Wednesday, January 12, 2011

Anti-Dumping Issues with India Rekindled

As the Sultanate continues to further diversify the national economy beyond oil and gas, Omani businesses are discovering that their export success depends not just on their ability to deliver quality products, but also on their ability to navigate the import laws of the foreign countries in which they seek to sell.

As reported recently in the Omani press, India has again imposed anti-dumping duties on imports of polypropylene from Oman. This rekindles an issue that has flared up from time to time over the past several years, as India has imposed these duties on Oman, Saudi Arabia and other polypropylene-producing nations.

Anti-dumping duties, such as India’s, are import taxes that are intended to raise the price of imported goods being sold at below-market costs up to the true market cost of the goods. The premise for anti-dumping laws and duties is that even nations committed to free international trade have the right to protect their domestic industries against foreign sellers that are willing to sell goods at a below-cost basis (ie, “dumping” the goods). There are a variety of reasons why some exporters may be willing to sell their goods at cut-rate prices or even below cost: they may be attempting to build their market share or drive competitors out of business; alternatively, they may be receiving subsidies from their home country governments.

The argument stated above is, in any case, the theoretical economic foundation for anti-dumping duties. Nations also may impose anti-dumping duties to protect the comfortable monopolistic or oligopolistic positions of domestic firms that are well-connected with the nation’s political establishment. In practice, many anti-dumping duties likely involve a mix of economic and political considerations. As Oman’s delegation of government and trade officials heads to India to attempt to resolve this issue, it should provide an opportunity for Omani diplomatic prowess to shine.