SAFEGUARD MEASURES (QUANTITATIVE RESTRICTIONS) RULES, 2012 – AN OVERVIEW.

[Mr. M. GOVINDARAJAN]

                        Chapter IIIA of Foreign Trade (Development and Regulation) Act 1992 deals with the power of Central Government to impose quantitative restrictions.  Quantitative restrictions means any specific limit on quantity of goods imposed as a safeguard measure under the Act.  No such quantitative restrictions shall be imposed on an article originating from a developing country so long as the share of imports of that article from that country does not exceed 3% or where that article originates from more than one developing countries, then, so long as the aggregate of the imports from all such countries taken together does not exceed 9% of the total imports of that article into India.  The quantitative restrictions so imposed shall, unless revoked earlier, cease to have effect on the expiry of four years from the date of such imposition. If the Central Government is of the opinion that the domestic industry has taken measures to adjust to such injury or threat thereof and it is necessary that the quantitative restrictions should continue to be imposed to prevent such injury or threat and to facilitate the adjustments, it may extend the said period beyond four years.  In no case the quantitative restrictions shall continue to be imposed beyond a period of ten years from the date on which such restrictions.

            By virtue of powers conferred on by Section 9A (3) of Foreign Trade (Development and Regulation) Act, 1992 the Central Government made the ‘Safeguard Measures (Quantitative Restrictions) Rules, 2012.

INTERESTED PARTY:

                        For the purpose of this Rules, we have to know the definition of the term ‘interested party’.  Rule 2(d) defines the terms ‘interested party’ which includes-

• an exporter or foreign producer or the importer of goods or a trade or business association, majority of the members of which are producers, exporters or importers of such goods;
• the Government of the exporting country; and
• a producer of the like goods or directly competitive goods in India or  a trade or business association, a majority of members of which produce or trade the like goods or directly competitive goods in India.

AUTHORISED OFFICER:

                        The Central Government shall, by Notification in the Official Gazette, designate an Officer not below the rank of Additional Director General of Foreign Trade as Authorised Officer-

• to investigate the existence of serious injury or threat of serious injury to domestic industry as a consequence of increased import of goods into India;
• to identify the goods liable for quantitative restrictions as a safeguard measure;
• to submit its findings to the Central Government as to the serious injury or threat of serious injury to domestic industry consequent upon increased import of goods into India from the specified country;
• to recommend-

-          the nature and extent of quantitative restrictions which, if imposed, shall be adequate to remove the serious injury or threat of serious injury to the domestic industry; and

-          the duration of imposition of safeguard quantitative restrictions and where the period so recommended is more than one year, to recommend progressive liberalization adequate to facilitate positive adjustment; and

• to review the need for continuance of the safeguard quantitative restrictions.

PROCEDURE OF INVESTIGATION:

Written Application:

• A written application may be made in the prescribed form by or on behalf of the domestic producer of like goods or directly competitive goods supporting with-

-          the evidence of-

(i)                 increased imports as a result of unforeseen development;

(ii)               serious injury or threat of serious injury to the domestic industry; and

(iii)             a casual link between imports and the alleged serious injury or threat of serious injury;

-          a statement on the efforts being taken, or planned to be taken, or both, to make a positive adjustment to increase in competition due to imports; and

-          a statement mentioning whether an application for the initiation of a safeguard action on the goods under investigation has also been submitted to the Director General of Safeguards, Department of Revenue.

• The Authorised Officer shall, on receipt of application, initiate an investigation to determine the existence of serious injury or threat of serious injury to the domestic injury, caused by the import of goods in such increased quantities, absolute or relative in domestic production;
• The Authorised Officer shall not initiate an investigation unless it examines the accuracy and adequacy of the evidence provided in the application and satisfies himself that there is sufficient evidence regarding-

-          increased imports;

-          serious threat or threat of serious injury; and

-          a casual link between increased imports and alleged serious injury or threat of serious injury;

• The Authorised Officer may initiate an investigation suo motu if it is satisfied with the information received from any source that sufficient evidence exists;

Public Notice:

• The Authorised Officer shall issue a public notice notifying its decision which, inter alia, contain the following information-
  • the name of the exporting countries, the goods involved and the volume of import;
  • the date of initiation of the investigation;
  • a summary statement of the facts on which the allegation of serious injury or threat of serious injury is based;
  • reasons for initiation of the investigation;
  • the address to which the representations by interested parties should be directed; and
  • the time limits allowed to interested parties for making their views known.
• A copy of the above said public notice shall be sent to the Central Government in the Ministry of Commerce and Industry and other Ministries concerned, known exporters of the goods, the Governments of the exporting countries concerned and other interested parties;
• A copy of the application filed before the Authorised Officer for initiation of an investigation shall be provided to-

-          The known exporters, or the concerned trade associations;

-          The Government of the exporting countries; and

-          The Central Government in the Ministry of Commerce and Industry.

