Anti Dumping Ppt
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Transcript of Anti Dumping Ppt
“Antidumping law, as practiced today,
is a witches’ brew of the worst of policy
making: power politics, bad economics,
and shameful public administration”
Finger, J. Michael, Editor,
“Antidumping How It Works and WhoGets Hurt”,
1Group 3 SIIB AB
After 45 min you will know !!
What is meant by DUMPING ? How is dumping measured ? The role of material injury and de-menimis in AD The steps in an AD investigation and duty
imposition A brief history of AD Various minuses of the AD measurement laws. AD Duties and their IMPACT. Increasing use of AD in WTO Top 10 users of AD in the world. Case studyAnd hence make u agree or disagree with Finger, J. Michael.
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Group 3 ON
3
ADITI MALIK (01) ANKIT SHARMA (02) NAVJOT KAUR NAGRA (20) PRADEEP KUMAR (26) RISHABH SOOD (29) YOGESH SHARMA (37)
Group 3 SIIB AB
The Meaning of Dumping?
“Dumping is a situation of international price discrimination, where the price of a product when sold to the importing country is less than the price of the same product when sold in the market of the exporting country.”
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Why does dumping take place?
As a short-term predatory pricing strategy to drive competitors out of the market
As a result of market intervention or state subsidies that enable companies to artificially lower their prices
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But there is something MORE! When the price causes or threatens to
cause material injury to the domestic industry of the importing country can there be an action against dumping.
An anti-dumping investigation can be started only if there is a written complaint on behalf of the domestic industry.(a significant share of the domestic producers have to support the complaint).
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Certain terms to be defined Normal Value: The comparable price at which
the goods under complaint are sold in the domestic market of the exporting country.
Can be determined by:• domestic sales• comparable representative export price to an
appropriate third country.• constructed normal value, i.e. the cost of
production in the country of origin with reasonable addition for administrative, selling and general costs and reasonable profits.
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Export price: The price at which it is exported to the importing country.
Dumping Margin: The margin of dumping is the difference between the Normal value and the export price of the goods under complaint. It is generally expressed as a percentage of the export price.
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Exporters Price Normal Value
Compare Exporter Price to Normal Value
Normal Value $110.00
Exporter Price $90.00
Difference Attributable to Dumping
$20.00
Difference Attributable to Dumping/exporter price
$20.00 / $90.00=22.22%DumpingMargin =
Dumping Margin Calculation
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How is Dumping Measured?
fundamental parameters are determined.
a) Normal domestic selling price of the product or similar products in the exporting country.
b) Export price being offered in the importing country.Both these elements have to be compared at the same level of trade, generally at ex-factory level, for assessment of dumping.
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Domestic price of exporter > export price
Dumping = price discrimination between national markets
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You would ask what is Injury?
Injury parameters include factors such as:
o Actual or potential decline in saleso Loss of profitso Market shareo Capacity utilizationo Employmento Wageso Ability to raise capitalo Lost contracts
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Non-injurious Price
NIP is that level of price, which the industry is, expected to have charged under normal circumstances in the exporter market during the period defined.
The Injury Margin is the difference between the Non-Injurious Price due to the Domestic Industry and the Landed Value of the dumped imports. 13Group 3 SIIB AB
Anti-dumping (Article VI of GATT 1994)
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Legal framework
Based on article VI of GATT, 1994Customs tariff act, 1975 sec 9A, 9B
(as amended in 1995) Investigations by designated
authority, Ministry of Commerce Imposition and collection by Ministry
of Finance
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Factors affecting Comparison of normal value and export price
Export price and normal value must be compared at he same level of trade, such as at the ex-factory level
allowance made for differences that effect price comparability. These are
Physical characteristics Taxation Quantities etc..
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HOW DID IT ALL BEGIN? In the 19th century European Sugar Industries
appealed to their respective governments 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 followed by the European countries and then the US in 1916.
Formed the basis for the original GATT article (Article VI of GATT) on anti-dumping in 1947.
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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, (1986-94) anti-
dumping agreement is an agreement binding on all GATT or WTO members.
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What is anti dumping ??
It is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect.
Re-establish fair trade. The use of anti dumping measure as
an instrument of fair competition is permitted by the WTO.
It provides relief to the domestic industry against the injury caused by dumping.
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difference between anti dumping duty and Normal Customs duty
ANTIDUMPING DUTY
To guard against unfair trade practices
trade remedial measures.
not necessary in the nature
levied against exporter / country in as much as they are country specific and exporter specific.
NORMAL CUSTOMS DUTY means of raising
revenue and for overall development of the economy.
trade and fiscal policies of the Government
Necessary in nature universally applicable to
all imports irrespective of the country of origin and the exporter.
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Imposition of duty
If there is dumping but no injury then no duty can be imposed.
Duty remains in force for 5 years.Re-determination at a “sunset
review”.
