THE TALE OF GOLDEN FIBRE : Jute industry and trade remedies

By Hansa Sinha

India recently has initiated anti dumping investigations against imports of Jute products from Bangladesh and Nepal. India, Bangladesh and Nepal all figure in the top five jute producing countries of the world. This is probably the first time India has initiated investigations with regard to this product against Bangladesh. Read the initiation notification here.

There are few but vital involvements of Jute Industry as far as trade remedies and patent offices are concerned. Let us have a cursory look at these developments. The history may contain some hints for the future solutions.

India’s Jute has been subjected to anti dumping investigations as well. Brazil had imposed duties on Jute from India in the 90’s. The subsequent investigations also targeted Bangladesh. The Jute Manufacturers Development Council (JMDC) fought extensively for years to remove the anti dumping duties. At first the India proved that the Brazilian authorities had in fact relied on a couple of forged invoices from a non-existent Indian company by the name of DADJ Bag Manufacturing Co. These invoices reflected high value of domestic trading which proved dumping. A criminal investigation was also initiated by Brazilian Authorities but the same got lost somewhere in the way. Indian government again made efforts through two high powered delegations under the Secretary, Textiles in 1999 and by Hon’ble Minister of Textiles in 2000. In addition to this JMDC’s two review petitions also did not succeed. In 2003, the Brazilian Authorities initiated the second sunset review for again continuing or re imposing the duties on Jute products from India. That is when JMDC aggressively pursued the matter by engaging Mr. Krishnan Venugopal, Senior Advocate, Supreme Court of India and Mr. A K Gupta of TPM Consultants Pvt. Ltd, New Delhi. The Indian consulate in Sao Paulo also came handy in the situation. They were able to prove that the prices of Indian Jute companies/exporters were higher and there was no need for anti dumping duties. With the duties withdrawn it was lauded as a big achievement at that time for the Indian Jute Industry. Read more here.

India had also pursued the matter at WTO. At WTO any dispute settlement starts by requesting consultations. In 2001, among the various efforts being made by India, requesting consultations against Brazil for the Jute products was one too. This was a little surprising. As India and Brazil are part of BRICS they have an informal agreement to not request consultations against each other. In fact in the history of WTO dispute settlement this is one of the only two instances of registered cases at WTO between BRICS countries. Probably that is the reason why officially the case is still under consultations. We now know that it was resolved by bilateral measures.

All is well that ends well? Not too sure as subsequently in 2007 Brazil again initiated anti dumping investigations against India and Bangladesh for dumping of jute products. This has been continuously supported by subsequent sunset review investigations as well. With the most recent sunset review investigation being in September, 2015, it is less likely that the duties will die out any time soon.

Brazil is one of the major producers of cocoa and coffee worldwide. It therefore requires a huge quantity of foodgrade jute bags for the packaging of its products. As the domestic jute industry is limited, it has no option but to exceedingly depend on the imports.

Around the time when India won the case against Bangladesh, there was another kind of victory that India celebrated related to Jute. This was when India won the European Patent Case on Waste Management Treatment using Hessian (cloth made from Jute). A British company named Geohess received European Patent for its waste treatment using hessian cloth which was cited as their invention. Initially they got the patent and charged 60% more and royalty. JMDC along with Indian Jute Industries Research Association and IJMA challenged this. Geohess’s claimed novelty and inventive merits in the use of Hessian, a variety of jute cloth. Geohess argued that for a skilled person hessian is a clearly defined term and such a person would not simply replace a canvas by hessian. However, the appeal was dismissed and it was cited that cheap jute sacking cloth and hessian are synonyms and obvious to a skilled person who may not know of the claimed invention. This decision was a respite for the growers of jute in India as their exports to EU at the time were free from any dumping duty related impact. Read the entire decision here.

The recent anti dumping investigation initiated by India against Bangladesh and Nepal will unfold over the next 12 to 18 months. The approach of Brazil and India should be different as India is one of the major producers of this golden fibre. After patents and anti dumping, countervailing is also a plausible option. Especially when Pakistan has in the past invoked the measure in view of the cash subsidy given by Bangladesh to Jute producers. IJMA has also urged New Delhi to take steps in this regard.

Thank you for reading.

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