Sri Lanka has won the first ever revocation of countervailing duty imposed in the United States for a Lankan export, thanks to the continued pursuit of the Department of Commerce of Sri Lanka, Minister of Industry and Commerce Rishad Bathiudeen said.
Praising the officials of the Department of Commerce for their committed work to win this judgement in favor of Sri Lanka, Minister Bathiudeen, upon learning about the decision of the United States Court of International Trade Monday, said the judgement will greatly help the Ministry’s efforts to enhance manufacturing exports, especially rubber products.
“This helps to strengthen our trade with US as well and helps achieve US$3 billion exports to US very soon. We thank the people of US for looking for Sri Lankan products,” Minister Bathiudeen added.
Director General of Commerce of Sri Lanka Ms Sonali Wijeratne agreed that the latest win by Department of Commerce of Sri Lanka strengthens US-Sri Lanka trade. “This is Sri Lanka’s first international victory on countervailing duties especially for a well-known rubber product export.”
The US Court of International Trade, on 11th July 2018 has ruled that the 0.95 percent countervailing duty attributed to the guaranteed price scheme on import of off-road OTR tires from Sri Lanka be removed.
Interestingly, as a result, not only 0.95% duty is out but a larger, 2.18% countervailing duty on the imports of off-the-road (OTR) rubber tires from Sri Lanka to the United States too will be eliminated due to the operation of WTO Agreements once the 0.95% duty is removed.
Sri Lanka’s solid tire exports to US has been on a growing trend from US$ 58.21 million in 2012, US$ 56.15 million in 2013, US$ 50.70 million in 2014, US$ 53.22 million in 2015, US$ 60.38 million in 2016 and further strengthening last year to US$ 69.04 million. Total Lankan exports to US last year was nearly US$ 3 billion while in 2017 it was US$ 2.9 billion, which was an increase from 2016’s US$ 2.8 billion.
Total bilateral trade with US increased by 12% to US$ 3.7 billion last year, from 2016’s US$3.3 billion.
Based on a countervailing duty petition filed by US industry at the US Department of Commerce (USDOC) and US International Trade Commission (USITC) alleging that producers of off-the-road tires in Sri Lanka benefits from subsidies provided by the government and the subsidized imports cause injury to the domestic rubber industry of the United States, the US Department of Commerce initiated a subsidies and countervailing duty (CVD) investigation aiming at imposition of countervailing duty on imports of OTR tires from Sri Lanka to the United States.
The USDOC has used the subsidy programs of “exemptions on fiscal levies on capital and intermediate goods”, “Tax Concessions for Exporters of non-traditional products”, and “guaranteed price scheme for rubber given to rubber small holders by the Sri Lankan government” to calculate the countervailing duty margin.
After the investigations, the US Department of Commerce on January 4, 2017, announced its affirmative final determinations in the countervailing duty (CVD) investigations and imposed 2.18 per cent countervailing duty on imports of OTR tires from Sri Lanka. This margin consists of 0.41% duty on ‘Exemptions on fiscal levies on capital and intermediate goods’, 0.95% on ‘Guaranteed price scheme for rubber given to rubber small holders’ and 0.82% duty on ‘Tax Concessions for Exporters of non-traditional products’.
On behalf of the Sri Lanka government, the Department of Commerce of Sri Lanka, in collaboration with the Attorney General’s Department and Camso Loadstar (the affected exporter in Sri Lanka), made a number of submissions to the US Department of Commerce and the International Trade Commission in the investigation stage rebutting the petitioner’s claims.
After imposition of the countervailing duty of 2.18 percent, the Department of Commerce of Sri Lanka, with the assistance of other line agencies and the local company, took necessary measures to challenge the decision by the USDOC at the US Court of International Trade.
As a result of effective interventions by the Department of Commerce in the appeal procedures, the US Court of International Trade ruled that the 0.95 percent countervailing duty attributed to the guaranteed price scheme be removed.
With this removal, the overall countervailing duty rate on import of OTR tires from Sri Lanka to the US imposed by the USDOC has now fallen down below the minimum threshold of 2 percent to impose countervailing duty on developing countries as specified in the WTO Agreements.
Therefore, the imposition of 2.18 percent countervailing duty on export of OTR Tires from Sri Lanka to the USA shall now be terminated and not be applied anymore.