TRADE REMEDY LAWS IN PAKISTAN UNDER W.T.O.

TRADE REMEDY LAWS IN PAKISTAN UNDER W.T.O.

By Amar Farooq, M.A., LL.B.

Trading Community has brought out practical problems on the subject, which are being dealt in the from of questions/ answers for the facility of readers

Introduction

There is Latin legal maxim, ubi jus, ubi remedium, which means that where there is a right 'there must be a remedy. Every right is thus attached to a duty and if this duty is violated then this gives rise to remedy that must be fulfilled in order to secure the interests of those whose right is violated. International trade law is all about balancing rights and duties of signatory jurisdictions.

Trade Remedy Laws

These laws are intended to remedy hardships of people that result from the actions and policies of foreign firms and governments. Allegedly these laws bring free and fair trade to the international trade scenario. There are views that this may result in protectionist trading environment, which lowers economic well-being rather than a fair and free one. But others argue that these laws are meant to end the distortions in trade that hinder the development of markets and thus give rise to bottlenecks. These laws are frequently characterized as "contingent protection" as the relief is provided under only certain conditions.

Q. Specify the trade remedy laws of Pakistan.

Following are the trade remedy laws of Pakistan:‑

(i) Anti-Dumping Duties Ordinance, 2000

(ii) Countervailing Duties Ordinance, 2001

(iii) Safeguard Ordinance, 2002

Similarly rules have been provided for the aforesaid statutes.

A brief outline of each above mentioned statute is given below:‑

(i) Anti-Dumping Duties Ordinance, 2000

It is the law that provides a framework for investigation and determination of dumping and injury in respect of goods imported into Pakistan and imposition of anti-dumping duty to offset dumping.

(ii) Countervailing Duties Ordinance, 2001

It is the law that provides a framework for investigation and determination of subsidies and injury in respect of goods imported into Pakistan and imposition of countervailing duty to offset subsidies.

(iii) Safeguard Ordinance, 2002

It is the law that provides a framework for investigation and determination of serious injury or threat of serious injury caused by surge of certain imports into Pakistan and imposition of safeguard measures to restrict such imports.

Q. What is the role of National Tariff Commission of Pakistan (NTC)?

The National Tariff Commission is an autonomous agency that conduct studies, make reports and give recommendations to the Federal Government on tariff protection to the domestic industries. The Commission was established in 1990 under the National Tariff Commission Act, 1990. Functions of the Commission are to advise the Government on tariff measures or other forms of assistance for:‑

(a) providing protection to the indigenous industry.

(b) improving the competitiveness of the indigenous industry; and

(c) promotion exports from Pakistan.

In addition to above functions, the Commission has been assisting and advising the Government from time to time on various aspects of:‑

-??????????? international trade negotiations;

-?????????? trade policy, investment policy and fiscal policy; and

-?????????? pre-budget and post-budget exercises to rationalize tariff structure.

Functions of National Tariff Commission (NTC)

It conducts studies, makes reports and gives recommendations to the Federal Government on tariff protection to the domestic industries. Moreover, quasi-judicial powers have been provided to the National Tariff Commission for conducting investigations and imposing anti-dumping and countervailing duties or safeguard measures.

(i) Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (Anti-dumping Agreement).

(ii) Agreement on Subsidies and Countervailing Measures.

(iii) Agreement on Safeguards.

Pakistan's domestic industry faces problems of increased imports and unfair practices under the global trade regime. WTO Agreements have an in-built mechanism providing for remedial measures to counteract the effect of these problems. Accordingly, Pakistan through national legislation has given effect to trade remedial measures provided for under the international trade laws. Pakistan has come up with Anti-. Dumping and Countervailing Duties Ordinance of 2001 against unfair trade practices and the Safeguard Measures Ordinance of 2002 against surge of imports in order to protect its domestic industry.

Now we shall compare these WTO related agreements with domestic related laws of Pakistan.

(i) Anti-dumping Duties Ordinance, 2000

GATT acknowledges that the rise in imports may also be due to the adoption of unfair trade practices by foreign suppliers. Its rules therefore lay down the basis on which governments may levy compensatory duties on imports of products benefiting from such unfair practices. The GATT rules deal with two types of 'unfair trade' practices, which distort conditions of competition. First, the conditions of competition may be distorted if the exported goods are dumped in foreign markets. Second, the competition may become unfair if the exported goods benefit from specific subsidies.

The Agreement on the implementation of Art. VI of GATT 1994, administered by WTO, elaborates the basic GATT rules on dumping and authorizes countries to levy anti-dumping duties on dumped products. Pakistan through Anti-Dumping Ordinance, 2000 has repealed the Import of Goods (Anti-Dumping and Countervailing Duties) Ordinance, 1983 and has given effect to WTO provisions relating to imposition of anti-dumping duties in order to offset dumping. This Ordinance has also provided a framework for investigation and determination of dumping and injury in respect of goods imported into Pakistan.

(ii) Countervailing Duties Ordinance, 2001

The basic provisions of GATT on the use of subsidies have been elaborated by the Agreement on Subsidies and Countervailing Measures (SCM). The basic aim of these provisions in either to prohibit or to restrain the use of subsidies by a WTO Member that affects the interests of other Members. However, where the use of permitted subsidies results in material injury to a domestic industry in an importing country, the rules permit the importing country to take remedial measures, which could take the form of countervailing duties on subsidized imports.

Pakistan through Countervailing Duties Ordinance, 2001 has given effect to WTO provisions relating to imposition of countervailing duties to offset such subsidies. This has been done by providing a framework for investigation and determination of such subsidies and injury in respect of goods imported into Pakistan.

