Duty on Galvalume steel imposed

The National Tariff Commission (NTC) has levied a 40.47% anti-dumping duty on Galvalume steel, a landmark decision to protect the domestic steel industry. The steel industry has suffered a lot due to this issue by losing market share and the recent decision will help the industry to revive it again.

The commission has affirmed in its decision that the product was being used to undermine the original anti-dumping measures. This is not only a significant outcome for the steel industry but also a landmark development in Pakistan's trade remedy jurisprudence.

Stakeholders have hailed the decision as a watershed moment in trade remedy, aimed at safeguarding the local steel industry from unfair trade practices.

It has also reaffirmed the country's commitment to upholding protective measures that were being undermined through technical evasion by exporters.

A legal firm representing the domestic producers also said that it was a landmark achievement for the legal framework, which governs trade remedies in Pakistan. "This is not only a significant outcome for the steel industry but also a landmark development in Pakistan's trade remedy jurisprudence. We take great pride in the fact that this is the first anti-circumvention case in Pakistan's history – filed and successfully pursued by our firm," Sumaira Kanwal, Senior Manager, said.

The NTC has concluded Pakistan's first-ever anti-circumvention investigation for trade remedy enforcement. This matter also involved circumvention of anti-dumping duties on galvanised steel through imports of Galvalume – a product that was slightly modified.

Circumvention refers to the exporters or importers who attempt to avoid anti-dumping or countervailing duties by making minor modifications to a product. They route it through third countries or slightly change its composition to retain its essential commercial purpose. The domestic industry (International Steels and Aisha Steel Mills) had challenged it in the NTC through legal firms. In 2017, Pakistan imposed anti-dumping duties on galvanised steel coils and sheets imported from China by imposing tariffs ranging from 6.09% to 40.47%. Pakistan extended these duties in 2022 after a sunset review. The authorities concerned noted continued dumping and injury to the domestic industry during a review.

However, foreign exporters were allegedly involved in circumventing these duties through making slight modifications in the product. They coated steel coils with a combination of zinc and aluminium (commonly known as Galvalume), instead of pure zinc.

Galvalume has the same function as galvanised steel and is in direct competition with it in the domestic market, but it was not originally covered under the anti-dumping regime.

International Steels and Aisha Steel Mills had recognised this threat to the effectiveness of trade remedies and submitted a formal application. Consequently, the NTC started an anti-circumvention investigation.

During the probe, the NTC targeted imports of hot-dip zinc-aluminium coated steel coils/sheets (Galvalume). It focused on thicknesses ranging from 0.15 mm to 2.75 mm and a width of 600 mm or more. These products were classified under Pakistan Customs Tariff (PCT) codes 7210.6110, 7210.6190, 7210.6910 and 7210.6990.

Despite the minor compositional change, the NTC found during the investigation that Galvalume products contained the same essential physical and chemical characteristics, end uses and production methods as the galvanised products, which were previously subject to anti-dumping duties. The commission further concluded that the exporters were allegedly involved in circumventing the existing anti-dumping measures.

It finally reached the findings that the domestic steel industry continued to suffer injury in terms of lost market share, suppressed prices and reduced profitability. Accordingly, the NTC decided to extend the original anti-dumping duty of 40.47% to Galvalume imports to close the loophole that had allowed the evasion of trade remedies.

The local industry welcomed the decision, calling it a victory for rule-based trade and industrial policy.

"This case not only defends the local steel sector from injury due to unfair imports but also strengthens Pakistan's standing as a country which is serious about enforcing trade laws," industry officials said, adding that it also reflects the maturity of legal institutions to deal with complex issues like circumvention.

"The imposition of anti-dumping duties is expected to restrict the influx of concessionary imports, thereby providing relief to International Steels and Aisha Steel, the two key flat steel manufacturers, by supporting their volumetric sales," said Muhammad Awais Ashraf, Director Research at AKD Securities.

However, he added that the influx of imported steel – previously attributed by local producers to concessionary imports and circumvention of anti-dumping measures – has adversely impacted their sales volume. Therefore, strict implementation of this duty is important to protect the local industry.