(UTV|COLOMBO) – After a 17 year long pursuit, Sri Lanka has finally enacted two landmark pieces of legislation that significantly advances the country’s standing in global trade. With this move, Sri Lanka also joins the league of WTO members who keenly look to offset possible adverse impacts on their domestic industries from trade liberalization processes.
The Anti-Dumping & Countervailing Duties and Safeguard Measures were passed by the Sri Lankan Parliament on 07th March 2018.
In 27 September 2017, addressing the 26th AGM of Industry Association of Sri Lanka (IASL) in Colombo, the Minister of Industry and Commerce Rishad Bathiudeen announced: “Our industries appear to be worried about impacts of FTAs and dumping. Our government will not enter into such agreements without consulting local industries and I am pleased to say that we are looking at new steps on anti-dumping and my DoCSL officials are studying this. We are planning to present the draft Anti-Dumping Bill to the Parliament.”
The enactment of the two pieces of legislation is a milestone development and an initiative taken by the Department of Commerce of Sri Lanka (DoCSL) of the Ministry of Industry & Commerce (MIC) as a to fulfil the considerable need being felt by the trade and domestic industry to protect themselves against unfair trading practices and unforeseen surges of imports.
Nearly 76% of the present WTO membership has already introduced their domestic legislations at least in one area of contingent trade remedies (Anti-Dumping or Subsidies and Countervailing, or Safeguard Measures).
These two new Bills will empower the Director General of Commerce of the Department of Commerce to initiate investigations relating to unfair business practices under these legislative provisions of Trade Remedy law and effect additional duties, counterveiling duties, safeguard action against imports which enter the country under unfair business practices. A high powered committee consisting of senior officials and ministers of relevant line Ministries would also be involved in the process.
Sri Lanka has been a founder member of the GATT since its interception in 1948 and also become a founder member of the World Trade organization (WTO), which was established on 1st January 1995, by ratifying the Final Act of the Uruguay Round Multilateral Trade negotiations.
The WTO Agreements include, among other things, Three Commercial Defense Agreements namely, the Agreement on implementation of Article VI of the GATT 1994 (Agreement on Anti-Dumping), the Agreement on Subsidies and Countervailing Measures and the Agreement on Safeguards. The Provisions of these Agreements allow WTO member countries to invoke remedial measures against unfair trade practices. The key objective of the first two Agreements is to safeguard domestic industry from ‘Unfair Trade’ practices such as ‘Dumping’ and ‘Subsidization’, while safeguards allows countries to adopt measures to restrict imports, where it is established that imports in large quantities cause ‘Serious Injury’ to the domestic industry. The Agreement on Anti-Dumping defined specific criteria to determine when a product is to be considered as dumped. The Agreements on Anti-Dumping, Subsidies and Countervailing measures provide for countries to levy additional duties over and above its WTO Bound levels on imports of products that are benefiting from unfair trade practices, such as from dumping or subsidization, in order to compensate the effects of such unfair trade practices. The Agreement on safeguards on the other hand, authorizes the importing country to restrict imports for temporary period when imports are taking place in such increased quantities to caused serious injury to the domestic industry that produces like or directly competitive products. Nearly 76% of the present WTO membership has introduced their domestic legislations at least in one area of contingent trade remedies (Anti-Dumping or Subsidies and Countervailing or Safeguard Measures), indicating the significance of the presence of these trade remedies in their respective countries to offset any possible adverse impacts on their domestic industries likely to emerge during the trade liberalization process at all levels, be it at bilateral or regional or multilateral level. Implementation of the provisions of above three WTO Agreements are considered important in the present liberalized trade and economic environment in Sri Lanka, since country’s increased participation in bilateral and regional Free Trade Agreements and Preferential Trade Agreements (FTAs and PTAs), particularly with growing economies such as India, China, Singapore etc.
The three WTO Agreements on Anti-Dumping, Subsidies and Countervailing and Safeguards have same common features since their main objective is to safeguard domestic industry against unfair trade practices and import surges. Therefore, two sets of legislation covering all three aspects of the interconnected legislations have been introduced by Sri Lanka. In terms of constitution of Sri Lanka, the mere ratification of any international or multilateral agreements does not confer the status of a written law and Sri Lanka needs to introduce appropriate domestic legislation for implementation of the provisions of such agreements. The domestic enactment of the three WTO Agreements referred to above is a result of this requirement. Many WTO developed and developing member countries including India, Pakistan, Bangladesh, China, Korea, Brazil, Malaysia, Thailand, Japan, UK and EU have already enacted the required domestic legislation or amended their existing legislations to be in conformity with the provisions of the WTO Agreements. Most importantly India is the major country, which has used maximum of these trade remedial instruments in the world. Since 2001, Ministries relevant for international trade and commerce sectors have worked to draft bills on Anti-Dumping and Countervailing Duties and Safeguard Measures. However, passing the aforesaid legislations in the Parliament was long overdue since 05th May 2001. The Cabinet approval was obtained to present these bills to the Parliament and as a result, these bills were presented to the Parliament in January 2006 for the first time. Thereafter, these two bills haven been discussed by members of Parliament at several consultative committee meetings related to trade, commerce, consumer affairs and market development. During these consultative meetings, members of Parliament suggested several amendments to these two bills. After taking in to account the amendments suggested by Parliament and suggestions & approvals received by President Secretariat, Ministry of National Planning & Economic Affairs, Ministry of Finance, Ministry of Industry & Commerce, Ministry of Justice, Department of Attorney General, the business community and Private sector institutions, new two bills were drafted. The Business community pointed out the necessity to enact such legislation as a remedy to deal with, in particular unfair trade practices, such as dumping and subsidization by certain countries and safeguard the domestic industry from unforeseen surge of imports.
After obtaining necessary approvals from the Cabinet, new two bills were published in the Government Gazette on 9th October 2017 and presented to the Parliament for necessary action. The Attorney General has confirmed that the provisions on Draft Bills are not inconsistent with the Constitution. As a result, new bills on Anti-Dumping and Countervailing Duties and Safeguard Measures have been passed by the Parliament on 07th March 2018.
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