dumping

1. Date (……….)
Professor,
Department of Business Administration,
School of Business Studies,
Ahsanullah University of Science and Technology
Subject: Submission of assignment on “Dumping and Anti-Dumping
duty a case of Bangladesh”
Dear Sir,
Here is the assignment that I was assigned on the topic as per your request.
The assignmenthas been completed bythe knowledge that I have gathered
from the course “Export-Import management”.
I am thankful to all those persons who provided us important information and
gave us valuable advices. I would be happy if you read the report carefully
and I’ll be trying to answer all the questions that you have about the
assignment.
I tried my label bestto complete this assignmentmeaningfully and correctly,
as much as possible.I do believe that my tiresome effortwill help you to get
ahead with this sort of venture. In this case it will be meaningful to me.
However, if you need any assistance in interpreting this assignment please
contact me without any kind of hesitation.
Thanking you.
Yours obediently,
Ahtesham Billah Sawon

2. Acknowledgement
I am using this opportunity to express my gratitude to everyone who
supported me throughout the course of this BBA project. I am thankful
for their aspiring guidance, invaluably constructive criticism and friendly
advice during the project work. I am sincerely grateful to them for sharing
their truthful and illuminating views on a number of issues related to the
assignment.
I express my warm thanks to MR. Md. Shak Forid Course Instructor, on
Ahsanullah University of Science and Technology for giving me a good
guidelines for assignment throughout numerous consultations. I would
also like to expand my gratitude to all those who have directly and
indirectly guided me in writing this assignment.
I would also like to thank all the people who provided me with the
facilities being required and conductive conditions for my assignment.

3. Executive Summary
Dumping is the export of products at less than "normal value,"
often defined as the price at which those products are sold in the
home market. Since its inception, the General Agreement on
Tariffs and Trade (GATT) has authorized signatories to apply
duties to offset dumping when it causes, or threatens to cause,
material injury to an industry in the territory of a GATT member.
Despite their longevity, antidumping measures are frequently
subject to sharp criticism, especially from academic economists.
Indeed, some observers advocate their complete elimination,
raising the question whether dumping itself is a problem
sufficiently serious to warrant retention of the antidumping
regime provided for under the GATT. This paper notes that
antidumping measures, like any complex regulatory regime, may
give rise to anomalous or undesirable results in some cases, but
argues that dumping itself remains a problem in international
trade.

4. Definition of Dumping
In economics, "dumping" is a kind of pricing, especially in the
context of trade. It occurs when manufacturers export a product
to another country at a price either below the price charged in its
home market, or in quantities that cannot be explained through
normal market competition.
Objectives of Dumping
To enter into a foreign market dumping may be resorted to
make an entry in a foreign market with subsidies being provided
by the government
To dispose of occasional surplus at a lower price in foreign
markets
To develop a market in foreign countries by selling at a lower
price in the initial stages just as new markets van be developed
in the country itself by selling at lower prices.
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

5. commodityat a lowerprice in theforeign market, he earnslarger
profit
Themonopolistpracticesdumpinginorder to developnewtrade
relations abroad. For this, he sells his commodity at a low price
the new market, thereby establishingnew market relationswith
those countries. As a result, the monopolist increases his
production, lowers his costs and earns more profit
Effects of dumping
On the importing country
1. Domestic industry might be affected adversely by a decline in
sales and profits.
2. If dumping is continued for a longer period, survival of the
domestic industry may be threatened.
3. Dumping may create balance of payments problems for the
country subjected dumping
On the Exporting Country
It must be presumed that a producer who dumps benefits from
doing so, although in the case of promotional and predatory
dumping, there is an element of risk in that the ultimate benefits,
on which the loss making export sales are premised, may not
materialize.

