Yogi Eco

Dumping & Anti-Dumping
EXECUTIVE SUMMERY
The topic is about Dumping & Anti-Dumping, where first I have written about dumping.
The Dumping is an international price discrimination in which an exporter firm sells a
portion of its output in a foreign market at a very low price and the remaining output at a
high price in the home market. There are some objectives of dumping which discriminate the
new trade relations, surplus commodity, and many more. The dumping has some effects
which effect s the import and export of country.
There are some advantages and dis-advantages for dumping. Dumping is not one there are
some types of dumping like prededatory, persistent, sporadic. The dumping is calculated as
the price is determined by some assumptions and conditions are there. Then there is
calculation of dumping, this is calculated by the marginal cost and by the duty assessment of
dumping.
The Anti-dumping can be fined as a protective device available to the states against
vicissitudes associated with the free trade. In the recent years a large number countries have
become frequent users of anti-dumping. There are also measures of anti-dumping. The antidumping has wto measures and agreements which is important for anti-dumping. The last is
subsides of anti-dumping which is benefited for the public which is paid by the government.
INTRODUCTION
Economics Of Global Trade &

Finance

The concept of dumping in international trade has a long history. Dumping, less than one name
or another has been part of the rhetoric of political economy for a long time. Jacob Viner, the first
scholar to pull together previous writings on the subject of dumping, noted a sixteenthcentury
English writer who charged foreigners with selling paper at a loss to smother the infant paper
industry in England. Viner also noted an instance in the seventeenth century in which the Dutch
were accused of selling at low prices in the Baltic regions in order to drive out French merchants.
He further noted statements made by Alexander Hamilton in debates in the USA in 1791 warning
about foreign country practices of underselling competitors in other countries so as to
frustrate the first efforts to introduce a business into another by temporary sacrifices,
recompensed, perhaps by extraordinary indemnifications of the government of such country
Hamilton further declared that the greatest obstacle encountered by new industries in a
young country was the system of export bounties, which foreign countries maintained in order to
enable their own workmen to undersell and supplant all competitors in countries to which these
commodities are sent.
DEFINATION
In economics, "dumping" is a kind of predatory pricing, especially in the context

of international trade. It occurs when manufacturers export a product to another country
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at a price either below the price charged in its home market, or in quantities that cannot
be explained through normal market competition.
The
definition
of
dumping
according
to
GATT
is
The sale of products for export at a price less than the normal value where normal value
means roughly the price for which those same products are sold on the home or exporting
market. The concept of dumping seems fair because it is recognized that producers may
sell their goods in different markets at different prices and that prices of a goods are
influenced by several market forces and may vary at different times. It may be a perfectly
legitimized business activity like discounts offered by airlines to students or senior
citizens etc. There may not seem anything intrinsically unethical or illegal about
dumping.
MEANING
Dumping is an international price discrimination in which an exporter firm sells a portion of its
output in a foreign market at a very low price and the remaining output at a high price in the
home market Haberler defines dumping as: The sale of goods abroad at a price which is lower
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than the selling price of the same goods at the same time and in the same circumstances at home,
taking account of differences in transport costs Viners definition is simple.
According to him, Dumping is price discrimination between two markets in which the
monopolist sells a portion of his produced product at a low price and the remaining part at a high
price in the domestic market. Besides, Viner explains two other types of dumping. One, reverse
dumping in which the foreign price is higher than the domestic price.
This is done to turn out foreign competitors from the domestic market. When the product is sold
at a price lower than the cost of production in the domestic market, it is called reverse dumping
Two when there is no consumption of the commodity in the domestic market and it is sold in two
different foreign market, out of which one market is charged a high price and the other market a
low price. But in practice, dumping means selling of the product at a high price in the domestic
market and a low price in the foreign market. We shall explain price determination under
dumping in this sense.
OVERVIEW
Finance

