Stringent laws against dumping of foreign products underway

The House of Representatives will on resumption from the Christmas and New Year recess, conduct public hearing on the bill which seeks to protect indigenous producers and industries from going into extinction due to unfair competition by foreign makers of similar products.

The bill titled: “Anti-dumping legislation and countervailing measures bill,” passed through second reading on the 10th of December 2015, was referred to the House Committee on Commerce chaired by Sylvester Ogbaga (PDP-Ebonyi) for further legislative action.

Recall that the Senate and House of Representatives have passed several resolutions to halt the indiscriminate use and abuse of waivers on importation of rice, palm oil, steel, vegetable, energy equipment and cement, among others, granted by previous administrations.

Abdullahi Faruk, sponsor of the bill, expressed concern over the difficult business environment in which the industries operate due to stiff competition from foreign companies and decried the indiscriminate granting of subsidy and tax holidays by the Federal Government.

Faruk, a three-time member of the House of Representatives, argued that “the root cause of the artificially low price is what differentiates anti-dumping and countervailing duties. Antidumping duties are for combating ‘dumping’, which means that an exporter is setting prices at such a low point, that they are intentionally losing money, in order to harm the domestic producers of the importing country.

“It is a predatory pricing model, where the exporter prices its goods below production costs or below what they sell in their home market. Countervailing duties seek to counteract low prices that are a result of subsidies.

“Governments often offer all sorts of subsidies on exports in the form of tax breaks and credits. Because of these subsidies, exporters are able to offer lower prices than domestic producers in the importing country. Countervailing duties level the playing field and negate the advantage that exporters get from subsidies,” he noted.

Faruk (APC-Kebbi) who emphasised the need for imposition of anti-dumping duties, explained that duties would help in “combating dumping which
means an exporter is setting prices at such a low point, that they are intentionally losing money in order to harm the domestic producers
of the importing country.

“It is a predatory pricing model where the exporter prices its goods below production costs or below what they sell in their home market.”

According to him, the bill when passed into law will regulate and control products manufactured outside the country, imported and sold at ridiculously low prices, in order to stifle competition of rival industries in the host country, which ultimately results in discouraging local industries already existing in the country.

Part II of the bill also seeks to set up a Committee which shall advise the minister on all matters concerning anti-dumping and countervailing measures and to conduct investigation, while Part IV contains the provisions regarding the determination of injury upon examination of volume of dumped or subsidised imports and their effect on internal production and price.

Under the proposal, the committee is empowered to assess the effects of such imports and its cuasal link.

Clause 11(2) provides that where the Committee upon investigation conducted in accordance of dumping with this Act, finds that the investigated product is introduced into the Nigerian market at a price below its normal value, the committee shall conclude that such product is dumped into the country’s market.

The bill seeks to provide antidumping and countervailing remedies in Nigeria which shall be used to offset the impact of injurious subsidies and provide safe landing to domestic industries, producers of like products or those producers whose collective output of the products constitutes a major proportion of the total domestic production of those producers, except that where producers are related to the exporters or importers or are themselves importers of the allegedly dumped products.

Faruk, who solicited for the support of other members of the House, also emphasised the need for the Federal Ministry of Trade and Investment to establish a “Trade Remedy Unit’, comprising of lawyers and economists, to enable  Nigeria smoothen the operation of the World Trade Organisation (WTO) law and practice by advising its delegation during meetings and  negotiations, as well as help in monitoring trade practices, such as dumping and subsidisation.