(iii) Safeguard Measures Ordinance, 2002

The Agreement on Safeguards (SG Agreement) sets forth the rules for application of safeguard measures according to Article XIX of GATT 1994. This Article provides that where, as a result of tariff reductions, a Member country finds that a product is being imported in such increased quantities and under such conditions as to cause or threaten serious injury to domestic producers, it can impose safeguard measures to restrict rich imports for temporary periods.

Pakistan through Safeguard Measures Ordinance, 2002 has given effect to the provisions of Article XIX of the General Agreement on Tariffs and Trade, 1994, and to the WTO Agreement on Safeguards for the imposition of safeguard measures. This has been done by providing a framework for investigation and determination of serious injury or threat of serious injury caused by products imported into Pakistan.

Conclusion

These days, one often comes across sporadic complaints in Pakistan that certain products are being dumped by foreign producers or are being subsidized to such an extent that it amounts to serious distortion of the market price to the detriment of local producers. In view of this situation, it can be anticipated that Pakistani industry would be availing the trade remedies, more aggressively, by making use of Safeguards, Anti-Dumping and Countervailing Ordinances, in order to protect themselves against foreign suppliers. However, it cannot be denied that all these laws are quite consistent with the WTO related agreements.

The alleged purpose of nearly all trade remedy laws is to ensure that international competition is fair. Certain commercial practices, such as dumping and export subsidies, are viewed as unfair and thus should be counteracted. The elimination of these unfair practices will produce an economic environment in which the success of firms and resources suppliers depend on their own performance in a competitive market rather than on their access to government subsidies or the use of questionable practices.

Q What steps have to be taken in order to make a complaint of in jury by domestic industry to the NTC of Pakistan?

In order to make a complaint any industrial undertaking or trading business in the prescribed form and accompanied by the prescribed fee has to apply to the National Tariff Commission (NTC) (and the Commission may initiate inquiries or investigations for the purpose of its functions under the National Tariffs Commission Act, 1990.

Where it has decided to undertake any enquiry or investigation, the Commission shall take such measures as it deems necessary to ensure that all units engaged in economic activities similar to those being carried on by an industrial undertaking or trading business which has made an application or in respect of which an enquiry or investigation has been undertaken by the Commission are informed that such enquiry or investigation has been undertaken.

Section 12 of the National Tariff Commission Act, 1990 has provided that while examining a proposal for tariff protection or assistance and making recommendations to the Federal Government the Commission shall satisfy itself that:‑

(i) the quality of the product to which such protection or assistance is to be given is good and conforms to the standards laid down by the Pakistan Standards Institution or, where such standard has not been prescribed, it conforms to internationally accepted standards,

(ii) the additional cost to the consumer will not be excessive, and

(iii) the injury is not likely to need the protection or assistance after reasonable period of time.

For seeking protection of the domestic laws, the steps to be taken to make a complaint of injury by the domestic industry are enumerated hereunder:

(i) Anti-Dumping Duties Ordinance, 2000

The remedy available against dumping is the imposition of anti-dumping duty on imported products. However, anti-dumping duty is levied only after it has been established, through investigations that:‑

(a) a produce was dumped; and

(b) injury was caused to domestic industry due to dumping.

(ii) Countervailing Duties Ordinance, 2001

The remedy available against subsidies is the imposition of countervailing duty on imported products. However, countervailing duty is levied only after it has been established, through investigations, that:‑

(a) Any exporting country paid, directly or indirectly, any subsidy upon the production or exportation of any product; and

(b) Injury was caused to the domestic industry on importation of the subsidized product.

(iii) Safeguard Measures Ordinance, 2002

The remedy available against surge of imports is the imposition of safeguard measures against import products. Such measures could take the form of an increase in tariffs, imposition of safeguard duty or quantitative restrictions. However, safeguard measures are applied only after it has been determined, through investigation, that:‑

(a) a product is being imported in increased quantities; and

(b) in such conditions as to cause or threaten to cause serious injury to domestic producers.

Standard of Injury

The standard of 'injury' to the industry that must be established to justify safeguard actions is much higher than that required for the levy of anti-dumping or countervailing duties. In the case of safeguard actions, injury to the industry ,must be 'serious' whereas in the case of countervailing and anti-dumping duties, a lower standard of proof of material injury is adequate.

The difference in standards is attributable to the fact that in taking safeguard measures, the industry's problems do

not arise from unfair competition, while taking anti-dumping or countervailing measures, these are due to the unfair trade practices of foreign producers.

BIBLOGRAPHY

  1. Anti-Dumping Duties Ordinance of 2000.

  2. Countervailing Duties Ordinance of 2001.

  3. National Tariff Commission Act of 1990.

  4. Safeguard Ordinance of 2002.

  5. Tariff Act of 1930, as amended.

  6. Tariff Act of 1974, as amended.

  7. Trade Agreements Act of 1979, as amended.

  8. Trade and Tariff Act of 1984, as amended.

  9. Omnibus Trade and Competitive Act of 1988.

  10. www.wto.org.

  11. Stiglitz, J.E & Walsh, C.E., "Economics", 3rd Ed., W.W.Norton & Company, Sydney, 2002.

  12. Taylor, J.B. & Moosa, I., "Macroeconomics 2", 2nd Ed, John Wiley & Sons Australia, Ltd. Sydney, 2003.

  13. Jackson, J.H., The World Trading System, MIT Press, Cambridge, 1990.

  14. Messerlin, S.L., and VanGrasstek, C., The Trade and Tariff Act of 1984: Trade Policy Lexington Books, NY, 1986.

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