anti dumping (batch 18 a)

8/8/2019 Anti Dumping (Batch 18 a)

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Anup Chiche 18

Anupam Guria 45

Indrayani Patil 11 (Batch 17)

Meera Gupta 44

Saranya R. 30

Shama 45 (Batch 13)


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What Is Dumping

In economics, "dumping" can refer to any kind of predatorypricing

In the context of international trade law, where dumping isdefined as the act of a manufacturer in one country exporting a

product to another country at a price which is either below theprice it charges in its home market or is below its cost ofproduction

As per Article VI Of GATT 1994

A product said to be dumped when its export price is less thanits normal value, that is less than the sale of a like product in thedomestic market in the exporting country.


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Dumping

Export Price Normal Value

Comparable domestic

price

Export Price to third

country

Cost of production plus

reasonable addition for

selling cost and profit


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Dumping Margin

The dumping margin is the amount by which the normalvalue exceeds the export price.

The comparison is made between sales at the samecommercial stage and on dates which are as close to eachother as possible.

The necessary adjustments are made to take account ofdifferences in sales conditions, taxation and otherdifferences which affect price comparability.


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Dumping Margin

Normal Value of

the like article

Export price of

product under

consideration

Minus

Domestic price

Rs. 150

Export price

Rs. 100

Dumping Margin = 150-100 = 50

Dumping Margin = 50/150*100 = 33%


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Reasons for Dumping

Predatory Price

The practice of cutting price in an attempt to drive a rival out

of business or create barriers for entry for potentially new

competitors.

Price Discrimination

If a firm has a monopoly in its home market but faces strong

competition in the international market, the home market is

charged a higher price.


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Reasons for Dumping

Cyclical Dumping

Overcapacity due to downturn causes selling at lower price

Market Expansion Dumping

In order to gain market share causes selling at a lower price

for export than selling domestically

State Trading Dumping

To gain hard currency causes selling at lower price


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The nations dumps products to

Eliminate Competition

Secure Monopoly

Increase share of International Export


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Dumping Factors

Subsidies:

It leads to aggressive dumping, since goods can be sold

profitably at a price that is cheaper than the cost ofmanufacture.

Banned Products:

There are numerous incidents when manufacturers have

used dumping to sell off products that were banned in

their domestic market.


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Implications of Dumping

Dumping results in the following:

Hurts a countrys domestic industry and producers.

Impacts the sales volume.Hurts the market shares.

Triggers decline in profitability.

Leads to job losses.

Cause material injury.


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Anti dumping History

In the 19th century European Sugar Industries appealed to theirrespective government for protection against sugar being

dumped at unfairly low prices.

In 1902, there was a formal agreement on anti dumping.

Canada adopted the first anti-dumping law in 1904 followedby European countries and then US in 1916.

Formed the basis for the original GATT article (Article VI of

GATT) on anti-dumping in 1947.

Subsequently, codes on anti dumping were developed during

the Kennedy Round (1962-67) and Tokyo Round (1973-79).

However, these were not binding on all GATT members; they

were open to signature by those countries that wished to do so.

But the Uruguay Round, (1984-94) anti-dumping agreement is

an agreement binding on all GATT or WTO members.


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Need for Anti-Dumping Measures

Trade is increasingly being seen as a means of achievingeconomic development.

Trade liberalization also implies distortion and exploitation,

which is unfair.

To reduce such distortion protectionary measures are available tocounter act these unfair practices.


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Antidumping Measures

Anti Dumping measures are of two kinds.

Antidumping duty:

This is imposed at the time of imports, in addition to other

customs duties. The purpose of antidumping duty is to raise theprice of the commodity when introduced in the market of theimporting country.

Price undertaking:

If the exporter himself undertakes to raise the price of theproduct then the importing country can consider it and accept it

instead of imposing antidumping duty.


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Differences & Similarities

between anti dumping &safeguards


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Anti Dumping Safeguards

Anti dumping is against unfair

pricing by Foreign Producers

charging higher price in home marketand exporting at lower price

Safeguards is against cheap imports,

which has shown a sudden surge in imports

due to some unforeseen circumstances.

Anti dumping is company and country

specific

Duty varies from company to company

There are two safeguard laws in India

General & Transitional

General safeguard is against all countries

Transitional safeguards is against ChinaUniform duty on all imports

Form of injury is material injury Form of injury is

Serious injury in general safeguards

Market disruption in case of China

specific safeguards

No interim duty can be imposed before

expiry of 60 days. However, duty can be

imposed on retrospective basis on past

90 days imports

Interim duty can be imposed on initiation

of enquiry without notice


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Anti Dumping Safeguards

India has wide and rich experience on

anti dumping

Not many cases done globally

Anti dumping is not a protection Safeguard duty means protection.

