Another anti-trade action

News: The Union Ministry of Commerce and Industry recently issued a statement that all imports of paper products — from newsprint to letter paper — will require pre-registration. From October 1, according to the new requirements, imports will be subject to a Paper Import Monitoring System, which will require importers to register themselves in a manner similar to systems that have been put into place in the past for steel and coal.

What are the issues with the decision?

There can be little justification for this return to the licence-quota raj in yet another industry. It is yet another step backward for India towards the pre-liberalisation period, especially as the specific justification provided by the ministry is protectionist in nature.

The Ministry statement stated the “move will also go a long way in promoting Make in India and Atmanirbhar in this category”. The misuse of “Make in India”, intended initially to create global competitiveness for Indian industry, continues.

This action from the government comes at a time when global newsprint prices have been increasing sharply. Newsprint prices have more than tripled from the lows in 2020. Domestic prices have risen to match. If the Indian paper industry is failing to use its capacity under these circumstances, then foreign producers can hardly be blamed.

Are the concerns regarding dumping wrt this sector valid?

Dumping is a technical term indicating that imports are being sold in a particular country below their production cost in their place of origin. Has such a determination taken place for the paper industry in recent months?

If the concern is dumping, then the ministry needs to put a targeted, appropriate, anti-dumping duty in place — not a return to import licences.

There is already a 5 per cent Customs duty on imports of newsprint. Is there evidence that this is insufficient to control dumping? 

What is the way forward?

Many mature economies have independent authorities that hold public hearings to hear from producers, importers, and consumers before assessing injuries from imports. The independent board of regulators then vote on their conclusions, with the votes also made public. At the very least, such an institutional framework needs to be put into place in India.

Source: This post is based on the article “Another anti-trade action” published in Business Standard on 30th May 22.

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