Financial Express: Centre to tag QR norm in amended Foreign Trade Act

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Centre to tag QR norm in amended Foreign Trade Act

Devsagar Singh

New Delhi, Jan 3: The centre is going ahead with amending the Foreign Trade (Development and Regulation) Act, 1992, for incorporating a provision of quantitative import restrictions in line with the World Trade Organisation (WTO) provisions on safeguards. The cabinet has approved the amendment proposal submitted by the commerce ministry even though the finance ministry had thrown a spanner by stating that it was not required.

The amendment would be broadly on these lines

To empower the centre to impose restrictions by notification on the import of such articles which, if imported, will cause or threaten to cause serious injury to domestic producers in the country.

To include, in accordance with the WTO agreement, provisions to ensure that no such restrictions shall be imposed on an article originating from a developing country so long as the share of imports of that article from that country does not exceed 3 per cent, or, where the article is originating from more than one developing country,then so long as the aggregate of the imports from all such countries taken together does not exceed 9 per cent of imports of that article.

To provide for the maximum time limit of four years for such import restrictions provided that if the centre feels the domestic industry has taken measures to adjust to such injury or threat thereof, and it is necessary that the import restrictions should continue to be imposed, it may extend the period of such imposition to a maximum of ten years from the date on which such restriction was first imposed.

To empower the centre to make rules for purposes of the proposed amendments. Such rules will provide for the manner in which articles liable for import restrictions may be identified.

To adequately define the important terms in accordance with the General Agreement for Trade & Tariff (Gatt) agreement, including the definitions of developing country, domestic industry, serious injury, and threat of serious injury.

The commerce ministry is creditedwith the view that the legislation on safeguard duties is in place, and the provision for imposition of quantitative restrictions will enable the government to meet any urgent situation arising out of increased imports of a particular commodity causing injury to the domestic industry. This will also enable the government to take safeguard measures in the form of safeguard duty or quantitative restrictions within the framework of the WTO agreements.

It is learnt that the department of revenue had pointed out that a provision (Section 11J) existed under the customs act, which provided for prohibiting imports or export of goods for preventing serious injury to domestic producers. The revenue department (ministry of finance) contended that this provision was enough for imposition of quantitative restrictions as a safeguard measure.

The finance ministry view point was, however, countered by the commerce ministry, which stressed that the WTO agreement on safeguards laid down a prescribed procedure which had tobe followed, and the obligations which were to be complied with for initiating the safeguard measures. According to the commerce ministry, the customs act provision does not comply with the WTO provisions on safeguards.

The commerce ministry's view finally prevailed, and an exercise for drafting the amendment is under way. The amendment will mostly be brought about in the forthcoming budget session of parliament.

Net Express

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