6. Provided its home market is shielded against arbitrage or
retaliation, and consequent price drop (which would neutralize
the discrimination), dumping can have clear advantages for the
individual exporter.
A profitable home market provides a platform which may be used
to operate in export markets at prices much lower than could have
been possible without market segregation.
What is anti-dumping? What is its purpose in International
Trade?
Dumping is said to occur when the goods are exported by a
country to another country at a price lower than its normal value.
This is an unfair trade practice which can have a distortive effect
on international trade. Anti-dumping is a measure to rectify the
situation arising out of the dumping of goods and its trade
distortive effect. Thus, the purpose of anti-dumping duty is to
rectify the trade distortive effect of dumping and re-establish fair
trade. The use of anti-dumping measure as an instrument of fair
competition is permitted by the WTO. In fact, anti-dumping is an
instrument for ensuring fair trade and is not a measure of
protection per se for the domestic industry. It provides relief to
the domestic industry against the injury caused by dumping.
Objectives of anti-Dumping
It is a measure to rectify the situation arising out of the dumping of
goods and its trade distortive effect.

7. The use of anti-dumping measure as an instrument of fair
competition is permitted by the WTO.
It provides relief to the domestic industry against the injury
caused by dumping
Anti-dumping duties
Duties were introduced by the developed countries to protect their
industries against the low priced imports.
Anti-dumping duties can be presented not as
Protection but as encounter against “unfair”
Competition
ANTIDUMPING DUTY vs NORMAL CUSTOMS DUTY
ANTIDUMPING DUTY
To guard against unfair trade practices
Trade remedial measures.
Not necessary in the nature
Levied against exporter /country in as much as they are country
specific and exporter specific.

8. NORMAL CUSTOMS DUTY
Means of raising revenue and for overall development of the
economy
Trade and fiscal policies of the Government
Necessary in nature
Universally applicable to all imports irrespective of the country
of origin and the exporter.
Advantages
The main advantage of dumping is selling at an unfairly
competitive lower price. A country exporting business to enable
them to sell below cost.
The country is willing to take a loss on the product to increase its
market share in that industry. 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. It hopes to put that country's
producers out of business and become the industry leader.
There is also a temporary advantage to consumers in the country
being dumped upon. As long as the subsidy continues, they pay
lower prices for that commodity.

9. Disadvantages
The problem with dumping is that it's expensive to maintain. It
can take years of exporting cheap goods to put the competitors
out of business. Meanwhile, the cost of subsidies can add to the
export country sovereign debt.
The second disadvantage is retaliation by the trade partner.
Countries may impose trade restrictions and tariffs to counteract
dumping. That could lead to a trade fair.
The Role of the WTO in Anti-dumping
Most countries are members of the WTO. Member countries
adhere to the principles laid out during negotiations of the general
agreement on tariffs and trade. Countries agree that they won't
dump and that they won't enforce tariffs on any one industry or
country. To install an anti-dumping duty, WTO members must
prove that dumping has occurred.
The WTO is specific in its definition of dumping. First, a country
must prove that dumping harmed its local industry.
It must also show that the price of the dumped import is much
lower than the exporter's domestic price. The WTO asks for three
calculations of this price:
1. The price in the exporter’s domestic market.
2. The price charged by the exporter in another country.

10. 3. A calculation based on the exporter’s production costs, other
expenses, and reasonable profit margins.
The disputing country must also be able to demonstrate what the
normal price should be. When all these have been put in place,
then the disputing country can institute anti-dumping tariffs
without violating the GATT multilateral trade agreement.
Calculating the Anti-Dumping Duty
The WTO Anti-Dumping Agreement allows governments to act
in a way that does not discriminate trading partners and honors
the DATT 1994 principle when calculating the duty. The GATT
1994 principle provides a number of guidelines to govern trade
between members of the WTO. It requires that imported goods
not to be subjected to internal taxes in excess of the costs imposed
on domestic goods.
Also, it requires that imported goods be treated the same way as
domestic goods under domestic laws and regulations. However,
it allows the government to impose a duty on foreign imports if
they exceed the bound rates and threaten to cause injury to the
domestic market.
There are several ways of determining whether an imported
product has been dumped lightly or heavily, and the amount of
duty to be applied. The first method is to calculate the anti-
dumping duty based on the normal price of the product.
The second alternative is to use the price charged on the same
product but in a different country. The last alternative is to
calculate the duty based on the total of product costs, expenses,
and the manufacturer’sprofit margin.

