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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.