A standard technical definition of dumping is the act of charging a lower price for a good in a
foreign market than one charge for the same good in a domestic market. This is often referred
to as selling at less than "fair value". Under the World Trade Organization (WTO)
Agreement, dumping is condemned (but is not prohibited) if it causes or threatens to cause
material injury to a domestic industry in the importing country.
The term has a negative connotation, as advocates of competitive markets see "dumping" as
a form of protectionism. Furthermore, advocates for workers and laborers believe that
safeguarding businesses against predatory practices, such as dumping, help alleviate some of
the harsher consequences of such practices between economies at different stages of
development. The Bolkestein directive, for example, was accused in Europe of being a form
of "social dumping," as it favored competition between workers, as exemplified by the Polish
Plumber stereotype. While there are very few examples of a national scale dumping that
succeeded in producing a national-level monopoly, there are several examples of dumping
that produced a monopoly in regional markets for certain industries. Ron Chenow points to
the example of regional oil monopolies in Titan: The Life of John D. Rockefeller, Sr. where
Rockefeller receives a message from Colonel Thompson outlining an approved strategy
where oil in one market, Cincinnati, would be sold at or below cost to drive competition's
profits down and force them to exit the market.

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OBJECTIVE OF DUMPING
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To Find a Place in the Foreign Market

A monopolist resorts to dumping in order to find a place or to continue himself in the foreign
market. Due to perfect competition in the foreign market he lowers the price of his commodity in
comparison to the other competitors so that the demand for his commonly may increase. For this,
he often sells his commodity by incurring loss in the foreign market.
To Sell Surplus Commodity

When there is excessive production of a monopolists commodity and he is not able to sell in the
domestic market, he wants to sell the surplus at a very low price in the foreign market. But it
happens occasionally.

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Expansion of Industry
A monopolist also resorts to dumping for the expansion of his industry. When he expands it, he
receives both internal and external economies which lead to the application of the law of
increasing returns. Consequently, the cost of production of his commodity is reduced and by
selling more quantity of his commodity at a lower price in the foreign market, he earns larger
profit.
New Trade Relations
The monopolist practices dumping in order to develop new trade relations abroad. For this, he
sells his commodity at a low price in the foreign market, thereby establishing new market
relations with those countries. As a result, the monopolist increases his production, lowers his
costs and earns more profit.
EFFECTS OF DUMPING
Dumping affects both the importer and exporter countries in the following ways:
Effects on Importing Country
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The effects of dumping on the country, in which a monopolist dumps his commodity,
depend on whether dumping is for a short period or a long period and what are the nature
of the product and the aim of dumping.
If a producer dumps his commodity abroad for a short period, then the industry of the
importing country is affected for a short while. Due to the low price of the dumped
commodity, the industry of that country has to incur a loss for some time because less
quantity of its commodity is sold.
Dumping is harmful for the importing country if it continues for a long period. This is
because it takes time for changing production in the importing country and its domestic
industry is not able to bear competition. But when cheap imports stop or dumping does
not exist, it becomes difficult to change the production again.
If the dumped commodity is a consumer good, the demand of the people in the importing
country will change for the cheap goods. When dumping stops, this demand will reverse,
thereby changing the tastes of the people which will be harmful for the economy.
If the dumped commodities are cheap capital goods, they will lead to the setting up of a
now industry. But when the imports of such commodities stop, this industry will also be
shut down. Thus ultimately, the importing country will incur a loss.
If the monopolist dumps the commodity for removing his competitors from the foreign
market, the importing country gets the benefit of cheap commodity in the beginning. But
after competition ends and he sells the same commodity at a high monopoly price, the
importing country incurs a loss because now it has to pay a high price.
If a tariff duty is imposed to force the dumper to equalise prices of the domestic and
imported commodity, it will not benefit the importing country.

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But a lower fixed tariff duty benefits the importing country if the dumper delivers the
commodity at a lower price.
Effects on Exporting Country:

Dumping affects the exporting country in the following ways:
When domestic consumers have to buy the monopolistic commodity at a high price
through dumping, there is loss in their consumers surplus. But if a monopolist produces
more commodities in order to dump it in another country, consumers benefit. This is
because with more production of the commodity, the marginal cost falls. As a result, the
price of the commodity will be less than the monopoly price without dumping.
But this lower price than the monopoly price depends upon the law of production under
which the industry is operating. If the industry is producing under the law of diminishing
returns, the price will not fall because costs will increase and so will the price increase.
The consumers will be losers and the monopolist will profit. There will be no change in
price under fixed costs. It is only when costs fall under the law of increasing returns that
both the consumers and the monopolist will benefit from dumping.
The exporting country also benefits from dumping when the monopolist produces more
commodity. Consequently, the demand for the required inputs such as raw materials, etc.
for the production of that commodity increases, thereby expanding the means of
employment in the country.
The exporting country earns foreign currency by selling its commodity in large quantity
in the foreign market through dumping. As a result, its balance of trade improves.

