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Safeguards, Anti-Dumping and Countervailing Act 2076 (2019)
This article provides a general overview of the Safeguard, Anti-Dumping and Countervailing Act 2076 (2019) (“SACA”).
SACA, which came into force on Poush 27, 2076 (January 12, 2020), aims to protect domestic industries from material injury or threat of serious material injury caused by unanticipated and unusual surge in import of foreign goods or import of goods at a price lower than normal value or import of subsidized goods into Nepal.
The key provisions of SACA, in summary, are discussed hereunder:
Definitions
The key definitions of the SACA include:
Safeguard Measures
Types for Safeguard Measures
The Government of Nepal (“GON”) is empowered to impose various safeguard measures in the event it is found upon investigation by the Department of Commerce, Supplies and Consumer Protection (“Department”) of the Ministry of Industries, Commerce and Supplies (“Ministry”) that domestic industries have suffered or are likely to suffer serious material injury due to unanticipated and unusual surge in the import of foreign goods, namely:
Duration of Safeguard Measures
Initially, safeguards measures may be imposed for a term not exceeding four years. The GON may further extend the term for additional four years at the recommendation of the Investigating Officer. In addition, the GON may further extend such safeguard measures for an additional two years if it deems necessary to do so. The GON may also impose provisional safeguard measures for a period not extending 200 days in the event it deems necessary to do so.
Inconsistency with WTO’s ASA
Safeguard measures are primarily used against fair-trade as an emergency action for protection of domestic industries. Under Article 7 of Agreement on Safeguard Measures (“ASA”) of the World Trade Organization (“WTO”), States are under an obligation to progressively liberalize such safeguard measures at a regular interval after one year of its imposition. Further, safeguard measures imposed during the extended period should not be more restrictive than the initial period. SACA provides that safeguard measures shall be reviewed at a period prescribed in the Regulation. Nevertheless, contrary to ASA, SACA neither requires such measures to be progressive liberal nor does it address that such measures should not be more restrictive than the initial period.
Anti-Dumping Duties
Prohibition on Dumping
Dumping is prohibited under SACA. The GON is empowered to impose anti-dumping duties in addition to prevailing custom duties in case in the investigation by the Ministry, it is found that goods under consideration are being exported to Nepal at a price lower than its normal value thereby causing material injury or threat of serious injury to domestic industries.
Duration
Initially, anti-dumping duties may be imposed for a term not exceeding five years. The GON may further extend the term for additional five years at the recommendation of the Investigating Officer. The GON, in the event an affirmative determination on dumping is made in the preliminary report, may also impose provisional anti-dumping duties for a term not exceeding six months, in case such measure is requested by domestic industries or 120 days in all other cases.
Countervailing Duties
Subsidized Goods
Goods, which have received grants or other forms of concessions from government of exporting country or government owned financial or other organizations or agencies, are regarded as subsidized goods, in particular, those goods:
The GON is empowered to impose countervailing duties in case upon the investigation by the Ministry, it is found that subsidized goods are imported in a manner causing serious material injury or threat of such injury to domestic industries.
Duration
Initially, countervailing duties may be imposed for a term not exceeding five years. The GON may further extend the term for additional five years at the recommendation of the Investigating Officer. Further, the GON, in the event an affirmative determination on the import of subsidized goods is made in the preliminary report, may impose provisional countervailing duties for a term not exceeding 120 days.
Inconsistency with WTO’s ASCM
WTO’s Agreement on Subsidies and Countervailing Measures (“ASCM”) provides that only specific subsidy may be subjected to countervailing measures. Under ASCM, four types of ‘specificity’ are recognized, namely, enterprise specificity, industrial specificity, regional specificity, and prohibited subsidies. In contrast, SACA does not require subsidies to be specific for countervailing duties to be imposed.
Investigation
The Ministry may initiate investigation through the Department for imposition of safeguard measures, whereas, investigation for imposition of anti-dumping or countervailing duties may be initiated upon an application filed by domestic industries representing at least 25 percent of the total domestic production of similar or identical goods. Such application must be seconded by domestic industries representing at least 50 percent of the total domestic production of the similar or identical goods.
Investigation Report
The Investigating Officer shall submit the final investigation report to the Department generally within one year from the date of initiation of investigation. The report shall then be forwarded to the Ministry for imposition of safeguard measures or anti-dumping or countervailing duties.
Duties Retrospectively
The GON may impose anti-dumping or countervailing duties retrospectively in following situations:
Nevertheless, such retrospective period shall not go beyond 90 days from the date of issuance of the notification imposing anti-dumping or countervailing duties.
Appeal
A person aggrieved by the decision of the Customs Office imposing safeguard measures, anti-dumping or countervailing duties, whether provisional or final, may file an appeal before the concerned High Court within 35 days from the date of the decision.
Conclusion
This is the first instance that a comprehensive legislation on contingency trade remedy is promulgated in Nepal. Several representatives of the GON, industrial federations, etc. have praised the GON’s effort in enforcement of SACA aiming to protect Nepali industries from import of foreign substandard goods. The enactment of SACA is seen to be a positive step towards protecting domestic industries from unfair trade practices of the foreign exporters, in reality, it should not be used as a weapon to safeguard incompetent national industries. Further, several provisions of SACA are inconsistent to WTO’s ASA and ASCM and lacks clarity, which need to be addressed in future.