In a move that mustve surely pleased domestic PSF manufacturers, the National Tariff Commission (NTC) imposed provisional antidumping duty on the import of polyester staple fibre (PSF) from China.
Individual duty rates have been imposed on certain selected companies, while other PSF exports from China will be subject to an antidumping duty of 8.82 percent. All in all, the range of the antidumping duty imposed varied between 2.09 and 8.82 percent.
The antidumping duties are provisional, having been slapped for a period of four months from December 21, 2012 to April 20, 2013.
Domestic manufacturers of PSF, ICI Pakistan in particular, had been pleading the NTC for the imposition of antidumping duty on imports of polyester. It was argued that the import of cheap PSF was detrimental to the domestic PSF industry.
Besides ICI Pakistan, Ibrahim Fibres is another key player in the domestic PSF manufacturing industry. Other companies involved with PSF manufacturing include Rupali Polyester Limited, Pakistan Synthetics Limited and Dewan Salman Fibres. Dewan Salman Fibres, though, is currently not producing the product because its units have been closed since end-2008 because of working capital constraints.
All leading manufacturers are believed to receive the news very positively.
Yet, while PSF manufacturers may be rejoicing, yarn dealers of polyester cotton are not too pleased, alleging that the antidumping duty would make PSF manufacturers raise prices of PSF, which are already high by about Rs10 per kg relative to the imported product.
Aside from the antidumping duty, an import duty of 6.5 percent is already being imposed on imports of PSF into Pakistan.
Currently, about 100,000 tons of PSF are being imported into Pakistan every year, while the annual demand stands at roughly over 500,000 tons.
While the allegations of yarn dealers may appear rational, it must not be ignored that it is important for the local PSF manufacturing industry to develop as well. A mere comparison of prices in the importing and exporting country is no criteria for evaluating the necessity or effectiveness of antidumping duties, as the economic impact of manufacturing a product locally versus importing it is much greater.
Local manufacturers clarify that their prices are set thoroughly on the basis of internal dynamics such as raw material prices and cost of production. Therefore, alleging that theyd take advantage of the antidumping duty to jack up prices of the product is incorrect.
The NTC has taken the decision after critical examination and investigation into the product being imported into Pakistan, and the prices at which it was being imported. In fact, the duty was not imposed on imports from certain Chinese manufacturers and exporters, which were "found either not to have dumped or their dumping margin was found to be de minimis (less than two percent)".
Overall, it has to be stressed that domestic manufacturing industries have to develop and grow, and the right measures have to be taken in this regard. Considering NTCs reasonable judgment about the imposition of antidumping duties on PSF, it appears to be a wise decision.