India starts probe into alleged exports subsidisation of rubber by South Korea

The government has initiated a probe into alleged exports subsidization on a particular kind of rubber by South Korea, which is impacting the domestic industry, according to a notification. The commerce ministry's investigation arm Directorate General of Trade Remedies (DGTR) has started the probe to see whether the subsidy programs of South Korea for exports of 'Styrene Butadiene Rubber' is impacting the domestic industry.

Indian Synthetic Rubber and Reliance Industries Ltd have filed an application before the directorate alleging subsidization of this rubber from Korea, DGTR has said. They have requested for initiation of an anti-subsidy investigation for levy of countervailing duties on the imports, originating in or exported from South Korea.

According to the DGTR notification, it has found evidence of the existence of "countervailable subsidies" on the production and export of the goods. Such subsidized imports are causing material injury to the domestic industry and there is a further threat of injury to them.

In view of this, "the authority hereby initiates an investigation into the alleged subsidization and consequent material injury and threat of injury to the domestic industry," it said. The directorate will determine the existence, degree, and effect of alleged subsidization.

If it will be established that subsidies by Korea are impacting the domestic industry, the DGTR would recommend the amount of countervailing duty, which if levied, would be adequate to remove the injury to the domestic industry. The product finds its primary usage in the production of tires and tire retread compounds. The other areas of usage include houseware mats, shoe sole and heels, chewing gum, food container sealants, conveyor belts, adhesives, automobiles mats, brake and clutch pads, and rubber toys.

The petitioners have alleged that the producers/exporters of the goods in Korea have benefitted from the actionable subsidies provided at various levels by their government, including the government of different provinces and municipalities in which producers/exporters are located.

The period of investigation is from April 2018 to March 2019 (12 months). However, the investigation will cover the data of 2015-18. Under the global trade rules of the World Trade Organization (WTO), a member country is allowed to impose anti-subsidy to countervailing duty if a product is subsidized by the government of its trading partner.

These duties are trade remedies to protect the domestic industry. Subsidy on a product makes it competitive in price terms in other markets. Countries provide this to boost their exports. India and South Korea are members of this Geneva-based multilateral organization.

Korea is a major trading partner of India. Both have also implemented a comprehensive free trade agreement since 2010. Under the pact, both the countries have eliminated duties on several goods and relaxed norms to promote investments and trade in services.

The bilateral trade between the countries has increased to USD 21.5 billion in 2018-19 from USD 21 billion in the previous fiscal. The trade balance is highly in favor of Korea.