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ADVANTAGES OF DUMPING
Unfairly
The main advantage of dumping is being able to sell at unfairly competitive lower price.
Generally a country will have to give the exporting businesses a huge subsidy to enable
them to sell the export below cost. The country is willing to take a loss on the product to
increase its comparable advantage in that industry
Attack
It may do this because it wants to create jobs for its residents. It often uses dumping as an
attack on the other country's industry, in the hopes of putting that country's producers out
of business, and dominating that industry.
DISADVANTAGES OF DUMPING
very expensive
The main disadvantage of dumping is that it's very expensive to maintain. It can take
years for dumping to work. Meanwhile, the cost of subsidies can add to the export
country's sovereign debt.
Trade partner
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The second disadvantage is retaliation by the trade partner. This can lead to trade
restrictions and tariffs. The third is censure by international trade organizations, such as
the World Trade Organization (WTO) or the European Union (EU).
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TYPES OF DUMPING
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Sporadic Dumping
It is adopted under exceptional or unforeseen circumstances when the domestic
production of the commodity is more than the target or there are unsold stocks of the
commodity even after sales. In such a situation, the producer sells the unsold stocks at a
low price in the foreign market without reducing the domestic price. This is possible only
if the foreign demand for his commodity is elastic and the producer is a monopolist in the
domestic market. His aim may be to identify his commodity in a new market or to
establish himself in a foreign market to drive out a competitor from a foreign market. In
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this type of dumping, the producer sells his commodity in a foreign country at a price
which covers his variable costs and some current fixed costs m order to reduce his loss.
Persistent Dumping
When a monopolist continuously sells a portion of his commodity at a high price in the
domestic market and the remaining output at a low price in the foreign market, it is called
persistent dumping. This is possible only if the domestic demand for that commodity is
less elastic and the foreign demand is highly elastic. When costs fall continuously along
with increasing production, the producer does not lower the price of the product more in
the domestic market because the home demand is less elastic. However, he keeps a low
price in the foreign market because the demand is highly elastic there. Thus, he earns
more profit by selling more quantity of the commodity in the foreign market. As a result,
the domestic consumers also benefit from it because the price they are required to pay is
less than in the absence of dumping.
Predatory Dumping
The predatory dumping is one in which a monopolist firm sells its commodity at a very
low price or at a loss in the foreign market in order to drive out some competitors. But
when the competition ends, it raises the price of the commodity m the foreign market.
Thus, the firm covers loss and if the demand in the foreign market is less elastic, its profit
may be more.
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DUMPING: ACCORDING TO GATT
AND WTO ANTI-DUMPING AGREEMEN

Dumping occurs when the export price of goods imported into India is less than the Normal
Value of like articles sold in the domestic market of the exporter. Imports at cheap or low
prices do not per se indicate dumping. The price at which like articles are sold in the domestic
market of the exporter is referred to as the Normal Value of those articles.
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The normal value is the comparable price at which the goods under complaint are sold, in the
ordinary course of trade, in the domestic market of the exporting country or territory. If the
normal value cannot be determined by means of domestic sales, the Act provides for the
following two alternative methods:
Comparable representative export price to an appropriate third country.
Cost of production in the country of origin with reasonable addition for administrative,
selling and general costs and for profits.
The export price of goods imported into India is the price paid or payable for the goods by the
first independent buyer
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EQUILIBRIUM UNDER DUMPING
(WITH DIAGRAM)
When a monopolist sells products at higher price in the home market and lower prices in the
international market, it is called dumping.
It is a special form of price discrimination in which an organization sells its products at a
price that is lower than the original price to get rid of the excess inventory.
Dumping is done in case of international trade in which an organization exports its products
at a price lower than the price it charges in its own country. In such a situation, the sales
volume and market share of the organizations operating in other countries may reduce. The
losses which are incurred in the international markets are compensated in home markets.
A monopolist has following motives for dumping
To dispose an excess stock produced due to wrong judgment of demand
To develop new trade relations with countries

