It looks almost certain that European Union (EU) will
impose 13.1% anti-dumping duty on bed linen originating from Pakistan
from March 2004. However, Ministry of Commerce is still hopeful that it
will succeed in reverting the decision. Some of the experts believe that
high ups in the Ministry are hoping against the hope. Looking at the
proceedings gone so far one can resist from saying, 'a bad strategy has
not helped in resolving the issue that was only a routine matter'.
It is necessary to understand that issue of call
notices will be a routine as time gets closer to complete phase out of
textile quota regime and also enters into free trade regime of textiles
and clothing. In order to protect the domestic industry, importing
countries of textiles and clothing will resort to creating various
hurdles and imposition of anti-dumping duties will be common. The
importing countries know very well that domestic industry cannot compete
with textiles and clothing manufacturers operating in the developing
In the past, a number of developing countries,
including Pakistan, were extended 'favours' due to geopolitical reasons.
These included GSP, enhanced quota ceilings and greater access to the
markets for the selected countries. However, continuation of these
favours is largely dependent on the foreign policy of the developed
countries aimed at achieving certain controls in the various regions.
However, it was also evident that they never wanted the influx of
cheaper goods to hurt their domestic industries. One such example was
the resistance by the US manufacturers regarding providing additional
market access to textiles and clothing manufacturers from Pakistan.
After the 9/11, Pakistan got enhanced access to the
EU market and yet another favour was provided under support strategy to
the country tryiny to combat drug trade. Ironically, India which has
been a key ally of Pakistan in fighting aganist the practices of
devloped countries has went against Pakistan due to grant of concession
against drug combat. This has caused substantial damage to Pakistan
particularly because Pakistan grossly lacks the indigenous expertise to
effectively counter anti-dumpting proceedings.
Saying that, many experts are of the view that
'waking up last minute' habit of Pakistan's private sector and officials
does not help Pakistan putting up a convincing argument. They also say
that the whole process, particularly the most recent mishap is due to
gross mishandling of the affairs. Till last minute efforts were made to
solicit political favour rather than putting up convincing argument in
the proceeding. Hardly any effort was made to prove that 'structured
cost' formula was incorrect. Some of the experts said the basis for
alleging dumping was incorrect, to start with. Had Pakistan contested
the basis of alleged dumping appropriately, it would have won the case
in the initial stages.
As regards structured cost formula, it is clear that
bed linen manufacturers and exporters do not enjoy any hidden subsidies
and/or incentives. They buy cotton at international prices. Cotton
growers are not provided any subsidy as the GoP no longer follows the
policy of fixing support price of cotton. Bed linen exporters do get
dutydraw back but the basis of calculation of such drawbacks is
transparent. The manufacturers do not get electricity at concessional
tariff. Almost all the leading manufacturers have their manufacturing
facilities located in the tariff area. Therefore, the question of
selling below cost does not arise at all.
It may be heartening that the government has not
given up. However, it is also important to work out the recourse if this
duty is imposed. Not only that export of bed linen from Pakistan will be
seriously affected, but textile industry as whole may run in problems.
As such export of textiles and clothing has come under threat due to
short fall of cotton production and its higher prices. Pakistan had
earned more then one billion dollar from export of bed linen during last
financial year and expectation was that export in current financial year
would be higher than last year.
At this juncture it is most appropriate to reiterate
that Pakistan grossly lack the indigenous expertise to effectly counter
dumping allegations. In the past some effort was made by Akbar Sheikh
from the platform of All Pakistan Textile Mills Asociation (APTMA).
However, he did not get the requisite support from neither the
government nor the private sector and forced to bid farewell to his
endavour. Pakistan is still dependent on the expertise of foreign
attorneys and pay huge amount as fee that too in foreign currency.
It is still not too late. It may be good that
Pakistan is still the front line partner in fight against terrorism but
days past soon. Looking at the past experiences, the increase in
uncalled for investigations should not be rules out completely.