11. Injury
Types of injury
The Agreement provides that, in order to impose anti-dumping
measures, the investigating authorities of the importing Member
must make a determination of injury. The Agreement defines the
term “injury” to mean either (i) material injury to a domestic
industry, (ii) threat of material injury to a domestic industry, or
(iii) material retardation of the establishment of a domestic
industry, but is silent on the evaluation of material retardation of
the establishment of a domestic industry.
Basic requirements for determination of material injury
The Agreement does not define the notion of “material”.
However, it does require that a determination of injury must be
based on positive evidence and involve an objective examination
of (i) the volume of dumped imports and the effect of the dumped
imports on prices in the domestic market for like products, and
(ii) the consequent impact of the dumped imports on domestic
producers of the like product. Article 3 contains some specific
additional factors to be considered in the evaluation of these two
basic elements, but does not provide detailed guidance on how
these factors are to be evaluated or weighed, or on how the
determination of causal link is to be made.

12. Basic requirements for determination of threat of material
injury
The Agreement sets forth factors to be considered in the
evaluation of threat of material injury. These include the rate of
increase of dumped imports, the capacity of the exporter(s), the
likely effects of prices of dumped imports, and inventories. There
is no further elaboration on these factors, or on how they are to be
evaluated. The Agreement does, however, specify that a
determination of threat of material injury shall be based on facts,
and not merely on allegation, conjecture, or remote possibility,
and moreover, that the change in circumstances which would
create a situation where dumped imports caused material injury
must be clearly foreseen and imminent.
Price undertakings
It establishes the principle that undertakings betweenany exporter
and the importing Member, to revise prices, or cease exports at
dumped prices, may be entered into to settle an investigation, but
only after a preliminary affirmative determination of dumping,
injury and causality has been made. It also establishes that
undertakings are voluntary on the part of both exporters and
investigating authorities. In addition, an exporter may request that
the investigation be continued after an undertaking has been
accepted, and if a final determination of no dumping, no injury,
or no causality results, the undertaking shall automatically lapse

13. anti-dumping measures by the Bangladesh Tariff
Commission (BTC)
Bangladesh could never initiate a case for anti-dumping measures
due to difficulties faced by the domestic industry in collecting
information required for initiation. Experience suggests whenever
the industries concerned were asked to furnish information
required for initiation of dumping cases, they mostly failed to
provide it. Thus there are serious difficulties in completing an
application for initiation. If a Bangladeshi exporter encounters
any of the problems covered by anti-dumping agreement, the
Trade Remedies Wing offers him advice and assistance on how
to overcome the situation. Meanwhile, a few importing countries
have imposed anti-dumping duty on some Bangladeshi export
items. Other importing countries contemplated to impose similar
duty on some of other export items. The Trade Remedies Wing is
advising the related exporters on how to resolve the problem that
has already affected or threaten to affect export earnings.
Anti-dumping effect in Bangladesh exports
There has recently been a flow in anti-dumping cases around the
world, and Bangladesh, unfortunately, is no exception. There are
allegations that Bangladesh has been dumping, meaning
exporting some goods at prices lower than that of the domestic
market to the detriment of the importing country. As a result, anti-
dumping measures are being taken against Bangladesh by way of
levying additional duties.

14. Recently, Bangladesh has been facing a number of anti-dumping
measures, such as -- on Jute, Hydrogen peroxide, fishing net
etc. More sectors which are prone to more measures are
pharmaceuticals, leather and textiles. The following paragraphs
will deal with jute.
Exports of jute and jute goods to India declined by 47.62 per cent
in the first half of the fiscal year 2017-18 compared with that in
the same period of last fiscal (2016-2017), due to anti
Dumping duty imposed by India on Bangladeshi jute and jute
products. This is to mention that on January 5 last year, India had
imposed anti-dumping duty (ADD) ranging from $19 to $352 a
ton on jute yarn/twine, hessian fabric and jute sacking bags from
Bangladesh. Because of this measure, export of jute goods to
India has drastically declined by at least Tk 7.75 billion in the
period from January to November of 2017 compared to the
corresponding period last year. But fortunately, the overall global
exports of jute and jute goods from Bangladesh rose by 21.48 per
cent to $574.06 million in the period of this fiscal year from that
of $472.57 million in the corresponding period of last fiscal. This
was because of a big leap in export of jute to Turkey.
However, we need to face the measure taken by India. What will
happen if again we face some more anti-dumping measures
against jute and jute goods from other countries? We need to take
urgent steps to save 170 jute mills running under Bangladesh jute
Manufacturers Association (BJMA), 94 under Bangladesh Jute
Spinners Association (BJSA) and 23 under Bangladesh Jute Mills
Corporation (BJMC). Bangladesh is still the largest producer and
exporter of raw jute in the world. Jute is the third-largest export
sector of Bangladesh in terms of earnings, after garments and

