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Industry and Commerce Minister Rishad Bathiudeen
After a 17-year-long pursuit, Sri Lanka has finally enacted two landmark pieces of legislation that significantly advance the country’s standing in global trade.
With this move, Sri Lanka also joins the league of WTO members which keenly looks to offset the possible adverse impact on their domestic industries from trade liberalisation processes.
The Anti-Dumping and Countervailing Duties and Safeguard Measures were passed by Parliament on 7 March.
Addressing the 26th Annual General Meeting of the Industry Association of Sri Lanka (IASL) on 27 September 2017 in Colombo, Industry and Commerce Minister Rishad Bathiudeen announced: “Our industries appear to be worried about the 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 (Department of Commerce of Sri Lanka) officials are studying this. We are planning to present the draft Anti-Dumping Bill to 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 of the Ministry of Industry and Commerce 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.
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 the legislative provisions of the Trade Remedy Law and effect additional duties, countervailing 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 will also be involved in the process.
Sri Lanka has been a founder member of the GATT since its inception in 1948 and also became a founder member of the World Trade organization (WTO), which was established on 1 January 1995 by ratifying the Final Act of the Uruguay Round Multilateral Trade negotiations.
The WTO agreements include 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 subsidisation, while safeguards allow 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 dumped. The agreements on anti-dumping, subsidies and countervailing measures provide for countries to levy additional duties over and above their WTO Bound levels on imports of products that are benefiting from unfair trade practices, such as from dumping or subsidisation, in order to compensate the effects of such unfair trade practices.
The agreement on safeguards on the other hand authorises the importing country to restrict imports for a 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 in at least 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 liberalisation process at all levels, be it at a bilateral, regional or multilateral level.
Implementation of the provisions of the above three WTO agreements is considered important in the present liberalised trade and economic environment in Sri Lanka, since the country’s increased participation in bilateral and regional Free Trade Agreements and Preferential Trade Agreements, particularly with growing economies such as India, China, Singapore, etc.
The three WTO agreements on anti-dumping, subsidies and countervailing and safeguards have the 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 the 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 is a result of this requirement. Many WTO developed and developing member countries, including India, Pakistan, Bangladesh, China, Korea, Brazil, Malaysia, Thailand, Japan, the UK and the EU, have already enacted the required domestic legislation or amended their existing legislations to be in conformity with the provisions of the WTO agreements. India is the country which has used the most of these trade remedial instruments.
Since 2001 ministries relevant to the international trade and commerce sectors have worked to draft bills on anti-dumping and countervailing duties and safeguard measures. However, the legislation has been due to be passed in Parliament since 5 May 2001.
Cabinet approval was obtained to present these bills to Parliament and as a result they were presented to 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 into account the amendments suggested by Parliament and suggestions and approvals received by the Presidential Secretariat, Ministry of National Planning and Economic Affairs, Ministry of Finance, Ministry of Industry and Commerce, Ministry of Justice, Department of the Attorney General, the business community and private sector institutions, two new bills were drafted.
The business community pointed out the necessity to enact such legislation as a remedy to particularly deal with unfair trade practices such as dumping and subsidisation by certain countries and safeguard the domestic industry from an unforeseen surge of imports.
After obtaining necessary approval from the Cabinet, two new bills were published in the Government Gazette on 9 October 2017 and presented in Parliament for necessary action. The Attorney General had confirmed that the provisions of the draft bills were not inconsistent with the Constitution. As a result, new bills on anti-dumping and countervailing duties and safeguard measures were passed by Parliament on 7 March.
