25, September 2016

  1. India initiates dumping probe against

Source: Indian Express

In a notification, DGAD has said it has found sufficient prima facie evidence of dumping of the product from China.

Protecting domestic products:

The move is aimed at protecting domestic players in the sector against cheap imports. The Directorate General of Anti-Dumping and Allied Duties (DGAD), an arm of the Commerce Ministry.

Anti-dumping

If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. The WTO Agreement does not regulate the actions of companies engaged in “dumping”. Its focus is on how governments can or cannot react to dumping — it disciplines anti-dumping actions, and it is often called the “Anti-dumping Agreement”.

Countries start anti-dumping probes to determine whether their domestic industries have been hurt because of a surge in cheap imports.

As a counter measure, they impose duties under the multilateral regime of WTO. The duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producers vis-a-vis foreign producers and exporters.

2.EX YUDH ABHYAS – 2016

Source: PIB

The exercise was the twelfth in the Yudh Abhyas series, which started in the year 2004 under US Army Pacific Partnership Program.

INDIA  AND US:

It strengthens and broadens interoperability and cooperation between the Indian and US armies.

It is the third Indo-US Army exercise at Chaubattia, Uttarakhand and complements number of other exchanges and exercise between the forces.

The exercise provided an ideal platform for the personnel of the two countries to share their experiences on counter insurgency and counter terrorist operations, especially in the mountainous terrain.

3.Pakistan’s MFN tag may stay for now

SOURCE: The Hindu

Revocation will only have ‘symbolic’ impact as current level of bilateral trade is very low.

The Centre is not considering any proposal to withdraw the ‘Most Favoured Nation’ (MFN) status accorded to Pakistan as even without the move the level of bilateral trade is “very low”

Most Favoured Nation:

MFN status is a method of preventing discriminatory treatment among members of an international trading organization. MFN status provides trade equality among partners by ensuring that an importing country will not discriminate against another country’s goods in favor of those from a third.

Concept:

  1. MFN concept is an integral part of the WTO agreements and is among the principles forming the foundation of the multilateral trading system.
  2. As per the WTO, whenever a country brings down a trade barrier or liberalises a sector, “it has to do so for the same goods or services from all its trading partners — whether rich or poor, weak or strong.” However, exceptions allowed to this rule include free trade pacts and special benefits to poor nations.

The MFN status was accorded in 1996 as per India’s commitments as a member of the World Trade Organisation (WTO). According to the MFN principle of the WTO’s General Agreement on Tariffs and Trade (GATT) — to which India is a signatory/contracting party — each of the WTO member countries (including India and Pakistan in this case), should “treat all the other members equally as ‘most-favoured’ trading partners.”

According to the WTO, though the term ‘MFN’ “suggests special treatment, it actually means non-discrimination.” In the wake of the deadly attack on Indian soldiers in Uri, an incident for which India is holding Pakistan responsible, there have been calls in India for tough action against its neighbour, including the revocation of the MFN status.

Trade between South Asian among India Export to Pakistan:

Bilateral trade between the two South Asian neighbours was just $2.6 billion in 2015-16 (of which $2.2 billion constituted India’s exports to Pakistan) — which represented a minuscule 0.4 per cent of India’s overall goods trade worth $643.3 billion in the same year.

Impacts:

Therefore, even if India revokes the MFN status it would only have a “symbolic” impact.

 On the other hand it would hit India’s exports to Pakistan if there are retaliatory actions and it could also result in India losing goodwill in the South Asian region (where it enjoys a trade surplus and is a party to a free trade pact called SAFTA, which also includes Pakistan). The move may also not go down well at the WTO-level.

No bar on WTO  trade dispute restrictions:

After the Uri attack India could consider making use of a ‘security exception’ clause in the GATT to deny the MFN status to Pakistan or bring in certain trade restrictions.

This is because Article 21(b)(iii) of GATT states that :

Nothing in this Agreement shall be construed to prevent any contracting party (including India in this case) from taking any action which it considers necessary for the protection of its essential security interests taken in time of war or other emergency in international relations.

4.CBDT signs five unilateral advance pricing agreements

Source: The Hindu

The Central Board of Direct Taxes (CBDT) has entered into five unilateral Advance Pricing Agreements (APAs) with Indian taxpayers. One of these Agreements has a rollback provision in it.

  1. The five APAs signed pertain to diverse sectors i.e. Information Technology, Sourcing services and Investment advisory services.
  2. With these signings, the total number of APAs entered into by the CBDT has reached 103. These include 4 bilateral APAs and 99 unilateral APAs.

Background:

It helps avoid disputes with the tax authorities over transfer pricing.

 The APA scheme, which was introduced in 2012, tries to provide certainty to taxpayers in transfer pricing by specifying the method of pricing and setting the prices of international transactions in advance.

The APA scheme provides certainty in transfer pricing up to a period of nine years and helps reduce tax disputes. The rollback provisions in APA was introduced in 2014.

Rollback provisions in APAs were introduced in the July 2014 Budget to provide certainty on the pricing of international transactions for 4 years (rollback years) preceding the first year from which APA becomes applicable. With the notification of Rollback rules in March 2015, the taxpayer has been provided the option to choose certainty in transfer pricing matters with the Government for a total of nine years (5 future years and 4 prior years).

 



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