To benefit from economies of scale
To drive competitors out of the foreign market
The concept of dumping can be explained with the help of Figure
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In Figure
ARH = Average revenue in home market
MRH = marginal revenue in home market
ARW = MRW = Foreign market demand curve
PH = Price in home market (monopoly price)
PW = Price in world market (competitive price)
In Figure an assumption is taken that there are two markets that is domestic market (home
market) and foreign market (world market) faced by an organization. In domestic market, the
organization enjoys monopoly, whereas in foreign market, the organization faces perfect
competition. Monopolist is in equilibrium when profits are maximum that is when MR=MC.
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In Figure the equilibrium is achieved at point E, with quantity as OQ 2, out of which OQ1 is sold
in home market at PH price and Q1Q2 is sold at price PW in world market. The price charged in
world market is lower than the price charged in the home market.
Dumping is a kind of predatory pricing in which a foreign organization charges high prices and
earns profits in its own country and uses these profits to sell the products at lower prices to build
market share in other countries
According to World Trade Organization, dumping should be condemned, if it is harming an

established industry in a particular market. Thus, every country has an anti-dumping policy,
which levies the duties that must be paid by organizations; if they engage in dumping. Antidumping duties act as measures that help in reducing the impact of dumping on domestic
producers.
Anti-dumping policies differ from country to country. According to China, dumping is a
subsidization of exports resulting in substantial injury or the threat of substantial injury, to an
established domestic industry, or substantially impeding the establishment of a comparable
domestic industry. According to US, dumping occurs if the products are priced only minimally
above cost, or at prices below those charged in the producing country.
Anti-dumping duties are similar to countervailing duties imposed on subsidized products
imported into a country.
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PRICE DETERMINATION
UNDER DUMPING
Under dumping, the price is determined just like discriminating monopoly. The only difference
between the two is that under discriminating monopoly both markets are domestic while under
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dumping one is a domestic market and the other is a foreign market. In dumping, a monopolist
sells his commodity at a high price in the domestic market and at a low price in the foreign
market.
Price determination under dumping is based on the following conditions or assumptions:
Conditions
The main aim of the monopolist is to maximize his profit. He, therefore, produces that
output at which his marginal revenue equals marginal cost. Since he sells his commodity
in the domestic market and the foreign market separately, he adjusts the quantity such
wise in each market that marginal revenues in both markets are equal.
Given the marginal cost of producing the commodity, the most profitable monopoly
output will be determined at a point where the combined marginal revenue of both the
markets equals the marginal cost. In other words, dumping profit = MRH + MRF = MC.
The elasticitys of demand must be different in the two markets. The demand should be
less elastic in the domestic market and perfectly elastic in the foreign market. As a result,
the monopolist sells his commodity at a low price in the foreign market and at a high
price in the domestic market. Thus, the price and MR are related to each other by this
equation: MR = p (=AR) (1 1/E), where e refers to the elasticity of demand.
The foreign market should be perfectly competitive and the domestic market is
monopolistic
The buyers in the domestic market cannot buy the cheap commodity from the foreign
market and bring it in the domestic market.
Explanation
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Given these conditions, price and output under dumping will be determined by the equality
of the total marginal revenue curve and the marginal cost curve of producing the commodity.
Figure 5 illustrates price-output determination under dumping.
The foreign market demand curve faced by the monopolist is the horizontal line PD F which is
also the MR curve because the foreign market is assumed to be perfectly elastic. The demand
curve in the home market with a less elastic demand for the product is the downward sloping
curve DH and its corresponding marginal revenue curve is MRH. The lateral summation of
MRH and PDF curves leads to the formation of TREDF as the combined marginal revenue curve.
In order to determine the quantity of the commodity produced by the monopolist, we take the
marginal cost curve MC. E is the equilibrium point where the MC curve equals the combined
marginal revenue curve TREDF. Thus OF output will be produced for sale in the two markets.
Since FE is the marginal cost, equilibrium in the domestic market will be established at point R
where the marginal cost FE equals the MRH curve (FE = HR).
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Now OH quantity will be sold at HM price in the home market and the remaining quantity HF
will be sold in the foreign market at OP (= FE) price. Thus the monopolist sells more in the
foreign market with the more elastic demand at a low price and less in the home market with the
less elastic demand at a high price. His total profits are TREC.
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HISTORICAL DUMPING
COUNTRY WISE
Dumping by Germany
There is general agreement that before 1914, export dumping was more widespread and more
systematically practiced in Germany than any other country. The resort to export dumping by
Germany seems to have been facilitated by the high tariffs and by the complete organization
of large scale industry into cartels or industrial selling and buying combinations. These two
factors monitored price competition in the domestic market. Cartels monitored price
competition from outside Germany and the combinations monitored the German producers
themselves. In concert, they made it possible for many of the cartels to adopt as a definite
price policy the maintenance of domestic prices at the foreign level plus the full amount of
the German import duties and the sale for exports at best prices obtainable, even if these
should be substantially below domestic prices. It is obvious that systematic and continued
dumping is not likely to arise if the dumping concern must share the higher domestic prices
with the competitors and must bear by itself the cost of the export dumping.
The cartel method in Germany provided the machinery whereby, without the loss of
individuality of the separate concerns, the benefits and burdens of export dumping could be
equitably distributed among the domestic producers. The effects of the protective tariff were
such that foreign competitors were prevented from sharing in the high domestic prices
resulting from the price fixing activities of the cartels. However, export dumping by German
industries and especially by the iron and steel trade began in the nineteenth century, long
before the establishment of cartels. Since 1914, writers have always made the charge hostile
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to Germany and all her works that much of the German dumping was actuated by predatory
motives. Some writers have gone so far as finding a manifestation of a deep laid conspiracy
between the German government and industry to destroy the competing industries of foreign
countries.
Dumping in the United States of America

