0
International Journal ISSN: 23194421
of Management and Social Sciences Research (IJMSSR)
Volume 7, No. 4,
April 2018
Antidumping Laws in India: The Consequent Impact of
Dumped Imports on the Domestic Industry
Sanya Yadav,
Assistant Professor, Amity Law School, Amity University Rajasthan, Jaipur
ABSTRACT frnctions of the Appellate Tribunal. If
the members of the
the decision is made
In recent years Benchdiffer in opinion of any issue,
the members
forefront of the
antidumping has been catapulted to the accordingto the opinion of the majority; if
can either give an
most
intemational trade While controversial practices in are equally divided, the President
or more of the
support for antidumping, politicians scarcely hide their opinion himself or refer the case to one
and the decision
and economists as there is little love lost betweenit other membersof the Appellate Tribunal
well as trade reformers. Interesting is based on the opinion of the majority of
those members.
lying World Bank's
trade policy loans or loans in which
trade policy reforms
the importance of
are a significant element.
In view of The last Twenty Two years have witnessed a phenomenal
the fact that statesantidumping to international trade and growth in the literature relating to dumping in
do not appear to be too eager
to international trade. The politicians, economists and
renounce it in the near
future, this paper discussessome lawyers have all participated in the ongoing debate on
significant issues involved
the Uruguay Round of
and the changes introducedby dumping with a zeal that is somewhat unprecedented even
that such discussion will
trade negotiations, with the hope in respect of a trade issue. To a considerable extent the
be useful to policy and decision- intensity of the debate is the direct outcome of the
makers in the intemational
trade arena. proliferationof antidumpinglaws and the increase in the
incidence of the antidumping actions in the principal
Keywords practitioners of this art among the developed countries and
some developingcountries that seem well set to catch up
Anti Dumping, Dumping Margins,
International Trade with the former. Although both Canada and U.S. have
emerged as major users of antidumping and countervailing
INTRODUCTION against each other as well as against other countries
The antidumping duty or undertaking agreement is usually includingdevelopingcountries2 and the U.S. is regarded
world's leading prosecutor of unfair trade, Brazil,
lifted after five years unless revoked earlier. Upon request as the
Korea and Mexico have been rapidly attempting to tum
received from interested parties or on its own initiative,
the
the Ministry periodically reviews the need for continuance
of antidumping duty or undertaking and determines MEANING OF ANTI-DUMPING
individual dumping margins for new suppliers in the
exporting county who did not export the product to India Moving on as to what is anti-dumping, it can be fined as a
during the original period of investigation. If it is protective device available to the states aga.inst
concluded in a review that the removal of the antidumping vicissitudesassociatedwith the free trade. In the recent
duties would be likely to result in the continuationor years a large number countries have become frequent
recurrence of dumping and injury, the Central Govemment users of anti-dumping. Many of the heaviest anti-dumping
may extend the period of imposition of antidumpingduty users are countries who did not even have an anti-
for a further period of five years. dumping statute a decade ago. The traditional users
continueto make use of these measures with more vigor
An appeal against the order of antidumping determination by targeting new users.
or review can be filed with the AppellateTribunalwithin
ninety days. Every appeal must be heard by a Special Anti-Dumpingduties were introduced by the developed
Bench consisting of the President of the Appellate countries to protect their industries against the low priced
must imports. Developing countries supported the inclusion of
Tribunal and no less than two other members, which
one technical member. A the provision relating to anti-dumping duties under GATT
include one judicial member and
discharge the powers and because they wanted to levy of anti-dumping duties to be
Bench can exercise and
Impact Factor: 6.313 www.irJcJournals.org
International Journal of Management and Social Sciences Research
(IJMSSR) ISSN: 23194421
Volume 7, No. 4, April 2018
under international regulation. Antidumping measures are these laws protect the competitive process
not only legal but they arc also flexible in usage. Further, and the
consumer from monopoly power of the foreign
anti-dumping duties can be presented not as protection but exporters.
Following the thinking in antitrust literature, most
as encounter against ''unfair" competition. [Il define economic efficiency in terms of consumer
scholars
welfare
standards. There are however, two protection-based
ANTI-DUMPING: INDIAN PERSPECTIVE justifications for imposing antidumping duties: (4
Trade policy regimes in most countries have transformed The political economy argument
highlights the role of the
from inward oriented protectionist regimes to more domestic political influences mainly
lobbying by
outward and libcral trade regimes. However, any influential domestic producers in
determining the
government that maintains a liberal trade policy is subject antidumping cases. In most cases in India
the use of
to pressures for temporary protection to specific industries. antidumpingmeasures may be justified
on economic
GATT therefore contains some contingent measures, grounds Dumpingin the literatureis definedin two
which permit the signatories to withdraw their normal ways : price dumping and cost dumping. The former refers
obligations under specified circumstances and impose to international price discrimination while the latter is the
higher protection against import of one or more goods practice of selling at prices below per unit cost. The
from one or more countries. Contingent protection antidumping law in the WTO Agreement however refers
measures fall under three categories — antidumping, to price dumping. The sales below costs are not considered
countervailing and safeguard measures. [2] 'the ordinary course of trade'. Article 2.1 of the WTO
antidumpingagreement stipulates:
The present study focuses on antidumping measures.
