2. Dumping - Definition
The export by a country or company of a product
at a price that is lower in the foreign market than
the price charged in the domestic market.
Dumping occurs when
Normal Value in Export market > Export Price
WTO decides whether dumping is
unfair competition
3. First Instances of the Practice of
Dumping
• 16th century – selling paper at loss in England to kill its
paper industry
• 17th century - Dutch accused of selling products at lower
cost to drive out French from the Baltic areas
• 1790s – 1800s – Americans become wary of under -
priced selling by competitors
4. Types of Dumping
• Sporadic Dumping
• Predatory Dumping
• Persistent Dumping
• Social Dumping
5. Causes of Dumping
• Producers in one country are trying to stay competitive
with producers in another country.
• Producers in one country are trying to eliminate the
producers in another country and gain a larger share of
the world market
• Producers are trying to get rid of excess stuff that they
can't sell in their own country,
• Producers can make more profit by dividing sales into
domestic and foreign markets, then charging each market
whatever price the buyers are willing to pay.
6. Consequences of Dumping
• Affects the financial viability of the domestic
manufacturers
• Job losses and unemployment in the long run
• Affects trade relations between countries
• Anti-Dumping rules and imposition of tariffs an quotas
7. Actions in the United States
• The regulations are determined by the United States
Department of Commerce for "less than fair value―.
• The International Trade Commission, which determines
"injury".
8. Actions in the United States
• The antidumping duties are imposed on goods imported
from the dumpers' country at a percentage rate calculated
to counteract the dumping margin.
• Countervailing duties
• Anti dumping duties.
9. Actions in the European Union
• European Union anti-dumping is under the purview of the
European Council.
• It is governed by European Council regulation 384/96
• implementation of anti-dumping actions (trade defence
actions) is taken after voting by various committees with
member state representation.
10. Actions in the European Union
• Community industry can apply to have an anti-dumping
investigation to DG Trade.
• It should represent at least 25% of community industry.
• the level of tariff set is based on the damage done to
community producers by dumping.
• EU anti-dumping actions are primarily considered part of
a "trade defence" portfolio.
13. China’s Response
Steel Tubes Polysilicon
Car parts Chemical Industry
14. China – World‘s Top Dumping Offender
No Market Economy Status!!!
An economy that relies chiefly on market forces to allocate goods and resources and
to determine prices.
So Analogous Market used…
•Quite unreasonable to compare
•China now developing an Open market unlike the 60’s
•Demands by other parties - Should give greater independence to the state-controlled
banking sector to issue loans based on what businesses could pay them back.
•Status in 2016.
http://www.voxeu.org/article/china-market-economy
16. Article VI Of GATT And The Anti-
dumping Agreement
• Explicitly authorizes the imposition of a specific anti-
dumping duty on imports from a particular source, in
excess of bound rates
• Members may challenge the imposition of anti-dumping
measures, in some cases may challenge the imposition
of preliminary anti-dumping measures, and can raise all
issues of compliance with the requirements of the
Agreement, before a panel established under the DSU
• Article 18.5 of the AD Agreement requires Members to
notify their domestic laws and/or regulations relating to
anti-dumping to the ADP Committee.
17. Notifications under the agreement on
implementation of Article VI
• WTO Members obliged to submit several types of
notification to the Committee on Anti-Dumping Practices
• Except where a notifying Member specifically requests
the contrary, all notifications are issued as unrestricted
documents and are fully accessible to the public
• Members that have no anti-dumping laws or regulations
should notify that fact
18. WTO Safeguard Provisions
• Prohibits ―grey-area‖ measures, and sets time limits (a ―sunset
clause‖) on all safeguard actions
• Authorities to announce publicly when hearings are to take place
and provide other appropriate means for interested parties to
present evidence. The evidence must include arguments on
whether a measure is in the public interest
• Quantitative restrictions (quotas) normally should not reduce the
quantities of imports below the annual average for the last three
representative years for which statistics are available, unless clear
justification is given that a different level is necessary to prevent or
remedy serious injury
19. WTO Safeguard Provisions
• The WTO‘s Safeguards Committee oversees the operation of the agreement
and is responsible for the surveillance of members‘ commitments. Governments
have to report each phase of a safeguard investigation and related decision-
making, and the committee reviews these reports
• Safeguard actions on developing countries: An importing country can only apply
a safeguard measure to a product from a developing country if the developing
country is supplying more than 3% of the imports of that product, or if
developing country members with less than 3% import share collectively
account for more than 9% of total imports of the product concerned
• A safeguard measure should not last more than four years, although this can be
extended up to eight years, subject to a determination by competent national
authorities that the measure is needed and that there is evidence the industry is
adjusting
20. Impact Of Dumping On Indian Economy
• Actual or potential decline in sales
• Loss of profits
1 • Decrease in market share
• Reduction in capacity utilization
• Reduction in wages
2 • Cut down in manpower
• Inability to raise capital
• Loss in contracts
3 • Shutdown of plant
21. 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.
22. Anti-dumping In India: Legal 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.
• 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 plus a section under the DGAD headed by
the SectionOfficer to deal with the monitoring and coordination of die
functioning of the DGAD.
23. Anti-dumping In India: Legal Framework
• The Designated Authority‗s 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.
• 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 (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.
24. Dumping Cases Filed By India
• 272 cases against other nations.
• Out of which 149 are against China
• Cases are filed under various products and profiles as follows:
• Chemicals & Petrochemicals
• Pharmaceuticals
• Textiles/Fibres/Yarns
• Steel & Other Metals
• Consumer Goods
• Other Products
• For more details please do visit the Ministry of Commerce link
given below:
http://commerce.nic.in/traderemedies/ad_casesinindia.asp?id=2
Wow !!! It‘s really worth it!
