Unit 4: Anti-Dumping Duties

Unit 4 focuses on the concept of anti-dumping duties, their principles, agreements, and the procedures
involved in their determination. Anti-dumping measures are critical for ensuring fair competition and
protecting domestic industries from unfair trade practices.

1. Meaning of Anti-Dumping Duties

Definition:

Anti-dumping duties are tariffs imposed by a country on imported goods that are priced below their normal
value (often their domestic market price or cost of production). These duties are intended to protect domestic
industries from the adverse effects of dumping.

Key Concepts:

Dumping: Occurs when a foreign manufacturer exports goods to another country at a price lower than the
price in its home market or below its production cost.

Anti-Dumping Duty: A protective tariff that bridges the price gap to ensure fair competition for domestic
producers.

Purpose:

1. Protect domestic industries from predatory pricing.

2. Prevent monopolistic practices by foreign producers.

3. Safeguard jobs and economic stability in domestic markets.

Example:

If a company in Country X exports steel to Country Y at $200 per ton, but sells it domestically at $300 per
ton, Country Y can impose anti-dumping duties to make the price in its market equivalent to or higher than
$300 per ton.
2. Principles of Anti-Dumping Duties

Anti-dumping duties are guided by principles established under international trade agreements, primarily
under the World Trade Organization (WTO) framework.

Key Principles:
1. Fair Competition: Ensure that imported goods compete fairly with domestic products.

2. Non-Discrimination: Duties should not discriminate among trading partners.

3. Temporary Measure: Duties are imposed for a limited period, typically 5 years, and are subject to review.

4. Injury Assessment: Imposition of duties requires proof of injury to the domestic industry.

5. Transparency: Investigations and decisions must be transparent and follow due process.

Significance:

Protects industries from unfair trade practices while adhering to global trade norms.

3. Agreements Governing Anti-Dumping Measures

Anti-dumping measures are governed by international agreements under the WTO, primarily the Agreement
on Implementation of Article VI of the GATT 1994 (commonly known as the Anti-Dumping Agreement).

Key Provisions of the Agreement:

1. Definition of Dumping: Selling a product in an export market at less than its normal value.

2. Investigation Process:

Initiated upon a complaint by domestic industries.

Requires evidence of dumping, injury, and causal linkage.

3. Determination of Injury:
Analysis of volume and price effects of dumped imports.

Impact on domestic industry, including sales, profits, market share, and employment.

4. Imposition of Duties:

Duties should not exceed the margin of dumping.

Applied only to the specific products and exporters involved.

5. Review Mechanisms:

Duties are reviewed periodically, typically every 5 years.

4. Determination of Normal Value and Export Price

Normal Value:

The price of a product in the domestic market of the exporting country. If domestic sales are insufficient,
normal value may be based on:

1. The price of the product in a third-country market.

2. The cost of production plus a reasonable margin of profit.

Export Price:

The price of the product when exported to the importing country.

Adjustments may be made for factors like transportation costs, taxes, and duties.
Dumping Margin:

The difference between the normal value and the export price.

Formula: Dumping Margin = Normal Value - Export Price

Example:

Normal Value in Country X: $100 per unit

Export Price to Country Y: $70 per unit

Dumping Margin: $100 - $70 = $30 per unit

Significance:

Accurate determination ensures fair assessment and avoids misuse of anti-dumping measures.
5. Institutional Agreements and Procedures in India

India, as a member of the WTO, follows the guidelines outlined in the Anti-Dumping Agreement. However,
it has its own domestic framework for handling anti-dumping cases.

Institutions Involved:

1. Directorate General of Trade Remedies (DGTR):

Investigates complaints of dumping.

Determines the existence and extent of dumping and injury.

2. Ministry of Commerce and Industry:

Oversees the DGTR and formulates trade policies.

3. Customs Authorities:

Implement anti-dumping duties at ports and borders.

Procedures in India:

1. Filing a Complaint:

Domestic producers file a complaint with the DGTR, providing evidence of dumping and injury.

2. Investigation:

DGTR conducts a detailed investigation, examining pricing, injury, and market impact.

3. Preliminary Findings:

If evidence of dumping is found, provisional duties may be imposed.

4. Final Determination:

After a detailed review, final duties are recommended and notified by the government.

5. Review and Sunset Clause

Duties are reviewed periodically and typically lapse after 5 years unless extended.

Significance of India’s Anti-Dumping Policies:

Protects domestic industries, such as steel, chemicals, and electronics, from predatory pricing.

Promotes fair trade practices while adhering to WTO norms.

6. Real-World Examples of Anti-Dumping Measures

1. India’s Anti-Dumping Duty on Steel Imports (2017):

India imposed duties on steel imports from China, Japan, and South Korea to protect its domestic steel
industry from cheap imports.

2. US Anti-Dumping Duty on Shrimp Imports from India:

The US imposed duties on Indian shrimp, citing dumping practices that harmed US shrimp farmers.

3. EU Anti-Dumping Measures on Solar Panels from China:

The European Union imposed duties on Chinese solar panels, claiming they were sold below cost, harming
the EU’s renewable energy sector.

7. Challenges and Criticisms of Anti-Dumping Duties

1. Retaliatory Measures:

Countries often retaliate with their own trade restrictions, leading to trade wars.

2. Consumer Impact:

Duties increase the cost of imported goods, leading to higher prices for consumers.

3. Protectionism:
Anti-dumping measures can be misused as a tool for protectionism, stifling competition and innovation.

4. Complex Procedures:

Determining dumping margins and injury is time-consuming and resource-intensive.

5. Global Trade Disruptions:

Overuse of anti-dumping measures undermines the principles of free trade.

8. Conclusion

Anti-dumping duties are essential tools for maintaining fair competition in international trade. While they
protect domestic industries from unfair trade practices, their misuse can harm global trade relations and
consumers. Proper implementation, guided by WTO principles and transparent procedures, ensures that anti-
dumping measures serve their intended purpose without disrupting global trade.