Yearly administrative reviews if requested by
domestic industry or exporter. 21Group 3 SIIB AB
Essentials for initiating an anti dumping investigation
Sufficient evidence to the effect that ; there is dumping there is injury to the domestic
industry; and there is a causal link between the
dumping and the injury, that is to say, that the dumped imports have caused the alleged injury.
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Link between dumping and injury
No anti dumping duty shall be recommended without a finding of this causal relationship. That is to say,
Dumping should lead to InjuryThe causal link is to be established
generally in terms of the following effects of dumped imports on domestic industry: -
volume effectprice effect
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The volume effect of dumping relates to the market share of the domestic industry.
for price effect, significant price under cutting by the dumped imports as compared with the price of the like product in the importer country.
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Stakeholders
Against
Consumers Exporters Economists Regional Agreements
(NAFTA)
In Favour
Importing country currently protected industries
Importing country Labor Unions
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Relief under Anti Dumping mechanism
anti dumping duty imposed against that countries, which could go up to the dumping margin.
may terminate investigation if the exporter concerned furnished an undertaking to revise his price
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ALSO !!!de-minims margin
Any exporter whose margin of dumping is less than 2% of the export price shall be excluded
Investigation is terminated if the volume of the dumped imports from a particular country accounts for less than 3% of the total imports of the like product.
The cumulative imports of the like product from all these countries who individually account for less than 3%, should not exceed 7% of the import of the like product.
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Suo-Motu cases
Rule 5(4) of the Anti Dumping Rules provides for suo-motu initiation of anti dumping proceedings by the Designated Authority.
The Authority can initiate the anti dumping investigation on its own without any complaint/petition filed in this regard
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Period of Investigation
Should not be less than six months and not more than eighteen months.
The most desirable period of investigation is a financial year. (period should be as representative a possible)
For the purposes of injury analysis, the domestic industry has to furnish the relevant data for the past three years. 29Group 3 SIIB AB
Steps in an Anti-Dumping investigation
Lodging of complaint
Initiation
Analysis of complaint
Preparation and sending of
questionnaires
Analysis of questionnaire
responses
On-spot verification visits
Internal decision + consultation of MS +
translation Imposition of provisional measures if warranted and disclosure of decision to interested parties
Sending of questionnaires
Analysis of disclosure reactions
Additional on-spot verification visits if
needed
Internal decision + consultation of MS + translation
Imposition of definitive measures if warranted
Final disclosure to interested parties
Measures normally
imposed for 5 years
45 days
9
months
AD 6 months
AS 4 months
Measures are normally
imposed for 5 years
Total Duration
AS 13 months
AD 15 months
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Stages of the investigation processA. Preliminary Screening:
The application is scrutinized to ensure that it is fully documented
provides sufficient evidence for initiating an investigation.
If evidence not adequate, then a deficiency letter is issued.
Till then cannot be considered as application pending before authority.
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B. Initiation:
Designated Authority determines that the application has been made by or on behalf of the Domestic Industry.
It also examines the accuracy and adequacy of the evidence provided
The Initiation notice will be issued normally within 5 days from the date of receipt of a properly documented application.
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C. Access to Information: The Authority provides access to the non-
confidential evidence available for inspection to all interested
parties on request after receipt of the responses.
D. Preliminary Findings: The Designated Authority will proceed
expeditiously with the conduct of the investigation
It makes a preliminary finding containing the detailed information on the main reasons behind the determination.
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E.
E. Provisional Duty: A provisional duty not exceeding the margin
of dumping may be imposed by the Central Government on the basis of the preliminary finding
Can be imposed only after the expiry of 60 days from the date of initiation of investigation.
The provisional duty will remain in force only for a period not exceeding 6 months, extendable to 9 months under certain circumstances.
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F.
F. Oral Evidence Interested parties can request the
Designated Authority for an opportunity to present the relevant information orally.
Such information shall be taken into consideration only when it is subsequently reproduced in writing.
G. Disclosure of information: Based on these submissions and evidence
gathered the Authority will determine the basis of its final findings.
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the Designated Authority will inform all interested parties of the essential facts, which form the basis for its decision before the final finding is made.
H. Final Determination:The interested parties submit their
response to the disclosure and The Authority examines these final
submissions of the parties and comes out with final findings.
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Where does Anti-dumping stand today ?
Anti-dumping measures taken by WTO members have increased from 129 in 1994 to 208 in 2008; 83%.
New users: Argentina, India, Brazil, South Africa.
Traditional users: Canada, U.S., European Union, Australia, Mexico.
Most affected industries: Metal, Chemical, plastic, textiles, machinery and equipment, agriculture and food.
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Anti-Dumping Measures Who used them more?
