Contuining global slowdown has led to influx of low priced imports. What are the WTO compatible techniques to deal with them?

1. Dealing with the problem of Low
Priced Imports
Ritesh Kumar Singh

2. Content
Introduction
Types of Cheap Imports and TRMs
Broad Requirements for Applying TRMs
Dumping
Ant-subsidy Countervailing Duties
India and Export Subsidy
Safeguards
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3. Introduction
Surge in imports
Trade Removal of
from low cost
Liberalization restrictions on
countries like
Import
China
Unilateral Unilateral / Bilateral /
Bilateral (ISL FTA) Multilateral removal Problem of Low Priced
Regional (ASEAN of Tariff & Non-tariff Imports
FTA) barriers
Multilateral (WTO
pacts)
Question is: How to deal with low priced imports?
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4. Types of Cheap Imports and Trade Remedial
Measures (TRMS)
Subsidy by Anti subsidy countervailing duty.
Exporting Country
Cheap
Imports Dumping Anti dumping duty.
Genuinely Priced
Safeguards Measure
Imports
Trade Remedial measures can be resorted to deal with any of the above `
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5. Low Priced Imports not covered under
Traditional TRMs
Comparative advantage can also be secured through manipulation of trade
regulations by an exporting country and hence may not be genuine
For example, China keeps the prices of key industrial inputs such as fluorspars
or coke, low for domestic manufacturers and high for import dependent foreign
manufacturers
The instrument used to achieve this are: export quotas, export duties, export
licensing and minimum export price requirements with respect to such inputs
In such cases, the only option available to a WTO member is to resort to WTO
Dispute Settlement Mechanism if consultation fails
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6. Broad Requirements for applying TRMs
Increased or increasing imports
Existence of injury or threat of injury to a domestically produced like
product
Causal relationship between injury (actual or potential) and increased
imports (subsidized, dumped or otherwise genuinely priced)
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7. Dumping (derived from article VI of GATT 1994)
Meaning of dumping: domestic price in exporting country is greater than export price of a
product
Anti-dumping duty is exporter specific and country specific
Margin of dumping: Normal value i.e. price (actual/constructed or comparable) in
exporting country - export price
Injury Margin: Non Injurious Price or fair price of a like product in importing country -
landed value of imported product
Anti-dumping duty should be equal to margin of dumping but in reality it s equal to
margin of injury. This is called rule of lesser value
Government agency to approach: Director General of Anti-dumping and Allied Duties
(DGAD) in India
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8. Anti-subsidy Countervailing Measures
(Article XVI of GATT 1994)
A subsidy is said to exist if (1) there is a financial contribution of any kind by a
govt. or public body (2) that confers a benefit (3) on a specific recipient i.e.,
limited to a firm, industry or group of industries
Requirements: existence of subsidies, injury or threat of injury and causal link
b/w subsidized imports and injury or threat of injury
Unilateral Remedy: Anti-subsidy Countervailing Duties
Multilateral Remedy: when damage is happening in third country export
markets, WTO Dispute Settlement Mechanism can be resorted to get subsidy
removed e.g. US cotton Subsidies
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9. India and Export Subsidies
LDCs and annex VII developing countries with a GNP per capita of less than US$ 1000
at 1990 price are exempted from export subsidy discipline
India to phase out its export subsidies within 8 years once it reaches US$ 100O PCY
(at 1990 prices) mark
Authority to approach: Designated Authority for Anti-dumping and Countervailing
Duty, MOC&I
Note: annexure VII countries are Bolivia, Cameroon, Congo, Côte d'Ivoire, Dominican Republic,
Egypt, Ghana, Guatemala, Guyana, India, Indonesia, Kenya, Morocco, Nicaragua, Nigeria, Pakistan,
Philippines, Senegal, Sri Lanka and Zimbabwe.
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10. Safeguards Measures
(article XIX of GATT 1994)
It s a temporary relief used when sudden (and unforeseen) import surge (market
disruption in case of China) causing or threatening to cause serious injury to domestically
produced like products
Usually applied simultaneously against all countries except in case of China, a non-market
economy till 2015 under India s transitional provisions
Agency to Approach: DG Safeguards, Dept. of Revenue, Ministry of Finance
Initially for 4 years but can be extended up to 10 years
Provisional or Emergency Safeguards for up to 200 days if it can be shown that situation
is so critical that it cannot wait for full fledged investigation
Bilateral versus General Safeguards (WTO): only one can be resorted to, at one time
depending upon the source of imports
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11. Please email (rk1234.singh@gmail.com) for any
query/clarification/comment.