International Trade Disputes

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Offline Abu Saleh

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International Trade Disputes
« on: November 15, 2018, 05:32:33 PM »
                                                                                    From Bilateralism to Multilateralism
Since foreign trade is regarded as vehicle of economic growth for developing and LDC countries, Bangladesh has adopted liberalized trade policy in 1980s and free trade boosted momentum during 1990s. Though the country has many success stories in international trade market, nevertheless huge negative trade balance is still a matter of great concern. However, it has always been in deficit over the last years and unfortunately the trade imbalance with India is not only unsatisfactory but also highly frustrating.
Jute is an emerging billionaire domestic industry in Bangladesh. It is such a growing area where she has high potentials of encountering India to minimize negative trade deficit.  In the fiscal year 2015-16, about 29.46% of our total export earnings from India accounted for Jute and Jute Goods. This progress has been stumbled drastically after New Delhi imposed anti-dumping duties from 5-30% over Jute products originated from Bangladesh on 5th January 2017. This measure is causing the destabilization of $ 1 billion jute export market and it led half million of job including growers at stake. According to the latest data of the Export Promotion Bureau, Export earnings from jute and jute goods slipped to $55.81 million in July-December of FY18 from $106.54 million in the same period of FY17.
To combat this trade restrictive measure imposed by our neighboring country, the high official of the government of Bangladesh including primer requested the government of India to rethink the issue of anti-dumping duties on Jute. Two countries engaged in bilateral negotiation to settle the issue but disgracefully that brought nothing for Bangladesh. The Indian counterpart vehemently disregarded the longstanding and deepening bilateral friendly relationship with the motto of safeguarding the interest of their domestic industry closing the door for Bangladeshi jute products. In genuine, India signals that trade interest for them stands over bilateral relationship.
This is not a new trade barrier that Bangladesh is contesting in Indian domestic market. Whenever export from Bangladesh comes in competition with Indian domestic industry, they become adamant to stop the rise of imports from Bangladesh blaming that Bangladeshi products have been dumped in their market causing material injury to the like products of their local industries.
Very recently India has become set to apply anti-dumping duties on fishing nets and hydrogen-peroxide originated from Bangladesh. Last month, the Director General of Anti-Dumping and Allied Duties (DGAD) published final determination report recommending $2.69 anti-dumping duty per kg fishing net produced or exported from Bangladesh in Indian market.
Bangladesh has the long four year failed trade negotiating experience with India from 2001-04, when India for the first time imposed anti-dumping duty on lead acid battery exported from Bangladesh. Initially Bangladesh gave priority over bilateral negotiation to solve the trade dispute amicably, where the country finds itself in a highly unequal position that does not produce a fair outcome. The country lacks adequate legal capacity and skill in trade negotiation since it largely depends upon professional aptitude of parties. The statement of former US ambassador Dan W Mozena after the GSP suspension also urged the need of shifting approach from bilateralism to multilateralism. He stated that “if I were a Bangladeshi I would have made strong legal arguments in trade negotiations and this is not a rocket science rather it is simple and you have experts and money and you have to have mechanism to deal with your problems”.
In spite of adopting all possible bilateral efforts to solve trade disputes with India and USA, the country abundantly failed therefore, Bangladesh needs to focus more on WTO legal issues and she should refer trade disputes before WTO multilateral forums where experts and observers from other countries get involved and that tilt the balance towards a more level playing field. Though the country took the advantage of WTO multilateralism in 2004 compelling India to withdraw anti-dumping duties on batteries, nonetheless she seems to be more reluctant in litigating trade issues before WTO forum.
Two possible factors could possibly prevent Bangladesh from not preferring multilateralism over bilateral negotiation. First, the culture on non-litigiousness with the mindset that litigation causes irreparable harm to the bilateral relationship and it is a kind of unfriendly behavior and damaging of foreign relationship. Second, a political power theory postulates that it is the external considerations of political power that affect a country’s decision on whether or not to escalate a dispute. Proponents suggest that a less powerful counterpart would be slow in bringing a dispute against more powerful counterpart for the fear that the defendant may consider such a move to be hostile, attracting retaliation through trade, foreign aid or other areas of international relations (Andrew Guzman and Beth Simmons).
These theories and myths were not strong enough to prevent South Korea from bringing US before WTO for more than ten times though the country relies heavily on USA for its security arrangements. Likewise, even though the US military is a major contributor to Japan’s military as well, the latter has not been afraid of USA to escalate disputes before multilateral forum for about eight times.
Now question arises how many more years Bangladesh will take to shift her approach from negotiation to litigation? Didn’t she learn anything from past failures and also from blatant WTO jurisprudence? Isn’t the high time for Bangladesh to escalate all current trade disputes with neighboring countries before WTO? Let’s make our domestic industries shine globally!!!