The latest news from the financial sector has highlighted that the government has decided to revoke anti-dumping duties on a chemical named Purified Terephthalic Acid (PTA). This news was revealed by the Finance Minister in her budget speech. PTA is a central raw material used in creating many products, including polyester fabrics. It contributes about 70-80% of a polyester product, making it vital to those engaged in the production of man-made fabrics or their components. The recent decision came after sustained demands from both the manufacturing and textile industries to acquire PTA at a feasible cost.
Understanding Anti-Dumping Measures
The term “dumping” refers to the action of exporting goods from one country to another at a price that is lower than what it normally charges within its domestic market. This unfair trade practice can distort international trade. Anti-dumping is implemented to correct the situation created by the dumping of goods and the deformation of trade caused by it. To protect their local businesses and markets, many countries impose heavy duties, known as anti-dumping duties, on products they perceive as being dumped into their national market. The World Trade Organisation (WTO) allows the use of anti-dumping measures as a tool for fair competition.
A Brief Historical Background
Anti-dumping duty on PTA was levied following a plea made by domestic manufacturers to the Directorate General of Trade Remedies (DGTR) in October 2013. Between 2014 and 2016, DGTR imposed these duties on PTA being imported from countries such as South Korea, Thailand, China, Indonesia, Taiwan, Iran, and Malaysia. However, companies that utilized PTA in the production of polyester products stated this step resulted in a scarcity of domestic PTA suppliers. These companies reported that the domestic cost of PTA increased as a result, making their own products more expensive and less appealing to their domestic and international customers.
About the Directorate General of Trade Remedies
The Directorate General of Trade Remedies operates under the Ministry of Commerce and Industry as the leading national authority for executing all trade remedial measures. This includes anti-dumping, counterbalancing duties, and safeguard measures. The body provides trade defense support to domestic industries and exporters in dealing with growing instances of trade remedy investigations directed against them by other countries.
The Mono Ethylene Glycol (MEG) Case
Mono Ethylene Glycol (MEG) is another raw material used in the production of polyester that is currently under an anti-dumping duty investigation initiated by the DGTR. The manufacturers of MEG have made a case that leading MEG exporters such as Kuwait, Saudi Arabia, Singapore, and the United Arab Emirates (UAE) have been dumping the product, causing harm to the domestic industry. Textile companies have approached DGTR to object to the imposition of anti-dumping duties on MEG, arguing that this could cause a similar predicament created after levying anti-dumping duty on PTA.