Islamabad High Court (IHC) has directed the National Tariff Commission (NTC) and a domestic sole manufacturer of tinplate to file comments on the issue of imposition of provisional anti-dumping duties on dumped imports of tinplate into Pakistan from China, European Union, South Africa and USA. According to the order of the IHC in WP No 563 of 2019, the petitioner association i.e. Pakistan Vanaspati Manufacturers Association (PVMA) has stated that no factual controversy has been raised through the instant petition. It would be appropriate to consider this question after written comments have been filed by the respondents (NTC and local manufacturer). The IHC has directed the respondents to file their comments by March 11, 2019.
The petitioner (PVMA) pleaded that the association is aggrieved by the unlawful imposition of the provisional duties at ad valorem value by the NTC through the preliminary determination dated 28th January 2019 (the "impugned determination") on dumped imports of tinplate into Pakistan originating in and/or exported from China, European Union, South Africa and USA under the Anti-Dumping Duties Act, 2015 (the "Anti Dumping Act") read with the Anti-Dumping Duties Rules, 2001 (the "Rules").
The petitioner is an association of persons, which represents approximately 125 manufacturers of vegetable ghee, cooking oil and other allied products and contributes more than Rs 120 billion per annum to the national exchequer. The petitioner is also duly registered with the Directorate General of Trade Organisations and is adversely affected by the impugned determination. The instant petition is filed through the secretary general of the petitioner, Umer Islam Khan, who is duly authorised in this behalf.
The local manufacturer has submitted an application to the NTC in relation to the alleged dumped imports of tinplate ("investigated product") into Pakistan originating in and/or exported from the exporting countries. The NTC also alleged that the imports of the investigated product from the exporting countries have caused and is causing material injury to the domestic industry producing the investigated product.
The NTC, in its application, further identified nine members of the petitioner as importers involved in the alleged dumping of the investigated product. The NTC vide its impugned determination and, subsequently, its notice of the preliminary determination dated 30 January 2019 ("notice"), concluded that the domestic industry suffered material injury on account of significant increase in volume of dumped imports, significant price undercutting, price suppression by the dumped imports, decline in market share, return on investment (ROI), productivity and negative effects on inventories and capacity utilisation. Resultantly, the NTC had imposed provisional anti-dumping duties for a period of four months effective from January 30, 2019.
The association pleaded that the decision of the NTC concerning the imposition of provisional anti-dumping duty is arbitrary, mala fide, unlawful, based on wrong interpretation of law, without lawful authority and of no legal effect.
The NTC had failed to acknowledge such factors that are blatantly recorded by the local manufacturer's own auditors and financial reports. Hence, the dumped imports cannot be the sole cause of any injury to the domestic industry.
In view of the foregoing it is evident that material injury, if any, is not being caused to local manufacturer by the alleged sole dumping of the investigated product and that imposition of any provisional duty is unlawful and arbitrary as the commission has failed to establish the causal link between material injury suffered and the alleged dumped imports.
The NTC by arbitrarily imposing the provisional duty without considering all relevant factors is, in essence, protecting such monopolistic behaviour of local manufacturer, thereby creating and strengthening a private monopoly, which in effect, is prohibited by Article 18 of the Constitution.
The intent of imposing anti-dumping duties is linked to the notion of fair trade, hence, it is used to check and balance unfair trade instead of counteracting competition from foreign goods and it is not a measure of protection per se for the domestic industry. Therefore, while imposing any duty or making any determination in anti-dumping cases, NTC is required to consider all relevant factors in determining material injury within the context of the business cycle and conditions of competition that are distinctive to the affected industry.
That commission has itself removed anti-dumping duties on the investigated product effective from January 2016 because it determined that there would be no likely continuation or recurrence of material injury to the domestic industry. It fails to be seen what circumstances have occurred that would have drastically altered the dynamics and structure of the industry that has led NTC to initiate yet another investigation and subsequent imposition of provisional duty into the matter.
The imposition of provisional measures/duties has caused and is likely to continue to cause irreparable loss to the members of the petitioner, hence, the petitioner has no other effective remedy but to invoke the constitutional jurisdiction of the IHC.
Keeping in view the above, the IHC may declare that the impugned determination dated January 28, 2019 is arbitrary, without lawful authority and of no legal effect, declare the imposition of the provisional anti-dumping duties to be unlawful, ultra vires, illegal, void and not in accordance with the law and restrain NTC from taking any other adverse action against the association, the petitioner added.
According to the report of the NTC on preliminary determination and levy of provisional anti-dumping duties on dumped imports of tinplate, the domestic manufacturer (applicant) raised the following issues in application regarding alleged dumping of tinplate and material injury to the domestic industry caused therefrom: exporters/ producers from exporting countries are exporting tinplate to Pakistan at dumped prices; tinplate imported from exporting countries and produced in Pakistan by the domestic industry are like products; and exports of tinplate by the exporters/producers from the exporting countries to Pakistan at dumped prices has caused and is causing material injury to the domestic industry producing tinplate mainly through significant increase in alleged volume of dumped imports; price undercutting; price suppression; decline in market share; decline in sales; decline in profits; decline in production and capacity utilisation; decline in return on investment; decline in cash flows; decline in employment; increase in salaries and wages and increase in inventories.
The application was filed on behalf of the domestic industry as the applicants represent 100% of the domestic production. The investigated product and the domestic like product are like products. The volume of dumped imports of the investigated product and the dumping margins established for the exporters/producers of the investigated product from the Exporting Countries were above the negligible and de minimis levels respectively. The domestic industry suffered material injury during the period of investigation (POI) on account of increase in volume of dumped imports, price undercutting, price suppression, decline in market share, capacity utilization, profits and negative effect on inventories, return on investment and growth in terms of Section 15 and 17 of the Anti-Dumping Duties Act, 2015. There was a causal relationship between dumped imports of the investigated product and the material injury suffered by the domestic industry, the NTC report added.