Saudi PP producers react; put pressure on India

By Malini Hariharan

The Gulf Petrochemical and Chemicals Association (GPCA) is speaking up on behalf of Saudi producers who are worried about the Indian government’s recent ruling on dumping of polypropylene (PP).

The Indian position, outlined in a disclosure statement, was that the Saudi price formula for propane gave local PP producers an ‘unfair advantage’. And the blog had highlighted a few weeks back that Saudi producers risked more dumping and other duties from countries around the world if India’s ruling sets a legal precedent.

In a statement yesterday, the GPCA termed the Indian government’s approach to the issue as ‘baseless’ and urged it to throw out the case before it affects economic relations with the Gulf region.

“This decision is not justified because GCC companies are neither dumping products in India nor causing injury to the Indian petrochemical industry.

“For obvious commercial reasons, including proximity to the source and low local production and distribution costs, the price of feedstock in Saudi Arabia, as in the Gulf region generally, is more competitive than in countries like India that do not have the same endowment of natural resources,” said the GPCA.

The argument put forward by the GPCA is not new and was used by Saudi producers during investigation by Indian authorities. The problem though is that no evidence has been provided, or that is what the Indian side has claimed. The blog has also been told that Saudi producers are extremely reluctant to share data relating to costs.

The GPCA has also tried to step up the pressure on India by referring to ‘India’s desire to improve economic relations with Gulf countries and considering the massive investments and employment of Indian nationals in the region’.

Saudi producers have also turned to the Saudi Export Development Center (SEDC) for support.

“During WTO talks the Kingdom had proved that Saudi feedstock prices were fixed on a commercial basis with gas producers taking a reasonable profit. All WTO members including India have accepted this point. India has signed the WTO agreement. So the Indian argument has no basis,” the SEDC chairman said yesterday.

He also said that Saudi Arabia’s commerce, finance and foreign ministries had made a lot of efforts to convince New Delhi to change its “irrational” anti-dumping-tax decision.

So will India yield to all this pressure? We should know very soon. The anti-dumping investigation was announced on 23rd February 2009 and according to WTO rules it has to be completed within 18 months which is 22 August 2010.

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