Broadly speaking a product is said to have been dumped if LEGAL FRAMEWORK OF ANTI
it is introduced into the commerce of another country at
DUMPING IN INDIA
less than the normal value of the product and it
causes/threatensmaterial injury to an established industry The principle of imposition of anti-dumping duties was
of the country. Article VI of the GATT stipulates that 'in propoundedby the Article VI of GATT 1994 —Uruguay
order to offset or prevent dumping a contracting party may Round. Indian legislation in this regard is contained in
levy on any dumped product an antidumpingduty not Section 9A and 9B (as amended in 1995) of the Customs
greater in amount than the margin of dumpingin respect Tariff Act, 1975 Further regulations are contained in the
of such countries'. Almost all WTO member countries Anti-Dumping Rules (Customs Tariff (Identification,
have adopted/amended their antidumping legislation Assessment and Collection of Anti-Dumping Duty on
largely in accordance with the GATT provisions to deal Dumped Articles and for Determination of Injury) Rules,
with dumped imports. Some of the counü-iesthat are not 1995.
members of WTO have also acquired their antidumping
legislation. Almost 90% of total world imports are now The price" of the goods allegedly dumped into
entering countries in which antidumping laws are in place. India means the price at which it is exported to India. It is
[3] generally the CIF value minus the adjustrnents on account
of ocean freight, insurance, commission, etc. so as to
The share of developing countries in total cases was 10% arrive at the value at ex-factory level.
at the beginning of the 1990s; it is almost 50% now. A
large-scale recourse to antidumping has raised fears The "margin of dumping" is the difference betweenthe
among researchers, analysts and specialists of its misuse as normal value and the export price of the goods under
a protectionist measure. While some have raised questions complaint. It is generally expressed as a percentage of the
about the ambiguities in antidumping regulations and export price.
procedures, others have questioned economic rationale The "domestic industry " means the domestic producers as
behind such actions.
a whole engaged in the manufacture of die like article and
any activity connected therewith or those whose collective
ANTI-DUMPING LAWS & PRACTICE: output of the said article constitutes a major proportion of
ECONOMIC PERSPECTIVE the total domestic production of that article except when
such producers are related to the exporters or importers of
The rationales for antidumping laws have long been the alleged dumped article or are themselves importers
subject to analysis by economists.The most frequently
offered economic justification for antidumping laws is that
www.lrjcjournals.org
Impact Factor: 6.313
International Journal of Management
and Social Sciences Research (IJMSSR) ISSN: 2319-4421
Volume7, No. 4, April 2018
thereofin which case such producers may be
deemed not investigationperiod is more than 20 percent of the total
to form part of domestic industry. [6)
sales being used to determine normal value, the Ministry
The "like article" means an article which is calculates the normal value using one of the two
identical or alternative methods.
alike in all respects to the articlc under investigation
for
being dumpcd in India or in the absence of such article,
The Ministry may calculate a "constructed" normal value
another article which although not alike in all respects, has
using the exporting country's cost of productionplus a
characteristicsclosely resembling those of the articles
reasonable amount for selling, general and administrative
under investigations.In regard to injury to the domestic
costs and profits, or use the prices of sales from the
industry,the industry must be able to show that dumped
exporting country to a selected third country. For non-
importsare causing or are threateningto cause "material market economy countries, the Ministry determines the
injury" to the domestic industry. normal value using either the sales price or constructed
value in a selected market economy country, or the price
INVESTIGATION PROCESS FOLLOWED from a selected market economy country to a selected
BY THE MINISTRY OF COMMERCE IN third country which may include India.
ANTIDUMPINGPETITIONS
If none of these methods are possible, the Ministry may
Legal Procedures calculate the normal value for a nonmarket economy using
the adjusted sales price of the like product in India, or
Any interested party may file an antidumping petition with using any other reasonable basis.
the Ministry of Commerce on behalf of the domestic
industry. After examining the accuracy and adequacy of The Ministry generally calculates a separate antidumping
the evidence in the petition, the Ministry undertakes an margin for each supplier. However, if any interested party
investigation into whether foreign products are imported at fails to provide authentic, necessary information within the
a price lower than the normal value, and whether those time limit, or it is difficult to verify the provided
imports are causing or threatening to cause material injury information,the Ministrymay make its determinationon
to the domestic industry. the basis of "facts available," which includes the
information submitted in the petition or submitted by
In special circumstance,the Ministry may self-initiatean interested parties.
investigation without having received an antidumping
petition if it has sufficient evidence of dumping, injury and When the number of suppliers or products involved in the
a causal link between the two. The Central Govemment investigation is too large, the Ministry may select a sample
imposes antidumping duties on the basis of the findings by of suppliers or products for the investigation using
the Ministry.To determine whether the foreign products statistical sampling methods based on information
are imported at a price lower than normal value, the available at the time of selection or by choosing those
suppliers or products with the largest import volumes.