Since the late eighties of the nineteenth century, export dumping on a continued and
systematic scale has been a common practice of American manufacturers. There is according
to Viner, immeasurable evidence available both in official and nonofficial sources, which is
conclusive in this respect, and which further demonstrates beyond doubt that a substantial
fraction of the American export trade in manufactured commodities had, before 1914, been
developed and maintained on the basis of sale at dumping prices. The abundance of evidence
is more significant and convincing because American exporters who resorted to dumping
generally endeavored to conceal their export prices from the general public. Export price lists
and quotations were carefully kept out of domestic circulation. In 1902, a Committee of the
Democratic Party seeking campaign material succeeded in obtaining from a foreign
subscriber a copy of the discount sheet of an American journal, which contained the lowest
export prices. A New York Tariff Reform pamphlet, published in 1890, presented many
instances of dumping. What followed was a buildup of evidence of the prevalence of
dumping.25 In the USA, the systematic and continued practice of dumping appears to have
been largely either confined to the dominant concerns (trusts) of the staple industries or to
manufacturers of specialties. In other countries, and especially Germany, even the smallest
concerns participated in exportation at reduced prices through their membership in cartels or
producers combinations and through the use of export bounties.
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CALCULATION OF DUMPING
MARGINS AND DUTY ASSESSMENT
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Calculation of dumping margins

The Agreement contains rules governing the calculation of dumping margins. In the usual
case, the Agreement requires either the comparison of the weighted average normal value to
the weighted average of all comparable export prices, or a transaction-to-transaction
comparison of normal value and export price (Article 2.4.2). A different basis of comparison
can be used if there is targeted dumping: that is, if a pattern exists of export prices differing
significantly among different purchasers, regions or time periods. In this situation, if the
investigating authorities provide an explanation as to why such differences cannot be taken
into account in weighted average-to-weighted average or transaction-to-transaction
comparisons, the weighted average normal value can be compared to the export prices on
individual
transactions.
Refund or reimbursement
The Agreement requires Members to collect duties on a non-discriminatory basis on imports
from all sources found to be dumped and causing injury, except with respect to sources from
which a price undertaking has been accepted. Moreover, the amount of the duty collected
may not exceed the dumping margin, although it may be a lesser amount. The Agreement
specifies two mechanisms to ensure that excessive duties are not collected. The choice of
mechanism depends on the nature of the duty collection process. If a Member allows
importation and collects an estimated anti-dumping duty, and only later calculates the
specific amount of anti-dumping duty to be paid, the Agreement requires that the final
determination of the amount must take place as soon as possible, upon request for a final
assessment. In both cases, the Agreement provides that the final decision of the authorities
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must normally be made within 12 months of a request for refund or final assessment, and
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Individual exporter dumping margins

