Evasion of anti-dumping duties: $120m investment being harmed by dumped imports, say PFY manufacturers

KARACHI: The local manufacturers of polyester filament yarn (PFY) have said that the investment of 120 million dollars for import substitution being harmed by dumped imports of filament yarn by evasion of anti-dumping duties.

They said that PFY is ranked at number 15 in the top imports of Pakistan in the total imports of $ 70 billion into the country. Pakistan has a domestic manufacturing industry of PFY in which investments are being made for its capacity expansion. The raw material of PFY is also produced locally in Pakistan, which would mean that PFY industry expansion will also promote the upstream domestic industry in Pakistan.

However PFY industry is a classic case, where after finding clear evidence of dumping after a detailed 12 month dumping investigation by National Tariff Commission (NTC), the notification on anti-dumping duties was issued in 2017. But dumping duties were evaded by the importer traders, and the injury to the domestic industry by dumped imports was not mitigated/shielded, retarding the country’s efforts to increase import substitution.

Due to the evasion of the anti-dumping duties on imports of PFY which by now would have accumulated to the tune of around Rs.10 billion remain outstanding from 2017 to date, despite dismissal of the stay petitions and continuous effort by the National Tariff Commission for these overdue duties.

Dumped imports continued to flood the market causing the injury to Domestic PFY Industry. Until June 2021, some protection was provided by the usual 2.0 percent Additional Customs Duty (ACD) and the 2.5 percent RD imposed to provide some support to the domestic industry against dumping. However the same was removed in July 2021 by the government hoping that the importers/traders will stop evading the anti-dumping duties.

Unfortunately the evasion has continued making a mockery of the anti-dumping measures for protection of domestic industry.

They said that the 5.0 percent Regulatory Duty on PFY for a period of two years will provide the necessary safeguard to the domestic PFY industry, till the authorities are able to leverage this to force the evaders to demonstrate effective compliance of paying the notified ADDs levied on PFY supplies from China and Malaysia, considering that all other measures taken in last five years by the authorities have not yielded results.

“While Pakistan’s prime problem is balance of payment deficit due to high level of imports, protection against dumping and penalizing evasion of dumping duties is most essential if the local industry is to expand and replace imports.”

Copyright Business Recorder, 2022