Anti-Dumping Duty

• 27 Dec 2021

For Prelims: Anti Dumping Duty, Countervailing Duty, Directorate General of Trade Remedies, World Trade Organisation.

For Mains: WTO's Provisions Related to Anti-Dumping Duty (ADD), Significance of ADD in International Trade Competition.

Why in News

As per Directorate General of Trade Remedies’ (DGTR) recommendations, India has imposed Anti-Dumping Duties on five Chinese products, including certain aluminium goods and some chemicals, for five years.

• The DGTR has concluded that these products have been exported at a price below normal value in Indian markets, which has resulted in dumping, causing injury to domestic markets.
• India's exports to China during the April-September 2021 period were worth USD 12.26 billion while imports aggregated at USD 42.33 billion, leaving a Trade Deficit of USD 30.07 billion.

Directorate General of Trade Remedies

• It is the apex national authority under the Ministry of Commerce and Industry for administering all trade remedial measures including anti-dumping, countervailing duties and safeguard measures.
• It provides trade defence support to the domestic industry and exporters in dealing with increasing instances of trade remedy investigations instituted against them by other countries.

Key Points

• Dumping:
  • Dumping is said to occur when the goods are exported by a country to another country at a price lower than the price it normally charges in its own home market.
  • This is an unfair trade practice which can have a distortive effect on international trade.
• Objective of Anti-Dumping Duty (ADD):
  • Imposition of Anti-dumping duty is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect.
    • In the long-term, anti-dumping duties can reduce the international competition of domestic companies producing similar goods.
  • It is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
  • The use of anti-dumping measures as an instrument of fair competition is permitted by the World Trade Organisation.
• Different from Countervailing Duties:
  • ADD is a customs duty on imports providing a protection against the dumping of goods at prices substantially lower than the normal value whereas Countervailing duty is a customs duty on goods that have received government subsidies in the originating or exporting country.
• WTO's Provisions Related to Anti-Dumping Duty:
  • Validity: An anti-dumping duty is valid for a period of five years from the date of imposition unless revoked earlier.
  • Sunset Review: It can be extended for a further period of five years through a sunset or expiry review investigation.
    • A Sunset review/ expiry review is an evaluation of the need for the continued existence of a program or an agency. It allows for an assessment of the effectiveness and performance of the program or agency.
    • Such a review can be initiated suo moto or on the basis of a duly substantiated request received from or on behalf of the domestic industry.

Source: TH