• A copy of the application shall be made available to any other interested person upon request in writing;
• The Authorised Officer may issue a notice calling for any information in such form as may be specified in the notice from the exporters, foreign producers and governments of exporting countries and such information shall be furnished by such persons and governments in writing within 30 days from the date of receipt of notice or within such extended period as the Authorised Officer may allow on sufficient cause being shown;
• The Authorised Officer shall provide opportunity to the industrial user of the goods under investigation and to representative consumer organizations in cases where the goods is commonly sold at retail level to furnish information which is relevant to the investigation including inter alia, their views if imposition of safeguard quantitative restrictions is in public interest or not;
• The Authorised Officer may allow an interested party or its representative to present the information orally but such oral submission shall be taken into consideration by the Authorised Officer only when it is subsequently submitted in writing;
• The Authorised Officer shall make available the evidence presented to it by one interested party to all other interested parties in the investigation;
• In case where an interested party refuses access to or otherwise does not provide necessary information within a reasonable period or significantly impedes the investigation, the Authorised Officer may record its findings on the basis of the facts available and make such recommendations to the Central Government as it deems fit under such circumstances.

Determination:

• The Authorised Officer shall determine serious injury or threat of serious injury to the domestic industry taking into account, inter alia, the following principles, namely:-

-          The Authorised Officer shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that industry, in particular, the rate and amount of the increase in imports of the goods concerned in absolute and relative items, the share of the domestic market taken by increased imports, changes in the level of sales, production, productivity, capacity utilisation, profits and losses, and employment, and

-          The determination shall not be made unless the investigation demonstrates on the basis of objective evidence, the existence of the casual link between increased imports of the goods concerned and serious injury or threat thereof;

-          When factors other than increased imports are causing injury to the domestic industry at the same time, the injury shall not be attributed to increased imports and in such cases, the Authorised Officer may refer the complaint to the authority for anti-dumping or countervailing duty investigation, as appropriate.

Final Findings:

• The Authorised Officer shall, within 8 months from the date of initiation of an investigation or within such extended period as the Central Government may allow, determine whether, as a result of unforeseen developments the increased imports of the goods under investigation has caused or threatened to cause serious injury to the domestic industry, and a casual link exists between the increased imports and serious injury or threat of serious injury and recommend-

-          the extent and nature of quantitative restrictions which, if imposed, would be adequate to prevent or remedy ‘serious injury’ and to facilitate positive adjustment, as the case may be;

-          the extent of quantitative restrictions so that the quantity of imports is not reduced to the quantity of imports below the level of a recent period which shall be the average of import in the last three representative years for which statistics are available and justification if a different level is necessary to prevent or remedy serious injury;

-          the quota to be allocated among the supplying countries, and the allocation of shares in the quota for such specified countries, which have a substantial interest in supplying the goods;

-          the duration of imposition of quantitative restrictions and where the duration of imposition of quantitative restrictions is more than one year, the progressive liberalisation adequate to  facilitate positive adjustment.

• The final findings if affirmative shall contain all information on the matter of facts and law and reasons which have led to the conclusion;
• The Authorised Officer shall issue a public notice recording his final findings;
• The Authorised Officer shall send a copy of the public notice regarding his final findings to the Central Government in the Ministry of Commerce and Industry and a copy thereof to the interest parties.

IMPOSITION OF SAFEGUARD QUANTITATIVE RESTRICTIONS:

• The Central Government may based on the recommendations of the Authorised Officer impose upon importation into India of the goods covered under the final determination, a safeguard quantitative restrictions not exceeding the amount or quantity which has been found adequate to prevent or remedy serious injury and to facilitate adjustment;
• Any safeguard quantitative restrictions imposed on goods shall be applied on a non-discriminatory basis to all imports of the goods irrespective of the source;
• The safeguard quantitative restrictions levied shall take effect from the date of publication of the notification in the official gazette, imposing such quantitative restrictions;
• The safeguard quantitative restrictions imposed shall be for such period of time as may be necessary to prevent or remedy serious injury and to facilitate adjustment;
• If the duration exceeds one year, the restriction shall be progressively liberalized at regular intervals during the period of its imposition;

REVIEW: 

                        The Authorised Officer shall, from time to time, review the need for continued imposition of the safeguard quantitative restrictions and shall, if it is satisfied on the basis of information received that-

• Safeguard quantitative restrictions is necessary to prevent or remedy serious injury and there is evidence that the industry is adjusting positively, it may recommend to the Central Government for the continued imposition of quantitative restrictions;
• There is no justification for the continued imposition of such restriction recommend to the Central Government for its withdrawal;
• Where the period of imposition of safeguard quantitative restrictions exceeds three years, the Authorised Officer shall review the situation not later than the midterm of such imposition, and, if appropriate, recommend for withdrawal of such safeguard quantitative restrictions or for the increase of the liberalization of quantitative restrictions.
• Any review shall be concluded within 8 months from the date of initiation of such review or within such period as the Central Government may allow.