anti dumping (batch 18 a)
TRANSCRIPT
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Anup Chiche 18
Anupam Guria 45
Indrayani Patil 11 (Batch 17)
Meera Gupta 44
Saranya R. 30
Shama 45 (Batch 13)
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What Is Dumping
In economics, "dumping" can refer to any kind of predatorypricing
In the context of international trade law, where dumping isdefined as the act of a manufacturer in one country exporting a
product to another country at a price which is either below theprice it charges in its home market or is below its cost ofproduction
As per Article VI Of GATT 1994
A product said to be dumped when its export price is less thanits normal value, that is less than the sale of a like product in thedomestic market in the exporting country.
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Dumping
Export Price Normal Value
Comparable domestic
price
Export Price to third
country
Cost of production plus
reasonable addition for
selling cost and profit
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Dumping Margin
The dumping margin is the amount by which the normalvalue exceeds the export price.
The comparison is made between sales at the samecommercial stage and on dates which are as close to eachother as possible.
The necessary adjustments are made to take account ofdifferences in sales conditions, taxation and otherdifferences which affect price comparability.
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Dumping Margin
Normal Value of
the like article
Export price of
product under
consideration
Minus
Domestic price
Rs. 150
Export price
Rs. 100
Dumping Margin = 150-100 = 50
Dumping Margin = 50/150*100 = 33%
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Reasons for Dumping
Predatory Price
The practice of cutting price in an attempt to drive a rival out
of business or create barriers for entry for potentially new
competitors.
Price Discrimination
If a firm has a monopoly in its home market but faces strong
competition in the international market, the home market is
charged a higher price.
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Reasons for Dumping
Cyclical Dumping
Overcapacity due to downturn causes selling at lower price
Market Expansion Dumping
In order to gain market share causes selling at a lower price
for export than selling domestically
State Trading Dumping
To gain hard currency causes selling at lower price
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The nations dumps products to
Eliminate Competition
Secure Monopoly
Increase share of International Export
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Dumping Factors
Subsidies:
It leads to aggressive dumping, since goods can be sold
profitably at a price that is cheaper than the cost ofmanufacture.
Banned Products:
There are numerous incidents when manufacturers have
used dumping to sell off products that were banned in
their domestic market.
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Implications of Dumping
Dumping results in the following:
Hurts a countrys domestic industry and producers.
Impacts the sales volume.Hurts the market shares.
Triggers decline in profitability.
Leads to job losses.
Cause material injury.
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Anti dumping History
In the 19th century European Sugar Industries appealed to theirrespective government for protection against sugar being
dumped at unfairly low prices.
In 1902, there was a formal agreement on anti dumping.
Canada adopted the first anti-dumping law in 1904 followedby European countries and then US in 1916.
Formed the basis for the original GATT article (Article VI of
GATT) on anti-dumping in 1947.
Subsequently, codes on anti dumping were developed during
the Kennedy Round (1962-67) and Tokyo Round (1973-79).
However, these were not binding on all GATT members; they
were open to signature by those countries that wished to do so.
But the Uruguay Round, (1984-94) anti-dumping agreement is
an agreement binding on all GATT or WTO members.
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Need for Anti-Dumping Measures
Trade is increasingly being seen as a means of achievingeconomic development.
Trade liberalization also implies distortion and exploitation,
which is unfair.
To reduce such distortion protectionary measures are available tocounter act these unfair practices.
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Antidumping Measures
Anti Dumping measures are of two kinds.
Antidumping duty:
This is imposed at the time of imports, in addition to other
customs duties. The purpose of antidumping duty is to raise theprice of the commodity when introduced in the market of theimporting country.
Price undertaking:
If the exporter himself undertakes to raise the price of theproduct then the importing country can consider it and accept it
instead of imposing antidumping duty.
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Differences & Similarities
between anti dumping &safeguards
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Anti Dumping Safeguards
Anti dumping is against unfair
pricing by Foreign Producers
charging higher price in home marketand exporting at lower price
Safeguards is against cheap imports,
which has shown a sudden surge in imports
due to some unforeseen circumstances.
Anti dumping is company and country
specific
Duty varies from company to company
There are two safeguard laws in India
General & Transitional
General safeguard is against all countries
Transitional safeguards is against ChinaUniform duty on all imports
Form of injury is material injury Form of injury is
Serious injury in general safeguards
Market disruption in case of China
specific safeguards
No interim duty can be imposed before
expiry of 60 days. However, duty can be
imposed on retrospective basis on past
90 days imports
Interim duty can be imposed on initiation
of enquiry without notice
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Anti Dumping Safeguards
India has wide and rich experience on
anti dumping
Not many cases done globally
Anti dumping is not a protection Safeguard duty means protection.