15. leather, and India is one of the biggest markets for these goods.
Bangladesh exports more than 0.8 million tons of jute goods
across the world out of which 0.2 million to 0.25 million tons are
exported to India.
Very recently the Indian authority has initiated an investigation
into the import of jute sacking cloth from Bangladesh following
allegations that the item was being brought in large quantities to
evade the ADD on jute sacking bags. This form of dumping is
called 'circumvention'. The investigation would look into the
matter in detail and examine the need to extend the existing ADD
to the circumventing product. Business communities of
Bangladesh are concerned for this fresh move and government of
Bangladesh is also planning to raise the issue in the WTO forum.
Bangladesh government and the business community are
concerned about another export product -- Hydrogen peroxide
(HP) and recent anti-dumping measure against it by Pakistan,
which has imposed an antidumping duty on import of this
chemical from Bangladesh. It is to note that, presently
Bangladesh is exporting HP, a major chemical used in the
bleaching and sterilizing process in textile and paper and pulp
industries, to half a dozen countries including India, Nepal,
Malaysia, Pakistan and Sri Lanka. India is the largest destination
of Bangladesh's hydrogen peroxide followed by Pakistan,
according to manufacturers.
Our garments industry is also a very delicate area for such
measures. Although India allows duty-free access to all
Bangladeshi items save for some alcoholic beverages, the Indian
government imposed a countervailing duty (duty against
government subsidized dumps) of 12.50 per cent on the import of

16. Bangladeshi apparel items. As a result, Bangladesh's garment
exports to India are stagnant. Though the Indian market can be a
good export destination for Bangladeshi garment makers, in last
fiscal, garment shipments to India, a market of more than $40
billion, fetched $129.81 million, down by 4.85 per cent from the
previous year.
A good command and analysis of some issues of the anti-dumping
measures will help Bangladesh face the situation successfully.
These, among others, involve examining the methodology of
determining dumping margin, domestic market disruption in the
importing country, effect on employment and finally procedural
issues. We need an expert core group to remain engaged in
analyzing the complicated issues as well as find a way out to
protect our exports from undesirable situations.
RECOMMENDATONS
In the light of the discussion above, the following
recommendations are made for the purpose of application of
anti-dumping and countervailing measures.
1. As weaker and smaller countries are most vulnerable,
Bangladesh should be most careful and build appropriate
capacity to deal with this issue.
2. Bangladesh shouldappealwith other LDCs together that LDCs
should be kept out of the provision.
3. With other LDCs Government will have to convince the WTO
members for adoption of simplified procedures.

17. 4. The Tariff Commission1 should be restructured and renamed
as Tariff and Anti-Dumping Commission.
5. With other LDCs government should convince the WTO that
LDC firms should be totally exempted from anti-dumping and
countervailing action by the developed country.
6. As it is very expensive for the LDCs to defend their Dumping
cases in WTO, the government should try with other LDCs to
convince the Council of Trade in Goods that solution for this
problem should be found.
7. As the legalcosts of investigationaresubstantialandare often
beyond the means of small and medium sized enterprises, the
government should defend their interests.
8. As resources are scare all chambers should jointly buildWTO
Information- Cell with policyframework and strategies, buildup
expertise on the subject and make the businesses aware of the
implication of anti-dumping and countervailing duty.
9The chambers should co-operate with the Tariff Commission in
the matter of investigation of antidumping and countervailing
cases.
10. Tariff Commission should be facilitated and empowered to
deal with international dumping claims.

18. Reference
1. The Results of the Uruguay Round of Multilateral Trade Negotiations -the
legal texts - WTO.
2. Reshaping the -world trading system - John Croome
3. Business guide to the Uruguay Round – ITC
4. Train for Trade –UNCTAD
5. Future Multilateral Trade Negotiation – UNCTAD
6. The World Trade Organization – WTO
7. Bangladesh Tariff Commission (BTC)
8 .the financial express of Bangladesh