The Agreement requires that, when anti-dumping duties are imposed, a dumping margin be
calculated for each exporter. However, it is recognized that this may not be possible in all
cases, and thus the Agreement allows investigating authorities to limit the number of
exporters, importers, or products individually considered, and impose an anti-dumping duty
on uninvestigated sources on the basis of the weighted average dumping margin actually
established for the exporters or producers actually examined. The investigating authorities
are precluded from including in the calculation of that weighted average dumping margin any
dumping margins that are de minimize, zero, or based on the facts available rather than a full
investigation, and must calculate an individual margin for any exporter or producer who
provides the necessary information during the course of the investigation.
New shippers
The Agreement makes provision for the assessment of anti-dumping duties on exports from
producers or exporters who were not sources of imports considered during the period of
investigation. In this circumstance, the investigating authorities are required to conduct an
expedited review to determine a specific margin of dumping attributable to the exports of
such a new shipper. While that review is in progress, the authorities may request
guarantees or withhold appraisement on imports, but may not actually collect anti-dumping
duties on those imports.
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DEFINATION
Anti-dumping is a measure to rectify the situation arising out of the dumping of goods &
its trade distortive effects. Thus the purpose of anti-dumping duty is to rectify the trade
distortive effects of dumping & re-establish fair trade
A protectionist tariff that a domestic government imposes on foreign imports that it
believes are priced below fair market value. In the United States, anti-dumping duties are
imposed by the Department of Commerce and often exceed 100%. They come into play
when a foreign company is selling an item significantly below the price at which it is
being produced. The logic behind anti-dumping duties is to save domestic jobs, although
critics argue that this leads to higher prices for domestic consumers and reduces the
competitiveness
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MEANING
Anti-dumping can be fined as a protective device available to the states against vicissitudes
associated with the free trade. In the recent years a large number countries have become
frequent users of anti-dumping. Many of the heaviest anti-dumping users are countries who
did not even have an anti- dumping statute a decade ago.
The traditional users continue to make use of these measures with more vigour by targeting
new users. Anti-Dumping duties were introduced by the developed countries to protect their
industries against the low priced imports. Developing countries supported the inclusion of the
provision relating to anti-dumping duties under GATT because they wanted to levy of antidumping duties to be under international regulation. Anti-dumping measures are not only
legal but they are also flexible in usage. Further, anti-dumping duties can be presented not
only as protection but also as an encounter against unfair competition.
If a company exports a product at a price lower than the price it normally charges on its own
home market, it is said to be dumping the product. Is this unfair competition? Opinions
differ, but many governments take action against dumping in order to defend their domestic
industries. The WTO agreement does not pass judgment. Its focus is on how governments
can or cannot react to dumping it disciplines anti-dumping actions, and it is often called
the Anti-Dumping Agreement. (This focus only on the reaction to dumping contrasts with
the approach of the Subsidies and Countervailing Measures Agreement.)
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MEASURES OF ANTI-DUMPING
Tariff Duty
To stop dumping, the importing country imposes tariff on the dumped commodity
consequently, the price of the importing commodity increases and the fear of dumping
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ends. But it is necessary that the rate of duty on imports should be equal to the difference
between the domestic price of the commodity and the price of the dumped commodity.
Generally, the tariff duty is imposed more than this difference to end dumping, but it is
likely to have harmful effects on other imports.
Import Quota
Import quota is another measure to stop dumping under which a commodity of a specific
volume or value is allowed to be imported into the country. For this purpose, it includes
the imposition of a duty along with fixing quota, and providing a limited amount of
foreign exchange to the importers.
Import Embargo
Import embargo is an important retaliatory measure against dumping. According to this,
the imports of certain or all types of goods from the dumping country are banned.
Voluntary Export Restraint

