India will start a trade war if it endorses a proposal to slap a fresh round of import duties on Gulf polypropylene producers, the head of an industry trade group has warned. India is mulling a proposal to place new duties on plastic imports from Saudi Arabia and Oman, after its ministry of industry and commerce concluded that the low costs of feedstock in the Gulf gave its petrochemical producers an unfair cost advantage. The 140-member Gulf Petrochemicals and Chemicals Association (GPCA) has accused India of throwing up new barriers against trade and of breaching World Trade Organization (WTO) rules. “It would set a precedent which would have ramifications on the entire export industry from this [Gulf] region. There is no basis for this case and I think that this will effectively lead to a trade war,” said Dr Abdulwahab Al Sadoun, secretary general, GPCA. “It's protectionism: exactly that. This is the result of the global financial crisis.” India and China last year imposed similar tariffs on polypropylene imports from Saudi Arabia and Oman, after accusing firms of dumping subsidised, cut-price produce on the Indian market. The duties expired in January. Saudi Arabia has a natural advantage in feedstock as a result of its close proximity to oil and gas resources, Al Sadoun said. “It's not a subsidy. The price reflects the prices of the feedstock, it reflects the cost of production and this has been endorsed by the WTO in the acceptance of Saudi Arabia and other Gulf states. This is the bottom line. India and China sit on the WTO, they're signatories, and we all play by the rules. Those advantages are natural and the basis for the anti-dumping (tariff) is false,” he said. The GPCA has said it is prepared to launch a legal challenge if India pushes ahead with fresh import duties. It is also understood to have met with Gulf ministries in a bid to press India towards a resolution. “We're talking to the ministries in the Gulf states, the GCC secretariat and we're considering several options. Most of those producers are wholly or majority owned by the governments in the Gulf. Legal action is likely, because the WTO is the platform for settling those differences. We believe our case would win - very much so,” said Al Sadoun. “I'm still optimistic that the Indian government will realize the ramifications on its indigenous, downstream industries will be significant. There is a mutual interest here for ensuring there is free trade between Indian and the Gulf countries.” Dr. Abdulrahman Abdullah Al-Zamil, president of the Executive Council, Saudi Exports Developing Center, said earlier in a statement that “we as exporters want to remind the Indian government of the huge dumping of the Indian labor with numbers exceeding a million and a half who send no less than SR20 billion every year to India. This is in addition to other irregular money transfer amounting to billions of riyals. Such Indian labor existence has resulted in increasing the unemployment of our Saudi labors who are seeking same technical jobs currently occupied by Indians. They demand stopping this Indian ‘labor dumping'. Our center confirms here that the Kingdoms non-oil products of petrochemicals as well as the steel products and others do not exceed SR180 million, while the Indian exports to the Kingdom which exceeded SR18 billion during 2008, the majority thereof enters the Kingdom without paying customs and the rest pays only 50 percent.” Despite that, “the Saudi government has not yet imposed any tax on any Indian product based on dumping even though all reasons for such tax are available. This is due to the Kingdom care and interest in keeping good economic relationships with India,” he pointed out. The “commercial privileges for India in our market have been ignored by the Indian government from whom we expect consideration and respect to our friendship and strategic relationship. We as exporters demand from our government not to wait for this issue to be examined through the procedures of the World Trade Organization,” he added.