Ministry calculates the dumping margin as the difference
between a weighted average normal value and a weighted The Ministry calculates the dumping margin for those
average export price to India, or the difference between firms not in the sample using a weighted average of the
individual normal values and individual export prices on a dumping margins calculated for those suppliers selected
transaction-to-transactionbasis over the period of for the investigation. When determining whether the
investigation. foreign imports are causing or threatening to cause
material injury to the domestic industry, or materially
In special circumstances,the Ministry may compare a
retarding the establishmentof an industry, the Ministry
weighted average normal value to prices of individual
considers the volume of dumped imports, the effect of the
export transactions to India. The Ministry determines the
dumped imports on prices of the like product in India's
normal value using one of four methods. Whenever
market, and the consequent effect of the dumped imports
possible, the normal value is calculated using the sales
on domestic producers.
price in the exporting country's home market.
To examine the impact of the dumped imports on domestic
However, if there is an insufficient quantity of sales in the
industry, the Ministry evaluates the magnitude of the
exporting country's domestic market, the weighted
margin of dumping and all relevant economic factors and
average sales price is below the weighted average unit
cost, or the volume of sales below unit cost during the Indices including natural and potential decline in sales,
Impact Factor: 6.313 www.lrjcJournals.org
International Journal of Management and
Social Sciences Research (IJMSSR) ISSN: 2319-4421
profits. output, share, productivity, and
investments. inventories, employments. ceturn on
wages. and growth CONCLUSION
in the domestic industry. The
Ministry also examines
other factors to ensure that the the The alarming increase in the number of antidumping
injury caused by these
factors is not attributed to the other actions pursued by the developed and developing countries
dumped imports.
has caused considerable concern among economists and
These factors include the volutne trade reformers. These concerns have led to the
of goods importedat a
value," contraction in demand suggestions of substituting antitrust principles for
pattem of consumption, or changes in the
competition antidumpinglaws and regulations or for using safeguard
domestic producers, developments between foreign and
in technology, and the
export performance and
productivity of domestic stage of the development of international trade law neither
pmducers Following its preliminary proposal appears feasible.
Ministry makes a pxrliminary investigation, the
determination on dumping Moreover, antidumping actions have become a fact of life
and injury and issues a public notice.
and the international community recognizes such actions
The Central Govemment then imposes
a provisionalduty
not exceeding the margin of dumping by and determined in accordance with law. Despite the
on the basis of urgings in some quarters neither municipal legal systems
preliminary determination by the Ministry.
Provisional nor international agreements have rnandated an "economy-
antidumpingduties usually remain in force for a
period of wide" cost-benefit analysis of proposed antidumping
no more than six month; in some cases, they
may be actions.
extended by the Central Govemment for up to nine
months. If an exporter promises to revise its price
REFERENCES
immediatelyand stop exporting at the "dumped"prices,
the Ministry may suspend or terminate the antidumping [IJ Anderson, J. E. (1994), "Strategic Lobbying and
investigation without applying provisional antidumping Antidumping," Journal of Economic Integration,
vol.9, pp. 129-155.
The Minist•y must also inform the Central Government of [2) Aggawal, A. (2004b) 'The WTO Antidumping
the acceptance ofan undertaking and issue a public notice. Code: Issues for Review in Post-Doha Negotiations,
If the exporter fails to uphold the undertaking agreement, ICRIER WTO Series Paper 2004.
the Ministry must inform the Central Govemment of such
violation and recommend imposition of provisional duties. [3] Aggarwal A. (2004b)'Macro economic
Following a provisional affirmative determination,the determinantsof antidumping: A comparative
Ministry continues its investigation on the margin of analysis of developed and developing countries,
dumping and injury. World Development, 32(6), 2004
Before giving its final findings, the MinistryinformsaH [4] European Commission. (2005). Economic and
competitiveness analysis of the footwear sector in
interested parties of the essential facts under consideration
the EU 25. [Report).
which will likely form the basis of its decision. Within one
year from the date of initiationof the investigation,or in Bowm,Chad P. and Patricia Tovar. (2011) "Trade
exceptional circumstances eighteen months, the Ministry Liberalization, Antidumping, and Safeguards:
must make a final determination regarding injury and the Evidence from India's Tariff Reform", Journal of
value of antidumpingduties, submit its final findingsto Development Economics, 96(1): 115-25.
the Centnl Government,and issue a public notice on its
finding. Within three months of the date of publication of Feinberg, Robert M. (1989) "Exchange Rates and
final determination by the Ministry, the Central Unfair Trade", Review of Economics and Statistics
Government may publish a notification in the Official 71
Gartte imposing antidumping duties not exceeding the
margin of dumping determined by the Ministry.
www.irjcjournals.org
Impact Factor: 6.313
