What is the issue?
- In the global trade scenario, dumping activity is seen as a potential threat, to address which WTO has a provision of Anti-dumping duties.
- However, practical constrains with anti-dumping duties diminish the global trade growth.
What is dumping?
- An export sale of a commodity at a price lower than the normal value (the price at which goods is ordinarily sold) prevailing in the exporting country is construed as dumping.
- A country can exercise trade remedial action against dumping only if dumping causes or has a threat of causing any adverse impact its domestic industry.
What is anti-dumping agreement?
- Anti-dumping Agreement (AD Agreement) provides for the right of contracting members to apply anti-dumping measures.
- This is to safeguard their domestic industry against the dumping and its injurious effect.
- By this, no country shall export a commodity to another WTO member country at a price that is lower than the price at which a similar commodity is traded in the exportingcountry.
- The purpose of the trade remedy action against dumping is to provide a level playing field to the domestic industry by imposing additional duty.
How does an Anti-dumping duty work?
- A country impacted by unfair anti-dumping duties can get it resolved either through mutual consultation or through the mechanism of the dispute settlement body of the WTO.
- Anti-dumping investigation conducted by affected countries involves the process of “non-injurious price”.
- To do this the authorities call for costing information from the complainant.
- And undertakes detailed analysis of relevant factors of the costs involved.
- This allows the authority to compute the anti-dumping duty based on the cost data and in the manner it thinks appropriate.
What are the practical constrains with this?
- In order to disprove the assertion that dumping has harmed the importing economy, producers/exporters have an uphill task of convincing the customs authorities.
- They need to demonstrate that the export price is higher than the price at which they themselves sell the same products in their own domestic market.
- Due to this, many of the producers/exporters are unable to satisfy the investigating officials of the importing economy about levying either a nil or lower anti-dumping rate.
- Genuine competitive disadvantages should not be masked by the cloak of anti-dumping duties.
- Member countries of the WTO have the responsibility to exercise restraint in invoking the unfair anti-dumping provisions.
Source: Business Standard
