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Anti-Dumping Bill approved by National Assembly

  1. Decline in national savings
  2. Avoidance of double taxation
  3. Anti-Dumping bill approved
  4. Single tax to replace 8 taxes
  5. MCB's new products
  6. Askari General Insurance

A positive step towards protection of local manufacturers against seasonal cheap imports

August 02 - 08, 1999

The National Assembly has passed the Anti-Dumping and Countervailing Bill on July 22. This bill is in conformity with the World Trade Organization (WTO) agreements and contains 42 clauses. This sort of protection has been demanded by the local manufacturers for quite some time. The immediate beneficiary of this law will be urea, polyester staple fibre (PSF) and soda ash manufacturers in the country. Profitability of these sectors, involving investments of billions of dollars, has been shrinking due to cheap imports.

Theoretically, question of dumping arises when imports are made at prices lower than: a) the producers' cost of production, b) the sale price in the country of origin and c) the price of the same or like products sold by the same producer in a third country.

The first test case can be imposition of anti-dumping duty on urea import. From the domestic urea manufacturers' point of view, this bill appears to be a positive move in the right direction. Ever since urea imports rocked the country in early 1999, manufacturers have been lobbying to restrict its import. They wanted imposition of anti-dumping duties or regulatory duty, at least, to protect billions of dollars invested in the industry. Their prime contention was that when urea prices were higher in the global market they were absorbing the difference. If the prices have gone down in the international market due to a temporary over-supply, the government should reciprocate by imposing regulatory duty on the import of urea.

The sharp fall in global prices, particularly Eastern Europe, has prompted the manufacturers in the European Union (EU) to demand a tougher anti-dumping legislation.

Recently the European Fertilizer Manufacturers Association announced a new EU anti-dumping investigation on urea. The countries being accused of dumping urea in the EU are Algeria, Belarus, Lithuania, Russia and Ukraine. The urea dumping phenomena is, however, a new one for Pakistan as historically domestic urea prices have been at a discount to international prices.

Many people still believe that urea manufacturers in Pakistan get the feedstock (gas) at a subsidized rate. This is a great misconception. It is evident from the gas prices charged from urea manufactures located in countries which are being accused of dumping. Urea manufacturers in Pakistan get feedstock at a rate ranging from US$ 1 to US$ 1.2 per million BTUs. Whereas the manufacturers in countries accused of dumping urea get feedstock at the rates ranging from US$ 0.37 to US$ 0.75 — at the maximum. This clearly shows that Pakistani manufacturers get feedstock at a very high rate when compared with other countries.

In such a scenario there are two alternatives either a regulatory duty at the rate of US$ 15 per tonne should be imposed or manufactures should be supplied gas at a further discount rate. The second option is just not possible due to Petroleum Policy of the government. Therefore, the first option is the only viable alternative to protect the interest of local manufacturers. It becomes more important because local urea manufacturers were absorbing the cost difference in the recent past.

Two other sectors needing immediate attention of the government are PSF and soda ash. In the recent past international prices of PSF came down and local manufacturers were obliged to reduce price of man-made yarn. Regulatory duty was applicable on the import of PSF and soda ash in the past to protect the local manufacturers.

One question arises here, "Were the local manufacturers working at optimum capacity utilization level?" The capacity utilization was low in case of PSF because of expansion. However, most of the urea manufactures are still working above the designed capacity. Any reduction in off-take of locally produced, can potentially reduce their capacity utilization and increase inventory carrying cost. Both these factors are a threat to their profitability.

Commencement of PSF and urea manufacturing has not only brought significantly large investment in Pakistan but has also helped in saving huge foreign exchange besides being a source of revenue for the government. Every country has a right to safeguard its domestic industry by ensuring availability of raw material at a modest cost and protecting against cyclical surges of prices in the global markets.

While the developed countries have been protecting their domestic industries through non-tariff barriers and resisting integration of textile trade under GATT why should not Pakistan protect its domestic manufacturers from cyclical reduction in prices? Protection of urea and PSF sectors is necessary as both of them help in conserving precious foreign exchange and also have the potential of earning foreign exchange.


Feedstock prices

(US$ per million BTUs)




1.00 - 1.20

Saudi Arabia

0.70 - 0.75


0.50 - 0.52

Former USSR

0.37 - 0.50