To restrict dumping, developed countries enter into bilateral agreements with other
countries from which they fear dumping of commodities. These agreements ban the
export of specified commodities so that the exporting country may not dump its
commodities in other country. Such bilateral VER agreements exist between India and
EU countries in exporting Indian textiles.
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ANTI-DUMPING
IN
INDIA:
LEGAL FRAMEWORK
The principle of imposition of anti-dumping duties was propounded by the Article VI of
General Agreement on Tariffs & Trade (GATT) 1994 Uruguay Round
Indian legislation in this regard is contained in Section 9A and 9B (as amended in 1995)
of the Customs Tariff Act, 1975
Further regulations are contained in the Anti-Dumping Rules [Customs Tariff
(Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles

and for Determination of Injury) Rules, 1995]
The Designated Authority for conducting investigations pertaining to Anti-Dumping

issues and on basis thereof, for forwarding its recommendations is the Ministry of
Commerce, Government of India.
The responsibility for Imposition and Collection of duties as imposed /recommended by
the Adjudicating authority is imposed upon the Ministry of Finance, Government of
India.
Section 9A of the Customs Tariff Act, 1975 (hereinafter referred to as the Act) as
amended in 1995 and the Customs Tariff (Identification, Assessment and Collection of
Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995
(hereinafter referred to as the Rules) framed there under form the legal basis for antidumping investigations and for the levy of anti-dumping duties. These are in consonance
with the WTO Agreement on anti-dumping measures.
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ANTI-DUMPING
IN
INDIA:
REGULATORY FRAMEWORK
Anti-dumping, anti-subsidies & countervailing measures in India are administered by the
Directorate General of Anti-dumping and Allied Duties (DGAD) functioning in the
Department of Commerce in the Ministry of Commerce and Industry and the same is
headed by the Designated Authority. The Central Government may, by notification in
the Official Gazette, appoint a person not below the rank of a Joint Secretary to the
Government of India or such other person as that Government may think fit as the
Designated Authority. In India, there is a single authority DGAD designated to initiate
necessary action for investigations and subsequent imposition of anti-dumping duties.
The Designated Authority is a quasi-judicial authority notified under the Customs Act,
1962. A senior level Joint Secretary and Director, four investigating officers and four
costing officers assist the DGAD. Besides, there is a section under the DGAD headed by
the Section-Officer to deal with the monitoring and coordination of die functioning of the
DGAD.
The Designated Authoritys function, however, is only to conduct die anti-dumping/anti
subsidy & countervailing duty investigation and make recommendation to the
Government for imposition of anti-dumping or anti subsidy measures. Such duty is
finally imposed/ levied by a Notification of the Ministry of Finance. Thus, while the
Department of Commerce recommends the Anti-dumping duty, it is the Ministry of
Finance, which levies such duty.
The law provides that an order of determination of existence, degree and effect of
dumping is appealable before the Customs, Excise and Gold (Control) Appellate Tribunal
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(CEGAT) a judicial tribunal. It reviews final measures and is independent of
administrative authorities.
This is consistent with the WTO provision of independent tribunals for appeal against
final determination and reviews. No appeal will lie against the preliminary findings of the
Authority and the provisional duty imposed on the basis thereof. The appeal to the
CEGAT should be filed within 90 days.
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Finance
WTO
AND
ANTI-DUMPING
AGREEMENT
Though the WTO rules normally discourage protectionist policies, they do permit and
accommodate anti-dumping measures to provide temporary relief to domestic industry against
dumping by foreign firms. Many trade economists view anti-dumping as the most pernicious
WTO-sanctioned instrument of protection available to countries currently. The best explanation
for its existence is that developed countries have chosen not to give it up. Lately, however,
developing countries have also become frequent users of this instrument.
The WTO provisions on anti-dumping are contained in GATT Article VI and the Uruguay Round
Agreement on Anti-dumping (formally, Agreement on Implementation of Article VI). The latter
builds on the Tokyo Round Anti-dumping Agreement, which had been signed by developed
countries only. The UR Agreement revises the Tokyo Agreement in some areas while adding
precision in others.
The Agreement on Anti-dumping introduces specific provisions relating to the methodology of
establishing the existence of dumping and injury. For example, the United States and European
Community had for years compared the prices charged in Individual export transactions with the
average home market price to establish dumping. This practice biased the outcome in favor of a
positive finding. The Agreement on Anti-dumping now requires that export prices be compared
on either "average-to-average" or "transaction-to-transaction" basis. As a result, the US has
adopted the average-to-average comparisons in majority of the cases.
