The World Trade Organisation has ruled that a cash bond demanded by US Customs for Thai shrimp exporters is illegal.

The WTO's dispute settlement panel handed down the verdict on Friday, ruling against the legality of the customs bond on both Thai and Indian shrimp exporters.

NOTE: The WTO decision can be viewed in full and downloaded at this link

The US imposed the bond requirement after the American shrimping lobby put pressure on the government, claiming that Thai exporters were dumping shrimp. US officials bizarrely compared prices in the United States and Japan, instead of Thailand.

The panel said the customs bond imposed on imports of shrimp from both India and Thailand violates WTO anti-dumping rules as well as the General Agreement on Tariffs and Trade (GATT).

The three-member panel of Michael Cartland, Enie Neri de Ross and Graham Sampson said the application of "enhanced continuous bond requirement (EBR)" on Thai shrimp exports was inconsistent with the rules of anti-dumping agreements.

The report said:

    ... We uphold Thailand's claims that the application of the EBR to subject shrimp from Thailand is inconsistent... We reject the United States' argument that the application of the EBR is justified.

  We further uphold Thailand's claim that the United States acted inconsistently with Article 2.4.2 of the Anti-Dumping Agreement by using zeroing to calculate margins of dumping in respect of the Anti-Dumping Measure.

    ... We therefore recommend that the United States bring its measures into conformity with its obligations under the Anti-Dumping Agreement and the GATT 1994.

Because of the bond, shrimp exporters incurred prohibitive costs on their sales to the US. Exporters said it was an unreasonable means of securing duties.

For almost two years, the US has collected a minimum bond equivalent to 10 per cent of the import duties from other country's exporters, multiplied by the value of imports of shrimp in the proceeding year. The dumping penalty then is subtracted from the sum before it is finally returned - far, far down the line.

Thailand challenged the bond requirement and the WTO formed a panel to investigate and adjudicate.

The US argued to the panel that the bond on shrimp imports from Thailand, India and four other countries was meant to be a "reasonable security" deposit. In 2003, the base year of the penalty, total shrimp exports from the five countries were $2.5 billion - with Thailand the leading trader.

The panel's ruling supposedly requires that the United States must correct its desposit demands, because they conflict with WTO rules.

Thai shrimp exporters are certain to be delighted by the ruling, although it is far from clear when - or even if - the US will actually comply with the decision.

Mar 1, 2008

Source: www.bangkokpost.com