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In the run up to the expiry of quota restrictions that had long regulated much of global trade in textiles and clothing, many a pundit predicted widespread recourse to anti-dumping actions.
WTO rules permit action to offset the injurious effect of dumping. Yet the apprehension was that given the protection enjoyed by textile industries in quota-imposing countries, it was difficult to see the entrenched interests giving up and that, therefore, the abolition of quotas might give rise to increased anti-dumping actions.
Institutions like the IMF/World Bank also weighed in, suggesting that ??the back loading of effective liberalization under the Agreement on Textiles and Clothing "raises concerns that political pressures might spark greater recourse to other forms of protection once quotas are phased out, with trade remedy actions [such as antidumping] becoming a new line of defense"¹.
To avoid the spectre, ITCB asked for a two-year grace period after the elimination of quotas, in which no antidumping actions shall be initiated so that trade could adjust to normal trading conditions.
The problem in perspective
ITCB worries were grounded on experience with some highly politicized actions by the European Union (E.U.). In those instances, by merely provoking the initiation of investigations, substantial harm was caused to the targeted countries'trade interests². Table 1 showing shares enjoyed by affected countries in European Union imports before and after the initiation of those actions is illustrative of the problem. Notice the sharp drop in affected countries' shares, especially for cotton fabrics.
Table 1 Targeted Countries?? Import Shares Before and After Anti-Dumping Actions
Fortunately, the predicted doomsday scenario did not occur; which is not, however, to say that the problem has faded away. If anything, it has assumed an added dimension inasmuch as more and more countries are taking recourse to anti-dumping actions raising concerns about their propriety.
Current state of anti-dumping actions in the sector
But what is the current state of anti-dumping actions on textiles and clothing, and how does it sit vis-??-vis the apprehensions noted earlier?
A snapshot of cases involving investigations into alleged dumping of textile and clothing products in 2008 and the actual anti-dumping measures in force during the year are provided in Tables 2 and 3 below.
Table 2 Anti-Dumping Investigations on Textiles and Clothing Products in 2008
Table 3 Anti-Dumping Measures on Textiles and Clothing Products in force in 2008
From these tables, the following features stand out:
l Most measures are directed against capital intensive segments of the sector, i.e., man-made fibres and yarns and fabrics
Thus, of the total of 110 measures in force in 2008, the large majority was against fibres (29 measures) and yarns (39 measures); or 62% of all.
At the second level were measures involving intermediate inputs or semi-processed products, namely, fabrics and made-up articles such as blankets, linen, ropes, etc. While 30 measures involved fabrics, 11 involved made-up articles, or 27% and 10% of the total respectively. Only one measure was directed against apparel products.
A similar pattern is evident in cases under investigation in 2008; with 74% involving fibres and yarns, and 26% fabrics and made-up articles.
l The pattern reflects the organized nature of complainants
The preponderance of actions in capital-intensive segments of the industry shows a clear pattern. It is now well documented that only large companies can muster the resources and wherewithal necessary to launch dumping complaints and to follow them through expensive investigative processes. These companies generally join hands through industry associations, hire the required expertise, and can exert the influence (lobbying, etc.,) with investigating authorities to push the process through.
l Most measures are now adopted by developing countries
Unlike in the past, developing countries are now the biggest users of antidumping in textiles; although it should be added that since E.U. is composed of 27 member states, looking simply at the numbers of measures is not necessarily comparable.
Even so, the largest number of measures in force were by Turkey (34) followed by India (25); Pakistan (8); Peru, EU and Brazil (7 each); USA (5); Mexico and South Africa (4 each); Argentina and Republic of Korea (3 each); and Chinese Taipei, Thailand and Ukraine (1 each).
l Developing countries are also the most affected
On the other side, the target of most measures were also developing countries: China (33) followed by Korea (15); Chinese Taipei (11); Indonesia, Malaysia, Thailand (8 each); India (6); Belarus (4); Bangladesh, Brazil, Pakistan, Saudi Arabia, Turkey (2 each); and Austria; Hong Kong, China; Japan; Philippines; Ukraine; Uzbekistan and Vietnam (1 each).
l But fear of anti-dumping replacing quota restrictions did not materialize
It is apparent, too, that four years since the expiry of quotas the apprehension that there might be large scale resort to anti-dumping actions has proven to be exaggerated. Several factors appear to have played a part. First, the prices of imports did not decline dramatically. After an initial drop, they stabilized. Second, clothing products account for bulk of trade in the sector; as the numbers of clothing manufacturers in developed countries have dwindled, it is hard for those remaining to muster the resources to mount successful actions. Third, there is significant outsourcing of assembly of clothing from developed countries to developing countries, which makes for an influential counter-voice against undermining their own interests by recourse to anti-dumping actions.
l A note of caution when comparing anti-dumping actions only on basis of numbers of actions
The WTO and other researchers report anti-dumping actions in terms of numbers of measures and/or investigations by various countries on one hand, and the numbers affecting different exporting countries on the other. And the method seems to have assumed common currency.
Mere numbers however do not reveal the true picture. For example, although it has since expired, a single measure by Mexico involved all clothing and made-up articles (i.e., entire chapters 61, 62 and 63 of the Harmonized System of nomenclature). Likewise, an E.U. measure involving cotton bed linen covered a large amount of trade. On the other hand, measures by many others were directed against narrowly circumscribed items falling under specific tariff lines. Thus, a measure by Brazil was directed at only viscose fibres, by India at only viscose filament yarn, and so on. A word of caution is therefore necessary.
What prospects for the future?
In fairness, it deserves recognising that fears about antidumping actions replacing the quota restrictions did not come to pass. Yet there is no guarantee that the calm of the last few years would continue to prevail.
Indeed the WTO predicts that ??On the basis of analysis of historical patterns of anti-dumping activity in previous business cycles, it is to be expected that the current economic crisis will result in a significant increase in the number of anti-dumping measures³.
It also bears noting that as a condition for its acceptance of the terms of Vietnam's accession to the WTO, under pressure from its textile industry the United States put in place a comprehensive programme to monitor imports of several main traded apparel products from Vietnam. The stated objective was that if this monitoring process brought out that dumping had taken place, then the "U.S. Commerce Department will self-initiate anti-dumping investigations with respect to the relevant products".
In other words, the U.S. Administration would step in and take actions on its own, which it otherwise is required to do only on substantiated complaints by those domestic manufacturers who actually produce the product concerned and therefore have the legal "standing" to bring such complaints. Fortunately, the two years of monitoring did not find any evidence of dumping.
Indeed, the United States industry groups are on the lookout to see if they could somehow sidetrack the established procedure and force the government's hand to initiate some actions on its own. Methods elsewhere are little different. Quite a few investigations into instances of alleged dumping have already been launched in 2009.
Thus the uncertainty hangs on. And there are many concerns as to the disciplines on the use of anti-dumping measures. To avoid the worst consequences, keeping prepared ought to be the watchword.
Note:
1. International Monetary Fund/The World Bank, "Market Access for Developing Country Exports - Selected Issues", 26 September 2002, Paragraph 68.
2. Those interested in the details of these effects can profit from a comprehensive ITCB analysis submitted to the WTO Negotiating Group on Rules (WTO document TN/RL/W/48/Rev.1, "Antidumping Actions in the Area of Textiles and Clothing: Developing Members" Experiences and Concerns??)
3. WTO, "Director-General's Report to the TPRB on the Financial and Economic Crisis and Trade-Related Developments", Job (09)/62, dated 1 July 2009.
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Anti-dumping in Textiles and Clothing
Updated: 2009-11-9 Source: China Textile Magazine
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