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SUBSIDIES
This agreement does two things: it disciplines the use of subsidies, and it regulates the
actions countries can take to counter the effects of subsidies. It says a country can use the
WTOs dispute settlement procedure to seek the withdrawal of the subsidy or the removal of
its adverse effects. Or the country can launch its own investigation and ultimately charge
extra duty (known as countervailing duty) on subsidized imports that are found to be
hurting domestic producers.
The agreement contains a definition of subsidy. It also introduces the concept of a specific
subsidy i.e. a subsidy available only to an enterprise, industry, group of enterprises, or
group of industries in the country (or state, etc) that gives the subsidy. The disciplines set out
in the agreement only apply to specific subsidies. They can be domestic or export subsidies.
The agreement defines two categories of subsidies: prohibited and actionable. It originally
contained a third category: non-actionable subsidies. This category existed for five years,
ending on 31 December 1999, and was not extended. The agreement applies to agricultural
goods as well as industrial products, except when the subsidies are exempt under the
Agriculture Agreements peace clause, due to expire at the end of 2003.
Prohibited subsidies
Subsidies that require recipients to meet certain export targets, or to use domestic goods
instead of imported goods. They are prohibited because they are specifically designed to
distort international trade, and are therefore likely to hurt other countries trade. They can
be challenged in the WTO dispute settlement procedure where they are handled under an
accelerated timetable. If the dispute settlement procedure confirms that the subsidy is
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prohibited, it must be withdrawn immediately. Otherwise, the complaining country can
take counter measures. If domestic producers are hurt by imports of subsidized products,
countervailing duty can be imposed.
Actionable subsidies
In this category the complaining country has to show that the subsidy has an adverse
effect on its interests. Otherwise the subsidy is permitted. The agreement defines three
types of damage they can cause. One countrys subsidies can hurt a domestic industry in
an importing country. They can hurt rival exporters from another country when the two
compete in third markets. And domestic subsidies in one country can hurt exporters
trying to compete in the subsidizing countrys domestic market. If the Dispute Settlement
Body rules that the subsidy does have an adverse effect, the subsidy must be withdrawn
or its adverse effect must be removed. Again, if domestic producers are hurt by imports of
subsidized products, countervailing duty can be imposed.
Some of the disciplines are similar to those of the Anti-Dumping Agreement.
Countervailing duty (the parallel of anti-dumping duty) can only be charged after the
importing country has conducted a detailed investigation similar to that required for antidumping action. There are detailed rules for deciding whether a product is being
subsidized (not always an easy calculation), criteria for determining whether imports of
subsidized products are hurting (causing injury to) domestic industry, procedures for
initiating and conducting investigations, and rules on the implementation and duration
(normally five years) of countervailing measures. The subsidized exporter can also agree
to raise its export prices as an alternative to its exports being charged countervailing duty.
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Finance
CONCULSION
Dumping is price discrimination between two markets in which the monopolist sells a
portion of his produced product at a low price and the remaining part at a high price in
the domestic market Dumping is an international price discrimination in which an
exporter firm sells a portion of its output in a foreign market at a very low price and the
remaining output at a high price in the home market
The sale of goods abroad at a price which is lower than the selling price of the same
goods at the same time and in the same circumstances at home, taking account of
differences in transport costs
The use of anti-dumping measures as a trade protection tool has increased phenomenally
during the last decade. One significant aspect of this new trend is the increasing
involvement of developing countries. India is one such country which has emerged as a
frequent
user
of
anti-dumping
measures.
However, safeguarding competition in domestic industry is not the only purpose that antidumping laws serve and in the present situation, they are acting as barriers for free trade
and domestic producers are concerned about avoiding competition
Critics of anti-dumping duties though find it difficult to prove the fact that the imposition
of anti-dumping duties results in economic benefits to the domestic industry. The role of
the government in tackling the problem of anti-dumping should be to protect the smaller
industries rather than concentrating on the major industries. This is because; it is these
small scale industries which suffer the most as a result of imposition of anti-dumping
duties.
BIBLIOGRAPHY
WWW.SlideShare.com
WWW.Wikipidia.com
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WWW.investopedia.com
WWW.mangemaentpradise.com
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