Sri Lanka races to safeguard Lankan rubber exporters from sudden US filing

State Minister of International Trade Sujeewa Senasinghe (far right) meets rubber exporters on 22 January

Sri Lanka’s apex export facilitator, the Sri Lanka Export Development Board (EDB) stepped in and began working against a countervailing duty petition filed on a class of tires exported from Sri Lanka to the US, filed by the US firm Titan International in early January. 

“I shall immediately enlist other relevant government agencies such as the Treasury and the Central Bank and our embassies in this regard,” said State Minister of International Trade Sujeewa Senasinghe while addressing leading Sri Lankan rubber exporters on 22 January. 

State Minister Senasinghe was speaking at a special rubber exporters meeting held at EDB. The rubber exporters present were both domestic and BOI firms- DSI, Global Rubber Industries (GRI), Lalanka, Herotec GMBH and Loadstar.

Quincy, Illinois-based Titan International Inc (joined by United Steel, Paper, and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, ALF-CIO -USW) filed a countervailing duty petition on pneumatic off-the-road tires from India, China and Sri Lanka with the Department of Commerce and International Trade Commission of the US on 8 January. 

It stated that “imports from China and India are being dumped in the US market, and imports from all three countries are benefitting from government subsidies and the imports are causing material injury to the domestic industry producing OTR tires.” 

Titan International Inc CEO and Chairman Maurice Taylor declared: “In 2007 Titan won antidumping and countervailing duties on OTR tires from China, but over the past few years there have been a number of companies putting wheels into the tires to get around the duties. This has become a large problem because some overseas operators have actually advertised on their websites how to beat duties. So our petitions address tires from China which enter mounted on a wheel or rim. We have also added India and Sri Lanka to this new action. We believe we have strong cases and look forward to the US government conducting investigations.  We urge our government to move expeditiously to investigate the unfair trade practices alleged.”

“Rubber is Sri Lanka’s third largest export. This filing in US affects one of our key markets and we want you to support us in this. Due to our high quality of rubber products, demand for them is growing globally. Sri Lanka is a lead supplier in global solid tyre market. We are now compelled to import rubber for another reason - our export manufacturing is faced with problems as domestic rubber production and supply is weaker than the demand we have. Domestic rubber production that was at 120,000 MT a few years ago has now drastically fallen to 80,000 MT and this volume is insufficient for us to sustain our exports, which is steadily increasing,” said GRI Executive Director Ananda Caldera (also representing Sri Lanka Association of Manufacturers and Exporters of Rubber Products - SLAMERP).

“We also want your help to remove the 15% rubber export tariff when we export to China. Rubber exporters in countries such as Thailand, Indonesia and Malaysia do not face this when they export to China due to regional members but we face it and this makes our rubber uncompetitive in China, the largest rubber consumer. Therefore we request you to take steps to remove this export tax in consultation with other government agencies such as the Treasury and the Central Bank and more importantly, we urge you to expedite the coming Sri Lanka-China FTA which can help our rubber exports greatly,” he added.

 While several leading exports from Sri Lanka use foreign imports in their export production, rubber exports are somewhat different - they pack more than 70% domestic value addition as a result of using rubber harvested within the country. As it has the biggest value addition potential within the country’s export basket, the Sri Lankan rubber sector is considered a wealth creator by many, and some even consider that rubber exports have the potential to surpass the country’s leading export merchandise, apparels. During the last decade, the industry showed a 10% annual growth on average. In 2014, exports of various rubber products from Sri Lanka exceeded $ 1.7 bn.

 “One of EDB’s main roles is to guard you in emergencies such as this and cater to your wellbeing since you as our committed rubber exporters serve the country greatly,” assured the State Minister of International Trade responding to rubber exporters.

“We are pleased about your contribution to Lankan exports making rubber the third export merchandise of the country. Since this filing is not only against Sri Lanka but includes India and China as well, this is a cross national exercise. I stress that the Government’s support for the rubber sector will continue unabated.” Thereafter Minister Senasinghe spoke with EDB officials on the way forward regarding the US filing.

 Sri Lanka’s reputation as a world-leading solid tyre producer continues to remain intact, taking 40% of the $ 2 billion global solid tyre market.