World trade in goods grew 2.6% last year and is projected to grow at 4.1% in the current year, according to World Bank estimates. While the WTO is continuously striving to create a seamless flow of goods and services throughout the globe under a free and fair environment, the protective measures of taxes, licences, duties in the form of normal, anti-dumping and countervailing and other non-tariff barriers are not only shrinking the size of the export market, but frequent trade frictions are assuming alarming proportions in escalating into political crises.
The concept of free and fair trade has undergone changes over the years. Exploring mineral resources only for export purposes has now been replaced by value addition within the country before exports. Developed countries are deprived of importing unprocessed raw materials, mostly from developing countries, at a cheap price for use in their export of finished products.
If value addition of unprocessed raw materials within the country is taking time to materialise for want of entrepreneurs, domestic or foreign, and the government is finding it difficult to arrange funds for the purpose, any attempt to preserve resources in the interim period and not to export is considered anti-competitive.
Being a member of WTO makes the country sacrifice hereditary rights of owning rich minerals and preserving them for its own industrial development. This includes all taxes, levies, licences required, quota imposed on exports of minerals to disincentivise the same.
A host of countries such
as China, India, Russia, Ukraine, Indonesia, Malaysia, South Africa, Thailand, Venezuela, Vietnam, UAE and Kazakhstan are allegedly adopting restrictive anti-competitive measures on export of raw material, much to the aggrievement of advanced countries, where excess capacity in many engineering products, including steel, has made it imperative to export finished products.
Under the circumstances, if any exporter of finished products from developing countries utilises its own raw material as inputs at the
base price, without the export levy or enjoying a discount
of the levy, the importing country under SCM rule of WTO can impose countervailing duties on the imports of finished goods from the developing country and make the exporter pay for the discounts, considered as subsidies, and ultimately make the product uncompetitive in that market.
This is what has happened recently in the review of CVD measures imposed by the US against exports of HR Coils from India and WTO panel finding certain provisions in US