Bangladesh government's decision to ban export of raw jute, partially, has some trade policy implications. The ban, though temporary, may be considered by many as a response to the recent requests made by the jute millers of the country. The private jute millers have been asking the government to make raw jute export costlier - an indirect retaliatory measure against India's imposition of anti-dumping duty on import of jute goods from Bangladesh.
India imports a sizeable volume of raw jute from Bangladesh to meet its internal demand. But, the country has slapped anti-dumping duty ranging from the US $19 to $ 351.72 a tonne on Bangladeshi jute goods. Against the backdrop, private jute millers of Bangladesh think that one way to compel India review the anti-dumping duty is to impose a higher tariff on jute exports from Bangladesh. In the first week of this month, they formally requested the government to impose duty worth US$ 352 a tonne on raw jute exports from Bangladesh. Currently, there is no duty on raw jute export like most other exportable items.
The government has imposed ban on export of low-quality raw jute. The official order in this regard, issued on January 18, mentioned of banning two types of raw jute. These are un-cut Bangla Tossa Rejection (BTR) and Bangla White Rejection (BWR). Thus, exports of graded or good quality raw jute will continue.
The jute ministry didn't mention any reason for imposing the ban. But different news reports quoting the ministry officials said that the decision had been taken to retain the reputation of the country's jute in global market. The reports also added that in many cases inferior quality jute got shipped to various export destinations. As a result, quality of Bangladeshi jute comes under question.
Talking to the FE, some industry insiders argued that the partial ban may be helpful for the local manufactures of jute goods as they need adequate quantity of raw jute. It is, however, not clear whether availability of inferior raw jute would help them. Some others argued that the ban would increase the price of graded raw jute. In that case, export of quality raw jute may decline.
One thing, however, is clear. The partial ban on the export of raw jute has nothing to do with the anti-dumping duty imposed by India on Bangladeshi jute goods. The call for imposing a high tariff on the export of raw jute as a retaliatory measure in this regard is quite misleading. Bangladesh can't impose a high tariff on raw jute while exporting to India only. By trying to do so, the country will not only violate the Most Favoured Nation (MFN) principle of the World Trade Organisation (WTO) but also breach the South Asian Free Trade Area (SAFTA) agreement. Country's businessmen should also be aware of these. They must not demand any measure that goes against international trade rules.
Dealing with the anti-dumping duty is a legal issue. The WTO has clear rules and guidelines in this connection -- no matter how cumbersome and time-consuming those are. Jute good exporters facing anti-dumping duty need to move with legal steps. A few exporters already sought legal review of the decision filing appeal to The Customs, Excise and Service Tax Appellate Tribunal of India (CESTAT). But the appeal was rejected. Nevertheless, some more jute mills are now moving for appeal.
Directorate General of Anti-Dumping and Allied Duties (DGDA) of India found only two jute mills of Bangladesh not dumping jute goods while exporting to India. So, in its final investigation report, the body recommended anti-dumping duties on jute goods produced by around 250 mills. Accordingly, Indian authority imposed the anti-dumping duty ranging from the US $19 to $ 351.72 per tonne. So, any jute goods exporter seeking withdrawal of the duty has to move individually and file a legal petition to the designated body in India. They have to acknowledge the fact that anti-dumping duty has been imposed on individual firms, not on the whole sector.
Nevertheless, many of the jute good exporters have alleged that the government is not doing enough. They also demanded that the government should talk with the Indian government. In reality, there is minimal scope for Bangladesh government to talk with its Indian counterpart on the issue. Limited assistance may, however, be extended through the Bangladesh Tariff Commission (BTC) to those who are moving for legal steps. And for that to happen, the firms need to come up with enough evidence to nullify the allegation of dumping - an elaborate task indeed.
If the appeal is rejected by the CESTAT, there is a scope to move the Supreme Court of India for redressing the issue. If the court verdict doesn't come in favour of jute good exporters, they can then move the Dispute Settlement Body (DSB) of the WTO. Here comes the critical role of the government.
Seeking redress in the WTO is costly and time-consuming. Small exporters are unlikely to bear the burden of high cost unless adequately supported by the government. Again, government's support in this regard depends on the extent of trade interest of the particular product. Big exporters may be ready to bear the cost fully, and so the government may act fast in such case. Being a Least Developed Country (LDC), Bangladesh is also eligible to get support from the Advisory Centre on WTO Law.
So, private jute millers and jute good exporters need to stop demanding higher tariff on raw jute exports to India or banning exports entirely. These are not the ways to seek recourse to thwart anti-dumping duty.