Affected country is entitled to protection.
Investigations are conducted by
Designated Authority on Anti Dumping in
Ministry of Commerce
Investigations are conducted by Director
General (Safeguards) in Ministry of
Finance
Designated Authority makes a
recommendation, which is required to be
implemented by Ministry of Finance
Director General (Safeguards) makes
recommendations
Committee on Safeguards accepts the
recommendationsMinistry of Finance imposes the duty
Final Order can be challenged before
CESTAT. Writ can be filed before High
Court or Supreme Court.
No appeal provision. Only a writ can be
filed before High Court or Supreme Court.
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Basic Principles
WTOmembers can imposeAnti-Dumping if
Dumping is occurring
Domestic industry producing the like product in importing
country is suffering material injury
There is a causal link between the two.
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WTO and Anti-Dumping Provision
Anti-dumping (AD) provisions of the WTO allow governments
to impose AD duties on foreign products if ;
They are imported at prices less than their fair values (often,the foreign market prices of imported products)
And such dumping activities cause material injuries to
relevant domestic industries.
Under the general guidance of these provisions, many countries
have developed distinct AD rules and practices of their own.
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Domestic Industry Standing: The petitioners account for 70% of the
total domestic production
Normal Value: The petitioners have claimed normal value in
Taiwan on the basis of constructed cost of production ofParacetamol.
Export price: The petitioners have claimed export price based on
the data published by DGCIS and secondary sources. Comparing
the normal value and export prices the dumping margins are
significantly higher than the de-minimize limit for which they have
provided the evidences for the same.
Like Goods: The petitioner has claimed that goods produced by it
are like articles to the goods originating in or exported from China
and Taiwan
Injury and Causal Link: The various economic indicators relating to
domestic industry such as production, sales, profit/loss etc.
collectively and cumulatively, indicates that the domestic industry
has suffered injury.
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Anti-Dumping Investigation
Period of Investigation: 1st April, 1999 to 30th September, 2000 (18 months).
Submission of Information: Designated Authority, Ministry of Commerce, Directorate
General of Anti- Dumping, Udyog Bhavan, New-Delhi 110011. Inspection of Public File: In terms of Rule 6(7), any interested party may inspect the public
file containing non-confidential version of the evidence submitted by other interested
parties.
Preliminary Findings
The Authority notified the Embassies of the subject countries about the receipt of dumping
allegation
The Authority issued a Public Notice dated 30th January 2001,published in the Gazette of
India Extraordinary initiating anti-dumping investigations
The Authority forwarded a copy of the Public Notice to the known exporters and importers
Request was made to the Central Board of Excise and Customs (CBEC) to arrange details of
imports of Paracetamol. The Authority provided copies of the non-confidential Petition to the known exporters in
accordance with Rule 6(3) supra.
The Authority sent a questionnaire, to elicit relevant information to various known
exporters in China and Taiwan and importers/users of Paracetamol in accordance with Rule
6(4); However none of them responded within a given time period.
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Petitioners View
Paracetamol is an odorless white crystalline powder (C8H9NO2)
Dumping has intensified extremely and the export price is continuously declining.
40-45 producers of Paracetamol in India. The collective output of the foue
petitioners represent a major proportion of the production of Paracetamol in India
and hence constitute domestic industry.
Comparable in terms of physical and chemical characteristics, manufacturing
process and technology, functions and uses, product specifications, pricing,
distribution and marketing and tariff classification of the goods.
Like Articles
Paracetamol produced by the domestic industry has been treated as Like to the
product exported from China and Taiwan within the meaning of Rule 2(d).
Normal Value & Export price
The Authority considers the normal value and the export prices provided by the
petitioners.
Dumping Margin:
Considering the constructed normal value and export prices, the dumping margin
determined by the Authority comes to 47.3% and 50.3% of export price for Chinaand Taiwan respectively.
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Injury
the quantum of imports from the subject countries have increased in
absolute terms and in relation to production and consumption in India
the market share of the petitioner has gone down while that of imports
has increased
the petitioners have been forced to sell at prices below their fair selling
price resulting in losses
imports have undercut the prices of the domestic industry.
Final Hearing
The Authority decided if the landed value is lesser than the reference
value provided ie. Rs.162470 per 1000kg, the landed price will be
equal to the reference price.
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