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Overview
What is dumping? Like Products Normal Value Relationship Injury Impact Remedial Action Case Studies Implications
What is Dumping?
A product is said to be dumped when its export price is less than its normal value of a like product in the domestic market in the exporting country.
What is Dumping?
Export Price
If a product is exported at a price (Export Price) lower than the price (Normal Value) it normally charges on its own home market, it constitutes dumping
Like products
A product is identical alike in all respects OR A product that has closely resembling characteristics
Normal Value
The Normal Value is The price in the exporters domestic market, or The price charged by the exporter in another country, or Production costs plus expenses and normal margins. other profit
ANTI-DUMPING FLAWS
Price discrimination is an unfair trade practice
Objectives of dumping
Benefits of Dumping
o
It finds market for its surplus production Exporting more, which strengthens its balance of Payments
Transitional Dumping
Sporadic Dumping
good as expected
Antidumping Laws
In existence since 1980s AntiDumping Petition Monopoly Firms POV Predatory Dumping Misuse of Antidumping
Relationship
Dumping
Injury
Injury
Types of Injury
Material injury to a domestic industry, Threat of material injury to a domestic industry, Economic retardation of the establishment of a domestic industry
The Impact
The Impact on the industries of importing country
Loss of Sales Reduced Profits Loss of market share Reduced returns on investments Decline in Productivity Decline in output Under utilization of capacity Cash flow Inventories Employment Wages Growth New Investment Ability to raise capital
Adverse Effect On
Allowances
Import Products
Not subjected to internal taxes No less favourable than domestic goods No quantitative restrictions, fees and formalities
Remedial Action
Restrict Dumping
OR
Countervailing duties
Safeguard measures
Concept of Zeroing
Zeroing is a concept whereby non-dumped sales are not permitted to offset dumped sales, essentially by setting the value of a negative dumping margin to zero
It is a significant cause of the systemic overestimation of dumping margins and subsequent application of inflated antidumping duties
Impact of Zeroing
If every comparison generates a positive dumping margin, then the prohibition of zeroing will have no impact.
If there are many comparisons generating negative margins, then prohibition of zeroing can have a very substantial impact on the amount of anti-dumping duties ultimately applied
In September 1996 the European Communities (EC) initiated an antidumping case against imports from India cotton-type bed linen.
EU WAS SPLIT ABOUT THE CASEREASON:
Protecting the EUs fabric weaving sector from low-priced import competition Opposing the anti-dumping action: job less companies that consumed the imports which faced redundancies as a result of the protective remedy
Measures Taken By EU
Constructed value as a substitute for Normal Value EC identified five types of cotton bed linen exported to it and also sold in representative quantities in India. EC established export price for cotton-type bed linen in the EC market and compared constructed value with export price Calculated dumping margins for different models (for example- pillowcases and sheets)
The Appellate Body of the World Trade Organization found EU to be volatile of the WTOs Anti-Dumping (AD) agreement, and ruled in favour of India. The Appellate Body found fault with the EU Commissions AD investigations and measures such as: o the practice of zeroing; i.e. investigating the existence of margins of dumping. o calculating the administrative, selling and general (SG&A) costs and profits . o calculating the amount of profits by excluding sales by other exporters or producers not made in the ordinary course of trade o using all types of bed-linen products - bed sheets, duvet covers and pillow cases etc.