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.
Dumping - DefinitionThe export by a country or company of a productat a price that is lower in the foreign market thanthe price charged in the domestic market.Dumping occurs when Normal Value in Export market > Export PriceWTO decides whether dumping isunfair competition
First Instances of the Practice ofDumping• 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
Types of Dumping• Sporadic Dumping• Predatory Dumping• Persistent Dumping• Social Dumping
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 cant 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.
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
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".
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.
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.
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.
Anti-Dumping Probes on China Glossy Paper Silica Bricks Galvanized Steel Solar Panels
China’s Response Steel Tubes Polysilicon Car parts Chemical Industry
China – World‘s Top Dumping Offender No Market Economy Status!!!An economy that relies chiefly on market forces to allocate goods and resources andto 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-controlledbanking sector to issue loans based on what businesses could pay them back.•Status in 2016. http://www.voxeu.org/article/china-market-economy
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.
Notifications under the agreement onimplementation 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
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
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
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
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.
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.
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.
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!
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.
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