vajpayee, and these provisos have been incorporated into the law. During the past several months, there’s hardly been any import of sugar into India.

In the case of bicycles, the manufacturers have been even more proactive in trying to find out about Chinese costs — essential, if you’re going to get the government to impose anti-dumping duties — and in figuring out other ways to stop the dragon from cycling across the border. For one, the manufacturers have imported not just various types of Chinese bicycles, they’ve even begun importing various sub-parts like wheel-rims and axles. This will help them construct the Chinese value-chain, to figure out where there’s an element of cross-subsidy, if any. They’ve even hired a top global consulting firm with clients in China to get authentic data about various Chinese costs. So, for instance, if a Chinese cycle costs less than the value of steel itself in China, there’s a case to be made out for dumping.

Once the Chinese cycles were imported, they were brought to the factories of various association members, then stripped, and each part examined and tested. The wheel rims of some of the Chinese cycles imported into India, for instance, were thinner and more fragile than the local ones from Ludhiana. Okay, so now, the association is now saying, let’s get to work on getting the government to specify a BIS specification for cycle rims ...

Whether there’s a new trade round initiated at Doha or not, being proactive is the need of the hour. And it is time Indian industry began being that — producing quality goods and protecting its turf.

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