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Product-specific safeguard duty on Chinese goods in offing

K.R. Srivats

The Finance Ministry has now outlined the manner in which articles liable for safeguard duty may be identified and the manner in which the existence of "market disruption'' to domestic industry be investigated as a consequence of increased imports from China.

NEW DELHI, June 13

THE Central Government has come a step closer towards putting in place a comprehensive framework for imposing transitional product-specific safeguard duty on imports from China. A transitional product-specific safeguard duty would generally be effective for a four-year time period.

The Finance Ministry has now outlined the manner in which articles liable for safeguard duty may be identified and also the manner in which the existence of "market disruption'' or "threat of market disruption'' to domestic industry be investigated as a consequence of increased imports of an article from China.

The Customs Tariff (Transitional Product Specific Safeguard Duty Rules) 2002, formulated and issued by the Revenue Department, specifies that the Centre may appoint a Director-General (Specific Safeguard) to investigate the existence of "market disruption'' or "threat of market disruption'' to domestic industry as a consequence of increased import of an article into India. The Director-General would be an officer not below the rank of a Joint Secretary, official sources said.

Besides identifying the article liable for safeguard duty, the Director-General (Specific Safeguard) has been charged with the duty of recommending the amount of duty which if levied would be adequate to remove the "market disruption" or "threat of market disruption".

There has to be a written complaint from the domestic producer of like article or directly competitive article for initiation of investigation to determine the existence of "market disruption'' or "threat of market disruption''.

The Commerce Ministry has already indicated that the Government may impose "transitional textile safeguard duty'' to tackle the cheap imports of certain textiles and clothing products from China or even a sudden surge of these imports into India.

Industry sources pointed out that the Customs Tariff Act already empowers the Central Government to impose transitional product specific safeguard duty on imports from China. "The formulation of rules will help in speeding up the process of imposition of transitional safeguard duty on Chinese articles, especially on textile products," they held.

China had as part of its accession process to the World Trade Organisation (WTO) agreed to the member countries having certain flexibilities for imposition of product-specific transitional safeguards and textile safeguards against imports from China.

The Centre's rules on product-specific transitional safeguard duty stipulates that the determination on whether increased imports have caused "market disruption" or "threat of market disruption" should not be made unless the investigation demonstrates, on the basis of objective evidence, the existence of "causal link" between increased imports of the article and "market disruption" or threat thereof.

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