India’s recent adoption of trade protectionist measures on mono ethylene glycol (MEG) imports from Kuwait and Saudi Arabia is damaging to its domestic market, the Gulf Petrochemicals and Chemicals Association (GPCA) has warned.
The comments come after India’s Directorate General of Trade Remedies (DGTR) initiated a new anti-dumping investigation into MEG imports from Kuwait, Saudi Arabia, and the United States on June 28, 2021. The investigation – described by GPCA as “unjustified” and in breach of the rules laid by the World Trade Organization – was prompted by an application from two of India’s heavyweight chemical manufacturers.
The news alarmingly comes only a few months after India terminated another anti-dumping investigation concerning imports of MEG originating in or exported from Saudi Arabia (on April 6, 2020), Kuwait, Oman, Singapore, and the United Arab Emirates (on November 20, 2020), after the application filed by one of the two companies was withdrawn following extensive diplomatic and political engagement.
GPCA has called for the immediate termination of the investigation in line with India’s obligations under the WTO Agreements, of which the country is a member.
The association further noted that since the establishment of the WTO in 1995, India has initiated 23 anti-dumping investigations and imposed seven anti-dumping measures against Saudi Arabia and Kuwait. This figure is more than four times the number of investigations initiated, and measures imposed by any other WTO member.
According to a report by India’s Ministry of Chemicals and Fertilizers, India is net short of MEG with current demand of around 2.5 million metric tons (MT).
As this shortfall is expected to continue, GPCA warned India will need to import more MEG to satisfy domestic demand and ensure that prices are sustainable.
The continuous pursual of trade protectionist measures against countries in the Gulf Cooperation Council (GCC), which represent India’s largest chemicals import partner, could not only prove damaging to its domestic market, but also jeopardize exports, thereby creating a bottleneck.
“The new anti-dumping application is utterly unjustified as it is not based on valid legal and factual grounds. It also lacks evidence of MEG imports being dumped from Saudi Arabia and Kuwait,” said GPCA Secretary General Abdulwahab Al-Sadoun.
“The price at which MEG feedstock is imported from the two GCC states is based on market considerations and is in fact not different for MEG that is sold domestically or exported,” he added.
“Furthermore, there was no spike in MEG export volume from the two countries to India during the period of investigation (January 1, 2020 –December 31, 2020). Rather, there was a decline in comparison to the previous year.”
“To state that India’s MEG industry is suffering a material injury would be simply untrue. I can certify with confidence that from the research that GPCA has conducted and the facts on the ground, MEG imports from Kuwait and Saudi Arabia cannot have negatively impacted India’s domestic industry’s performance.”
