Shielding Local Industries: Antidumping Duties on Polyurethane Raw Materials

Introduction

Antidumping duties are trade protection measures imposed by a country to shield its domestic industry from foreign companies selling products at unfairly low prices. These duties play a crucial role in maintaining fair competition and ensuring survival of domestic industries by mitigating the adverse effects of dumping. Dumping occurs when a foreign producer sells goods in an importing country at a price lower than their normal value, often below the cost of production or the price in the producer's domestic market.

Impact on Polyurethane (PU) Raw Materials

Polyurethane (PU) raw materials, including polyols and diisocyanates, are widely traded across borders, making them subject to price fluctuations and supply chain dynamics that can impact domestic industries. With measures like anti-dumping duties, the Indian government aim to protect domestic industries from excessive competition from foreign products. Anti-dumping measures may not solve the issue. They may temporarily ease pressure on India's domestic industry, but they could lead to trade disputes and market instability.

From 1995 to 2023, China faced 1,614 anti-dumping cases globally. India led with 298 cases, surpassing big trade partners like the U.S. and EU. Chemical raw materials & products, pharmaceuticals, and non-metallic products are India's top three Chinese export anti-dumping targets.

 Some of the anti-dumping strategies are as follows:

• In 2023, the new antidumping and countervailing duty petitions filed by U.S. mattress producers against imports from 13 countries. These petitions target adult and youth mattresses, including innerspring, non-innerspring, and hybrid mattresses, but exclude futon mattresses, airbeds, waterbeds, and certain multifunctional furniture. Significant dumping margins are alleged, such as 321% for Bosnia and Herzegovina and 915% for Kosovo. The highest alleged margin is 1,094% for Slovenia. Other notable margins include 915% for Kosovo and 738% for Taiwan. These significant margins indicate that imported mattresses from these countries are being sold at unfairly low prices in the U.S. market, prompting domestic producers to seek relief through antidumping and countervailing duty investigations. The U.S. Department of Commerce and the International Trade Commission have initiated investigations, with preliminary determinations expected by early 2024.

• In 2003, India began anti-dumping investigation into polyether polyols from China, South Korea, and Taiwan. In November 2004, India made an affirmative final ruling on this case.

• India's Ministry of Commerce and Industry (MoCI) finalized the anti-dumping review on polyether polyols from China, South Korea, Taiwan, and Brazil in 2009, imposing a minimum price undertaking of USD 2,601/tonne. In August 2014, India initiated a second sunset review investigation on the same case.

• In 2015, India made a review final ruling on polyether polyols originating from China, South Korea, and Taiwan, recommending the withdrawal of anti-dumping measures due to the withdrawal of appeals against the investigation into these products’ origins.

A notable example of the impact of antidumping duties on PU raw materials is the case of Manali Petrochemicals Limited (MPL) in India. MPL, a leading producer of PU raw materials, faced significant challenges due to the dumping of these materials by foreign exporters, primarily from China and Thailand. The investigation was set up followed by a petition from Manali Petrochemicals, the sole manufacturer of polyols in India. Directorate General of Trade Remedies (DGTR) then launched an investigation to determine the extent of dumping, the damage to MPL, and appropriate remedial measures.

In response to these, the DGTR proposed the imposition of antidumping duties on Chinese and Thai flexible slabstock polyol suppliers for a period of five years unless repealed. Imports from Wanhua Chemical would be subject to a duty of $534 per metric tonne, while other Chinese producers would face a duty of $608 per metric tonne. Thai producers would be assessed a duty of $480 per metric tonne, except for GC Polyols, whose products would incur a duty of $470 per metric tonne. These duties were designed to neutralize the dumping margin and restore fair competition in the domestic market.

The imposition of antidumping duties provided much-needed relief to MPL and other domestic producers additionally, it signalled India's commitment to protecting its industries from unfair trade practices, sending a strong message to foreign exporters.

Conclusion

In conclusion, antidumping duties on PU raw materials are vital for safeguarding domestic industries from unfair trade practices. The example of Manali Petrochemicals, India, demonstrates the importance of these measures in protecting local producers from the adverse effects of dumping. By ensuring fair competition, antidumping duties contribute to a healthier global trade environment and the sustained growth of domestic industries.