Kochi, Sept. 2 Indian seafood exporters are running into trouble over the huge amounts outstanding as enhanced custom bonds paid to the US Customs and Border Protection over and above the anti-dumping duties paid for shrimp exports into that country.
The situation continues even after the World Trade Organisation (WTO) had ruled in favour of India against the mandatory enhanced bond requirement imposed by the US Government.
The US Customs Department has implemented the WTO ruling only prospectively and should cancel and discharge the bonds collected before March 31, 2009 quickly, sources in the seafood industry said.
It had been mandatory for the Indian shrimp exporters to pay the US bonds upfront, before the shrimp imports were permitted into the ports of entry. The practice had been in vogue from August 2004 to March 2009.
“It is the legitimate right of every Indian shrimp exporter to get the bonds liquidated and reimbursed at the earliest. However, it has been a long and time consuming process,” said Mr Anwar Hashim, President of the Seafood Exporters Association of India (SEAI).
Several exporters are running into cash-flow problems due to the long delay in getting the bonds refunded. This position of the US Customs is entirely inconsistent with the enhanced bonding requirement guidelines issued in 2004 and 2005, and will result in huge additional costs to the frozen shrimp exporters, most of who are also producers as well. The US Customs should take immediate action to cancel and discharge these bonds, the SEAI said.
The US Customs introduced the enhanced bond requirement in August 2004 which required the Indian exporter to pay 10 per cent of the past and potential duties with a minimum amount of $50,000. Now bonds worth millions of dollars are waiting to be liquidated and released. There were other additional expenditures that the Indian exporters incurred.
For executing the bonds, the US companies demanded 100 per cent collateral which was provided as irrevocable letter of credit in favour of the surety company. The banks providing the collateral also charged annual fees to keep each of the collateral valid.
Elaborating on the tedious and time consuming process, sources in SEAI said that it would take between four and five years for the bonds to be liquidated and released. Each of the exporters would have had to execute four to five bonds along with the annual renewal of the collateral and its costs.
Each of these bonds were executed for a period of one year. The administrative review to decide on the final duties will begin only at the end of this year and the review process itself takes close to one-and-a-half years.
The Customs and Border Protection in turn takes close to one-and-a-half years to liquidate all the entries. The whole process had ensured that only the well-capitalised companies with good cash flow entered into the US shrimp market.
In this context, the seafood exporters felt that the Ministry of Commerce should take the issue with the US Trade Representative and use its good offices to create a mechanism immediately to cancel and discharge these bonds so that the surety companies can discharge the collaterals for these bonds.
Source : Business Line