• Brain Booster Articles

ANTI-DUMPING LAWS

Author: Sameer Afzal Ansari, IV year of B.A.,LL.B. from Guru Gobind Singh Indraprastha University


If twe ttake tout tsome ttime tfrom tyour tbusy tsocial tlives tand tpick tup ta toy with twhich tour tyoung tones tplay, twe twill tfind t“Made tin tChina” twritten on tit, tnot ta tthing tof tsurprise twe tall tare tfamiliar twith tthis tbut tyou’ll tget surprised tto tsee tthe tprice tof tthe ttoy, tit twill tbe tdamn tcheap. tThis tis just one texample twe tevery tyear tget tnumerous tproducts tfrom tdifferent countries tat tvery tcheap trates, twe tmight tthink tof tit tas tprofitable timports for tour tcountry tbut tin tfact tit tis t‘dumping’ tof tits tproduct tby tanother country ton tour tland. t


What is Dumping?

WTO tdefines tdumping tas “a tfirm tis tsaid tto tdump tif tit tsells tits tproduct in tanother tcountry tat ta tprice tless tthan tthe tnormal tvalue. tIt tdoes tnot matter twhether ta tforeign tfirm tsells tat ta thigher tor tlower tprice tthan tthe domestic tones; tas tlong tas tthe tprice tcharged tin tthe tdomestic tcountry tis below tthat tin tits town tcountry, tthe tfirm tcan tbe theld tdumping.”The Ministry tof tCommerce tand tIndustry tresponsible tfor tfree tand tfair ttrade in tIndia tconsiders tdumping tto toccur ‘When tthe texport tprice tof tthe goods timported tin tIndia tis tless tthan tthe tnormal tvalue tof tthe tlike articles sold tin tthe tdomestic tmarket.’


Normal tValue tof ta tgood tis tthe tprice tcomparable tat twhich ta tgood tis sold in tthe tdomestic tmarket tof tthe texporting tcountry tor tterritory. tIn tthe above tgiven texample, tit twould tbe tthe tprice tof tthe ttoy tin tthe tChinese domestic tmarket. tThe tdifference tbetween tthe ttwo tprices tis tcalle tMargin of tDumping. tToday, tdumping tis tuniversally tconsidered tan tunfair t businesspractice tas tgoods tof tthe tsame tquality tought tto tbe tsold tat tthe same tprice teverywhere, texception tto tlegal tpractices tlike timport ttariff tand local ttaxes tthat tmay tcause tvariation tin tthe tprice tof tthe tproduct.


Existing Legal Framework

The tcurrent tset tof tlaws tin tIndia tthat tdeal twith tcurbing tthe tpractice tof dumping tare tderived tfrom t:


  • International tlaws: such tas tArticle t6 tof GATT t(General tAgreement on tTariffs tand tTrade), It tlays tdown tcertain tprinciples tto tbe followed by tmember tcountries tfor timposition tof treliefs tsuch tas tanti-dumping tduties tand tcertain tother tsafeguards.


  • Local tlaws: Such tas tSection t9A tand t9B tof Customs tand tTariffs tAct, 1975 (Amended t1995) tand t The tAnti-dumping trules tsuch tas (Identification, tAssessment tand tCollection tof tAnti-dumping tDuty on tDumped tArticles tand tfor tDetermination tof tInjury) tRules tof 1995, Section t9A tof tcustoms tand ttariffs tAct t1975 tstates:

If any article tis exported from any country or territory to India at less than its normal value, then, upon the importation of such article into india, the central government may by notification in the official gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article.


  • Policy tRecommendations: Recommendations tby tDesignated Authority, Ministry tof tCommerce tand tIndustry, tGovernment tof tIndia. Investigative recommendations tby tMinistry tof tFinance. tBoth tthe ministries thave tin tpast trecommended tchanges tin tAnti-dumping laws such tas tthe t1993 trecommendation twas tincorporated tin t1975 tact tby an tamendment.


Who can complain of dumping?

Anti-dumping tmeasures tare tused tin tmost tcountries tby tthe tstate tto protect tits tdomestic tplayers tin tthe market. tSo tin tIndia tas twell ta dumping investigation tcan tbe tinitiated ton ta tcomplaint tby ta t“Domestic tIndustry.”


Ministry tof tCommerce tand tIndustry tdefines tDomestic tIndustry tas, Producers tof tLike tArticles tas ta twhole tor tthose tproducers twhose cumulative output constitutes ta tmajor tchunk tof ttotal tIndian tproduction. The tcomplaint thas tto tbe in tthe tform tof twritten tApplication tby tor ton behalf tof tDomestic Industry.


Implementation of Law

For ta tdomestic tplayer tto tget trelief tunder tthe tcurrent tAnti-dumping tlaws, it tmust tshow tmaterial tinjury tcaused tby tdumping. tThe tmaterial tinjury cannot tbe tbased ton tfuture tthreats tor tconjectures. tMaterial tinjury tcan tbe established tby twhen tthe tfollowing tgets testablished t:


  • Step t1 tVolume tEffect: The tauthorities texamine tthe tincrease tin tthe import tof tdumped tmaterials teither tin tabsolute tterms tor tin trelation to tproduction tor tconsumption tin tIndia and tits teffect ton tthe domestic tplayers. tIf tthe tvolume tis thigh tin teither tterms tthan tthe next tstep tis treached.


  • Step t2 tPrice tEffect: The tvast tinflow tof tmaterial tgoods tin tthe market leads tto tdecrease tin tthe tprices tof toverall tgoods t(By tthe tlaw tof demand tand tsupply) tand tfurther tthwart tthe tdomestic tplayers tfrom making tprofits. tOnce tthis tis testablished tthe tfinal tstage tis tof establishing ta causal tlink.


