According to producers, there is also a need to start anti-dumping investigation of the imports of chemical fabrics and fibers to Russia and other countries of the Customs Union of Russia, Kazakhstan and Belarus with the participation of the Eurasian Economic Commission (EEC), a single permanent regulatory body of the Customs Union.
In their official letter the producers said that Russia’s WTO accession resulted in a significant growth of imports of fabrics with chemical fibers and yarns to Russia, which resulted in serious losses of many local producers. According to producers in October 2012 the Department of the Protective Measures of the Eurasian Economic Commission had already held a special anti-dumping investigation on the imports of chemical fabrics and fibers to the Customs Union, which was initiated by some country’s leading producers of chemical fabrics among which are LLC Balteks, LLC Kids, JSC Don-Tex, JSC KFTK, JSC Mogotex and OOO Tchaikovsky textile Company. It showed that imports of chemical fabrics and fibers to Belarus, Russia and Kazakhstan grew by 50% in 2010 and by 40% in 2011. At the same time prices of imported goods amounted to 40 cents per one square meter of fabric, which is three times lower than the cost of similar goods, produced in Russia.
As a result of this, the majority of producers suffered huge losses, while the average utilization of the industry’s enterprises declined to only 30%.
For example, the growth of imports resulted in the reduction of production of such fabrics and fibers by Russian Children Clothing company, one of the country’s largest producers of such kind of fabrics by more than two times and the complete cease of production by another country’s leading producer Don-Tex. At the same time in the case of Kazakhstan, the country no longer has any producer of chemical fabrics and fibers.
At the same time, according to producers, despite this data, the Eurasian Economic Commission, which conducted the investigation at the end of 2012, found no cause-and-effect relation between the dumped imports of chemical fabrics to Russia and the losses of producers.
In this regard, the producers have called on Medvedev to organize a re-investigation of the ongoing imports and to raise the rate of duty from the current 10-20%.
According to Igor Ulyanov, the executive director of Soyuzlegprom, the industry has already gained the support of the national Ministry of Industry and Trade. Viktor Evtukhov, Russia’s Deputy Minister of Industry and Trade, and the Ministry support the idea of re-investigation.
“There is a great difference in price and quality between imported and domestic products,” says Evtukhov. “The situation is aggravated by the limited production range of manufacturers from the Customs Union. The majority of domestic enterprises require modernization of their capacities, which, however is delayed due to lack of funds. Russian consumers have already supported introduction of these protective measures.”
In the meantime, the initiatives Soyuzlegprom have already sparked critics from local apparel and nonwovens producers, according to which artificial restriction of imports may negatively affect their business and result in the increase of prices for their products. According to them, before asking to raise duties, fabrics’ producers should improve the quality and range of their own products.
According to an official representative of the Russian Association of Nonwovens Producers (RANWP), potential restriction of imports should result in a significant increase of domestic production, however at this current stage Russian producers do not have necessary capacities for implementation of these plans, while technical conditions of the majority of the industry’s plants remains poor.
According to analysts of RANWP, the Russian nonwovens industry has only recently fully recovered from the consequences of the recession and the increase of import duties on raw materials may result in the second wave of crisis in the industry and the decline of production. This, in turn, may result in the decline of the average annual per capita consumption of nonwovens in Russia, which is currently estimated at six square meters and which is significantly lower than in the EU countries and other key figures for the industry.
In addition, the Russian market of nonwovens continues to be far from saturated and the raise of duties will lead to the decline of supplies on the domestic market.
In the meantime, an official representative of the department of protection of the domestic market of the Eurasian Economic Commission said that so far the EEC has not received any petition about the need to start anti-dumping investigation.
He has already added that EEC is ready to defend the producers of the Customs Union from unfair competition or sudden changes in trading conditions, which result in negative effects on their business.
At the same time, according to the Russian Ministry of Industry and Trade, the adoption of such protective measures should take place in case of the existence of compelling reasons and should fully comply with WTO rules.
These reasons include the existence of evidence showing an unexpected sharp growth of imports of specific products, similar to those that are produced in the Customs Union, if such imports result in losses of domestic producers.
An official representative of the Eurasian Economic Commission comments, “During the previous investigation the producers called to adopt protective measures for many types of synthetic fibers, some of which are simply not produced within the territory of the Customs Union. In this regard, the adoption of protective measures in such case will be unfair and would be a serious breach of WTO rules. There is a need to identify the list of chemical fabrics that have shown a sharp rise in imports because this really threatens the production of apparel and nonwovens in Russia and other countries of the Customs Union. After the completion of such list the EEC will start investigation.”