A genuine reason or pure retaliation for not buying Airbus type aircrafts


Feb 03 - 09, 2003 



Pakistan faces yet another anti-dumping proceedings on its export of bed linen to the European Union (EU). The country had faced similar proceedings, with provisional anti-dumping duty, in the past. However, this time the issue of call notice seems a little astonishing because the EU had enhanced textile quota as well as withdrawn 12% duty in November 2002.

The call notice has caused mixed feeling among the Pakistani exporters of bed linen. Some exporters say, "It is not surprising because Pakistan managed to capture major share in the EU as well as the US markets. The local manufacturers are not able to compete with Pakistani exporters and are loosing their market share gradually. The call notice has been issued to pave way for imposition of anti-dumping duty, apparently the only alternative available to curb export of bed linen from Pakistan."

However, some other analysts say, "Protecting the local manufacturers is not the objective as stated in the call notice. The real motive is to exert pressure on Pakistan due to mounting anti-US sentiments in Pakistan, particularly the anticipated US attack on Iraq. The other reason behind the move seems to be Pakistan's decision not to buy Airbus type aircrafts. It seems that the EU was expecting return of favour that was not reciprocated. "

Some analysts say, "The EU stand that export of bed linen from Pakistan has caused damage to local manufacturers lack substantial evidence. The call notice has been issued on the complaint of Eurocotton, an association of textile manufacturers and traders. Technically, a trader is not competent to move an application for an investigation against dumping, it has to be moved only by the manufacturers."

Some Pakistani exporters say, "As the world is moving closer to complete quota phase out, the manufacturers from the importing countries are putting pressure on their respective government to exercise some constraints to block the onslaught. We have witnessed such moves in the recent past and the frequency of anti-dumping investigations call notices is expected to increase manifold."



Some exporters say, "We should not be scared of such call notices. We enjoy comparative advantage over the manufacturers of textiles and clothing from the EU and the US. We can offer prices that are competitive. We produce superior quality. Our superiority has been proved by the fact that Pakistan enjoys 6% share in the global trade of bed linen. With the establishment of state-of-the-art textile processing and bed linen manufacturing facilities, Pakistan's export of the commodity is poised to touch new highs. Therefore, the manufacturers from the importing countries have to make efforts to retain their market share."

They also say, "We should not follow a apologetic approach or request for a sympathetic treatment. We must counter these allegations systematically and professionally. We have countered these allegations successfully in the past. However, such participation in these proceedings cost substantial amounts because we lack local expertise."

It is necessary to mention here that in the past Akbar Sheikh, a textile tycoon from Lahore, tried to put together the local expertise but got only limited success due to poor response from the textile industry as well as the GoP. Responding to the call notices is very technical as well as time consuming. Though, the Export Promotion Bureau had established a WTO Cell, the lack of expertise could not be overcome as yet.

If the local exporters of textiles and clothing wish to retain their market share in quota free environment they must understand that there will be more and more call notices. Therefore, developing the local expertise is very necessary. It has many facets, i.e. knowledge of local as well industry in importing countries, precise costing procedure and above all legal framework followed in such proceedings.

Some sector experts say, "One of the factors providing an opportunity to importing countries for initiating anti-dumping proceedings is improper cost accounting. This weakness can be overcome through cost audit. In the past efforts were made to make cost audit compulsory, along with financial audit but textile industry put the highest resistance against the move."

It is worth noting that most of the bed linen exporting companies, having received the call notices, are public limited companies. All the public limited companies in the country are required to follow International Accounting Standards. It is a general feeling that the local companies often do not take into account the full costs. Not following the international practices encourages the importing countries to allege that Pakistani manufacturers are selling their products to foreign buyers at a price that is lower than the cost or prices lower than that charged locally.