  • Step t3 tCasual tLink: A tcausal tlink tmust tbe tthere tbetween tthe material tinjury tsuffered tand tthe tdumped tgoods. tThis tstep talsottakes into tregard tother tfactors tsuch tas tgeneral tproductivity tof tthe domestic tplayer, tif tthe tgeneral tproductivity tis titself tlow tthen tthe causal tlink tcannot tbe tsaid tto texist.


When tall tthe tthree tconditions tare tmet, tit tis tascertained tthat tthedomestic industry thas tfaced tmaterial tinjury ton taccount tof tdumping tand tis accordingly tprovided trelief.


Reliefs Available

  • Imposition tof tAnti-dumping tDuties: Anti-dumping tduties tare tthe most tcommon tform tof tremedy tprovided tagainst tdumping. tThese duties tare timposed tin tnon-cooperative texporters tand tare tusually tat very thigh trates tas tbeing ta tform tof tpenalty.


  • Lesser tDuty tunder tGATT tprovisions: By tGATT, tmembers tcannot impose thigher tduties tthan tthe tmargin tof tdumping, tsome tmost tof the tnations timpose tduties tproportion tto tthe tinjury tsuffered. tThe rate tis tdetermined tat twhich tis tadequate tto tmitigate tor tremove tthe injury tto tthe tdomestic tindustry.


  • Injury tMargin: Injury tmargin tis tthe tdifference tbetween tthe tfair selling tprice tdue tto tthe tdomestic tindustry tand tlanded tcost tof tthe product taccused tof tbeing tdumped. tGovernments tcan tadopt tdifferent courses tof trelief tgoing tby tthe tmagnitude tof tinjury tmargin.


  • De tMinimis tMargins: These tmargins tare tadopted tkeeping tin tregard the tnotions tof tfair tcompetition tand tproviding tadequate opportunities to tworld tplayers tto ttap tthe tdomestic tmarket tkeeping taligned twith the tethos tof tglobalisation. tUnder tthe tprinciple tany texporter taccused of tdumping, tif tthe tmargin tof tdumping tis tless tthan t2% tof tthe export tprice tof tthe tproduct tin tquestion tis timmune tfrom tAnti-dumping tlaws teven tif tall tthe tthree tsteps tare tsatisfied.


  • Further tthe tinvestigations tcarried tout tunder tthe tcurrent tlaws tare restricted tto tthose tcountries twhose tdumped timports tare tmore tthan 3% tof tthe ttotal timports tof tthe tcountry. tChina tin tmost tof tthe tcases takes tadvantage tof tthis tprinciple tto tdefend titself tagainst tthe accusations tof tdumping.


  • Get tUndertakings tfrom texporter: If tdumping tis tproved, tthen tgovernment tof tIndia tamong tthe tavailable tmeasures tcan task tthe texporter tconcerned tto trevise tthe tprices tto tremove tdumping. tIf tthe texporter tagrees tto tit tthen tunder tthe tGATT tprovisions tthe tinvestigations tagainst tthat tcountry tneed tto tbe tsuspended.


Why is Anti-dumping Laws Important?

Anti-dumping tmeasures thave tassumed tmuch tmore timportance ttoday than any ttime tin tthe tpast, twith tthe tadvent tof tglobalisation tand tLiberalization Foreign ttrade thas tbeen tgrowing texponentially. tEvery tday tnew tplayers tare entering tnew tmarkets tof tthe tworld tit tthus tbecomes tnecessary tfor tevery nation tto tprotect tits tdomestic tplayers tfrom tunfair tpractices. tA tmajority of tthe tcountries ttoday tmake teffective tuse tof tAnti-dumping tmeasures. Dumping tis ta tmenace tto tthe tdomestic tmarket tand tto tthe teconomy tas ta whole tfor tany tcountry. tSome tof tthe tgrave tconsequences tif tdumping goes on tunchecked tare t:


  • Decline tin tthe toutput tof tdomestic tplayers due tto tlosses tfaced tby the tarrival tof tcheap tproducts tin tthe tmarket. tAnother tconsequence being ta tdecline tin tproductivity.


  • Loss tof tMarket tShare tfor tindigenous tProducts, twhich tin tturn hampers tthe tsecondary tsector tof tthe teconomy. tOur tcountry tsuffers worse tfrom tthis tsort tof tdumping.


  • Increasingly treduced treturns ton tinvestments tdue tto tlosses tin tthe market.


  • Reduced twages for tthe tworkers ton taccount tof tdecrease tin tthe overall tprices tof tthe tgoods t(Price teffect tcomes tinto tplay)


  • Adverse teffects ton tcash tflow are talso tobserved tdue tto tdumping. Further tdue tto tthe tlosses tfaced tby tdomestic tproducers ta tmarket’s ability tto traise tcapital tgets tseverely thampered. tIn ttoto, twe tcan tsay the citizens tloose tthe tincentive tto tenter tthe tmarket which tis detrimental tto tany teconomy.

No tcountry tin tthe tworld ttoday tis tself-sufficient; tin tfact, teach tis dependent ton tother tdirectly tor tindirectly. tAt tthe tsame ttime, tit tis important tto thave tfree tand tfair ttrade tto tensure tequal tconditions tand opportunities tfor tall tcountries tto tprosper. tDumping tis tone tsuch tpractice that thampers tthis tprospect. tIndia tthough thas tlaws tin tthis tregard tbut they are tfar tfrom tbeing tperfect, timplementation tglitches tcombined twith tthe laxative tapproach tof tgovernment toften tleads tto trampant tdumping tin tfew areas tof tthe teconomy, tit tneeds tto tcurbed tas tsoon tas tpossible tor telse our cliché tof temerging tsuperpower twill tforever tremain tsuch.