Affected country is entitled to protection.

Investigations are conducted by

Designated Authority on Anti Dumping in

Ministry of Commerce

Investigations are conducted by Director

General (Safeguards) in Ministry of

Finance

Designated Authority makes a

recommendation, which is required to be

implemented by Ministry of Finance

Director General (Safeguards) makes

recommendations

Committee on Safeguards accepts the

recommendationsMinistry of Finance imposes the duty

Final Order can be challenged before

CESTAT. Writ can be filed before High

Court or Supreme Court.

No appeal provision. Only a writ can be

filed before High Court or Supreme Court.


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Basic Principles

WTOmembers can imposeAnti-Dumping if

Dumping is occurring

Domestic industry producing the like product in importing

country is suffering material injury

There is a causal link between the two.


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WTO and Anti-Dumping Provision

Anti-dumping (AD) provisions of the WTO allow governments

to impose AD duties on foreign products if ;

They are imported at prices less than their fair values (often,the foreign market prices of imported products)

And such dumping activities cause material injuries to

relevant domestic industries.

Under the general guidance of these provisions, many countries

have developed distinct AD rules and practices of their own.


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Domestic Industry Standing: The petitioners account for 70% of the

total domestic production

Normal Value: The petitioners have claimed normal value in

Taiwan on the basis of constructed cost of production ofParacetamol.

Export price: The petitioners have claimed export price based on

the data published by DGCIS and secondary sources. Comparing

the normal value and export prices the dumping margins are

significantly higher than the de-minimize limit for which they have

provided the evidences for the same.

Like Goods: The petitioner has claimed that goods produced by it

are like articles to the goods originating in or exported from China

and Taiwan

Injury and Causal Link: The various economic indicators relating to

domestic industry such as production, sales, profit/loss etc.

collectively and cumulatively, indicates that the domestic industry

has suffered injury.


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Anti-Dumping Investigation

Period of Investigation: 1st April, 1999 to 30th September, 2000 (18 months).

Submission of Information: Designated Authority, Ministry of Commerce, Directorate

General of Anti- Dumping, Udyog Bhavan, New-Delhi 110011. Inspection of Public File: In terms of Rule 6(7), any interested party may inspect the public

file containing non-confidential version of the evidence submitted by other interested

parties.

Preliminary Findings

The Authority notified the Embassies of the subject countries about the receipt of dumping

allegation

The Authority issued a Public Notice dated 30th January 2001,published in the Gazette of

India Extraordinary initiating anti-dumping investigations

The Authority forwarded a copy of the Public Notice to the known exporters and importers

Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of

imports of Paracetamol. The Authority provided copies of the non-confidential Petition to the known exporters in

accordance with Rule 6(3) supra.

The Authority sent a questionnaire, to elicit relevant information to various known

exporters in China and Taiwan and importers/users of Paracetamol in accordance with Rule

6(4); However none of them responded within a given time period.


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Petitioners View

Paracetamol is an odorless white crystalline powder (C8H9NO2)

Dumping has intensified extremely and the export price is continuously declining.

40-45 producers of Paracetamol in India. The collective output of the foue

petitioners represent a major proportion of the production of Paracetamol in India

and hence constitute domestic industry.

Comparable in terms of physical and chemical characteristics, manufacturing

process and technology, functions and uses, product specifications, pricing,

distribution and marketing and tariff classification of the goods.

Like Articles

Paracetamol produced by the domestic industry has been treated as Like to the

product exported from China and Taiwan within the meaning of Rule 2(d).

Normal Value & Export price

The Authority considers the normal value and the export prices provided by the

petitioners.

Dumping Margin:

Considering the constructed normal value and export prices, the dumping margin

determined by the Authority comes to 47.3% and 50.3% of export price for Chinaand Taiwan respectively.


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Injury

the quantum of imports from the subject countries have increased in

absolute terms and in relation to production and consumption in India

the market share of the petitioner has gone down while that of imports

has increased

the petitioners have been forced to sell at prices below their fair selling

price resulting in losses

imports have undercut the prices of the domestic industry.

Final Hearing

The Authority decided if the landed value is lesser than the reference

value provided ie. Rs.162470 per 1000kg, the landed price will be

equal to the reference price.


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anti dumping (batch 18 a)

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