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Anti Dumping
Kamal SyalKhyati SethKunal Moitra
Mayank Jeloka
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Overview
What is dumping?
Like Products
Normal Value
Relationship
Injury
Impact
Remedial Action Case Studies
Implications
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A product is said to bedumped when its export price
is less than its normal valueof a like product in thedomestic
market in theexporting country.
What is Dumping?
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What is Dumping?
Normal Value in theExporting Market Export Price
If a product is exported at a price (ExportPrice) lower than the
price (Normal Value)it normally charges on its own homemarket, it
constitutes dumping
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Like products
A product is identical -alike in all respects
OR
A product that has
closely resemblingcharacteristics
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Normal Value
The price in the exportersdomestic market, or
The price charged by theexporter in another country, or
Production costs plus otherexpenses and normal
profitmargins.
The Normal Value is
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ANTI-DUMPING FLAWS
Price discrimination is an unfair trade practice
It disciplines unfair trade practices
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Objectives of dumping
To enter into a foreign market
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
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Benefits of Dumping
o It finds market for its surplus production
o Exporting more, which strengthens its balance of
Payments
o Consumers benefit as they have to pay lower prices
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Transitional Dumping
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Sporadic Dumping
When the producer intends to dispose off his
casual overstock.
Sales in the specified period may not be as
good as expected
The producer finds himself with surplus stock.
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Antidumping Laws
In existence since 1980s
AntiDumping Petition
Monopoly Firms POV
Predatory Dumping
Misuse of Antidumping
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Relationship
Dumping Injury
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Dumping must causematerial injury in theimporting market
Injury
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Types of Injury
Material injury to a domesticindustry,
Threat of material injury to adomestic industry,
Economic retardation of the
establishment of a domesticindustry
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The Impact
Loss of Sales Reduced Profits Loss of market share Reduced
returns on investments
Decline in Productivity Decline in output Under utilization of
capacity
Cash flow
Inventories Employment Wages Growth New Investment Ability to
raise capital
Adverse Effect On
The Impact on the industries of importing country
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Allowances
Not subjected to internal taxes
No less favourable than domestic goods
No quantitative restrictions, fees and
formalities
Import Products
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Remedial Action
Restrict Dumping
OR
Enter into a Price Undertaking
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Imposition of anti dumping duties
Countervailing duties
Safeguard measures
Measures for Remedial Action
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Concept of Zeroing
Zeroing is a concept whereby non-dumpedsales are not permitted
to offset dumpedsales, essentially by setting the value of a
negative dumping margin to zero
It is a significant cause of the systemic
overestimation of dumping margins andsubsequent application of
inflated anti-dumping duties
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Impact of Zeroing
If every comparison generates apositive dumping margin, then
theprohibition of zeroing will have no
impact.
If there are many comparisons
generating negative margins, thenprohibition of zeroing can have
a verysubstantial impact on the amount ofanti-dumping duties
ultimately applied
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The EC Bed Linen Case:
In September 1996 the EuropeanCommunities (EC) initiated an
anti-dumping case against imports from
India cotton-type bed linen.
EU WAS SPLIT ABOUT THE CASE-REASON:
Protecting the EUs fabric weaving sectorfrom low-priced import
competition
Opposing the anti-dumping action: job lesscompanies that
consumed the imports whichfaced redundancies as a result of the
protective remedy
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Measures Taken By EU
Constructed value as a substitute forNormal Value
EC identified five types of cotton bed linen
exported to it and also sold inrepresentative quantities in
India.
EC established export price for cotton-typebed linen in the EC
market and comparedconstructed value with export price
Calculated dumping margins for differentmodels (for example-
pillowcases andsheets)
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The Appellate Body of the World Trade Organization found EU tobe
volatile of the WTOs Anti-Dumping (AD) agreement, andruled in
favour of India.
The Appellate Body found fault with the EU Commissions
ADinvestigations and measures such as:o the practice of zeroing;
i.e. investigating the existence ofmargins of dumping.o calculating
the administrative, selling and general (SG&A)
costs and profits .o calculating the amount of profits by
excluding sales by otherexporters or producers not made in the
ordinary course of tradeo using all types of bed-linen products -
bed sheets, duvetcovers and pillow cases etc.