25. Dumping Cases Filed by India: India vs China
• India on 13 January 2012 extended for five years anti-dumping duty on import of four Chinese
products in the face of widening trade gap with China. The duty has been imposed to protect the
domestic industry from cheap imports.
• As per the Revenue Department notification issued for the purpose, import of certain type of silk
fabrics from China is to attract anti-dumping duty of $1.82 to $7.59 per meter. The duty was first
imposed on the fabrics in December 2006 till December 2011.
Notifications for extension of anti-dumping duty on imports of cellophane transparent film and
saccharin from China for five years have also been issued. Saccharin is a non-nutritive sweetener
and considered to be low calorie substitute for cane sugar.
• India had a trade deficit of $16 billion against China during 2010-11. It has already crossed $20
billion in the first seven months of 2011-12. The Directorate General of Anti-Dumping (DGAD) had
carried a suo motu probe in December 2010 to examine whether cessation of the duty would lead
to continuation of dumping and injury to the domestic players. Following the review, DGAD had
recommended continuation and enhancement of the anti-dumping duty. India till date initiated
about 150 anti-dumping cases against China, which account for over half of such actions taken
by the country against foreign nations.
• In the notification it was also specified that the duty on import of certain type of nylon filament
yarn from China, Chinese Taipei, Malaysia, Thailand and Korea will be imposed at USD 0.20 to
USD 1.51 per kilogram for another five years.
• the government also levied provisional anti-dumping duty on import of phosphoric acid (excluding
agriculture /fertiliser grade) from Israel and Taiwan. The duty at $116.25 to USD 260.26 per tonne
has been imposed for six months.
26. Dumping Case Filed Against India
• Shrimp case ---USA Vs BIVCET
• Case was filed by US DOC on behalf of ASTAC in 21st Jan, 2004
• Vietnam reacts first, Indonesia next and then India enters.
• Case won by BIVCET and India resumes exports from 27th Jan, 2010
• Allura Red Color[(FD&C)Red No.40] case---USA Vs India
• Its used in soft drinks, baked foods, pet foods and pharmaceutical
drugs.
• Case was filed by US colors company Sensient Technologies on the
grounds of import commodity allura red coloring being sold at less than
fair value in USA
• Decision by 4 Commissioners in favor of India saying that ― there is not a
reasonable indication that a US Industry is is materially injured or
threatened with material injury by reason of imports of allura red coloring
from India that are allegedly subsidised and being sold in the US at less
than the fair value.
• Gain to Indian allura producer ---Neelikon
Notas do Editor
the price charged by the exporter in another country• Cost of production in the country of origin with reasonable addition for administrative, selling and general costs and for profits. 5% ruleSelling below cost – Sell below variable cost, 1974 US ammended its Anti - dumping Code to provide for this, other countries followed suit.100/148 claims of US on dumping was based on this law. 20% of sales are below cost http://books.google.co.in/books?id=96x7IwWDJUQC&pg=PA2285&lpg=PA2285&dq=Dumping+and+selling+below+cost&source=bl&ots=yJhJvSE_5w&sig=-5U5zcZLhDzXeLe-H4BB_Ct7HxM&hl=en&sa=X&ei=YzkPUZOUG8rNrQfmvYDgCw&ved=0CDkQ6AEwAQ#v=onepage&q=Dumping%20and%20selling%20below%20cost&f=falseDumping is legal under World Trade Organization rules unless the foreign country can reliably show the negative effects of the exporting firm on the domestic producers. In order to counter dumping, most nations use tariffs and quotas to protect their domestic industry from the negative effects of predatory pricing.Read more: http://www.investopedia.com/terms/d/dumping.asp#ixzz2JtoXl18y
Adam Smith not only disapproved of the practice by whichgovernments stimulated exports at prices lower than those current in their domesticmarkets through the grant of official bounties, but that he also gave an instancefrom personal observation of the grant of bounties on exports by a privatecombination of producers in order to reduce the supply available for the domesticmarket
Occasional sale of a commodity at below cost in order to unload an unforeseen and temporary surplus of the commodity Temporary sale of a commodity at below its average cost or a lower price abroad in order to derive foreign producers out of business, after which prices are raised to take advantage of the monopoly power abroad. Continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a higher price in the domestic market than internationally (to meet the competition of foreign rivals). Social dumping" is a term that is used to describe a practice of employers to use cheaper labour, than what is usually available at their site of (1) production and/or (2) selling.
12thDec 2001 Joined WTOWorld’s biggest exporter and 2nd largest importerHowever it has faced a lot of issues with Dumping
Glossy Paper – 8 to 35% Tariff charges EU & Upto99.65 % USSilica bricks dumping range between 118.47 percent and 290.12 percent.Galvanized Steel – One of the complaints is from IndiaSolar Panels - The EU market was the destination for almost 60 percent of China's solar product exports SolarWorld USA
Polysilicon - $50 to $18 in USCar parts from USSteel Tubes from Japan, EU, etc charged 9.7 percent to 39.2 percent Pyridine and Monobutyl ether
As on report by WTO in 2010But China does not have market economy status, so Chinese domestic prices can not be used as the reference. Instead, the DG Trade must decide upon an analogue market: a market which does have market economy status, and which is similar enough to China. Brazil and Mexico have been used, but the USA is a popular analogue market. In this case, the price of widgets in the USA is regarded as the substitute for the price of widgets in China. This process of choosing an analogue market is subject to the influence of the complainant, which has led to some criticism that it is an inherent bias in the process.