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39
Most Affected Sectors
39%
13%11%
9%
7%4%
17%
METAL CHEMICAL PLASTIC TEXTILES M&E A&F OTHER
Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
ANTI–DUMPINGINITIATIONS BY SECTOR1995 - 2006
0
20
40
60
80
100
120
140
160
Metals Chemicals Plas Tex/Cloth
40Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
ANTI–DUMPING NUMBER OF CASES
1979 - 2008
41Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
ANTI–DUMPING NUMBER OF MEASURES
1979 - 2008
42Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
Who makes the most USE ?
Developing Countries Use Antidumping more intensely than developed countries.
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ANTI-DUMPINGMEASURES 1995 - 2006Developed / Developing Members
Developed Members Developing Members
MEASURES:1 900
Developing75%
Developed25% Developing
80%
Developing75%
Developed25%
Developed20%
Total 500
Total 1 400
44
Source: WTO Secretariat, Rules Division Anti-dumping Database
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Top 10 Users of AD Law (by initiations) 1995 - 2006
45
Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
ANTI–DUMPINGInitiations by Importing Member 1995 – 2000
218
181173
150139
116
7977
4443
Total 1 529
4646
Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
ANTI–DUMPINGInitiations by Importing Member 2001 – 2006
284
192
144127
89807365
55
Total 1 516
4747
Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
DISPUTE SETTLEMENTTrade Remedy Disputes (Panels Established, 1995 - 2006)
Countervailing Measures
11Safeguards
11
Anti-Dumping 33
Total 55
48
Source: WTO Secretariat, Rules Division Anti-dumping Database 48Group 3 SIIB AB
49
Impact of Anti-Dumping Laws
Pros
Prevents Monopolies Protects Vulnerable
Industries Allows Firms to
Compete Preserves Jobs
Cons
Against Free Trade Concept
Trade Barrier – Lowers Economic Growth
Distorts the Market Protects Firms from
Competition Hurts Consumers
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Notice INDIA’s proportion
Proportion of AD cases initiated by the countries
0
0.05
0.1
0.15
0.2
0.25
0.3
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
India United States Canada China European Community
50
Source: WTO Secretariat, Rules Division Anti-dumping Database Group 3 SIIB AB
1
2
5
2
5
2
6
2 2
6
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Anti-Dumping Related Disputes Panels Established 1995 - 2006
Total 33
51
Source: WTO Secretariat, Rules Division Anti-dumping Database
Various minuses of AD measurement law
Unclear concept of “ordinary course of trade”.
For computation of the normal value complicated cost calculations and allocations
Arbitrariness steps in especially when there is a conflict between accounting practices in the exporting country and the importing country.
This is so because investigating authorities typically follow accounting practices of the importing country
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“India to levy antidumping duty on China telecom gear”-
Business Standard - 15 December, 2009
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India to impose antidumping duties on some equipment imported from China.
Chinese companies entered the Indian telecom market, offering products and services at prices about a third cheaper than that of global competitors.
Indian manufacturers hurt as well54Group 3 SIIB AB
Fibrehome Telecommunication Technologies Ltd. will have to pay a duty of 236%, Alcatel-Lucent Shanghai Bell Co. 29% and Israel's ECI Telecom Ltd. 93% on equipment imported from China
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The Indian Shrimp Industry Organizes to Fight the Threat
of Anti-Dumping Action
(CASE STUDY)
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History
The Ad Hoc Shrimp Trade Action Committee (ASTAC), an association of shrimp farmers in eight southern states of the United States, filed an anti-dumping petition against six countries — Brazil, China, Ecuador, India, Thailand and Vietnam.
The petition alleged that these countries had dumped their shrimps in the US market. 57Group 3 SIIB AB
History
on 21 January 2004 the US Department of Commerce (DOC) announced the initiation of anti-dumping investigations against the six countries.
The Department notified the International Trade Commission (ITC) of its decision on initiation.
On 17 February 2004 the International Trade Commission announced its decision that there was a reasonable indication that the US shrimp industry was affected due to Anti-dumping.
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The Department of Commerce continued with its investigations and gave its preliminary determination on 28 July 2004.
The ratio of preliminary duty varies between 3.56% and 27.49% by the DOC.
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The weighted average rate for India is 14.2%,
The average rate for ▪ China is 49.09%, ▪ Brazil 36.91%, ▪ Vietnam 16.01%,▪ Ecuador 7.3% ▪ Thailand 6.39%.
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II. The National and International context
On 26 February 2002, Reggie Dupre,
a Louisiana state senator, alleged
that tainted farm-raised Asian
shrimp was being diverted from
Europe and dumped on the US
market. 61Group 3 SIIB AB
The national and international context
Vietnam, one of the countries identified almost at the beginning of the SSA(South America Shrimp Association) exercises and also highly dependent on the US market for shrimp exports, was the first to protest.
Foreign Ministry spokeperson Phan Thuy Thanh said in a statement on 12 September 2002 that ‘I can say with certainty that Vietnam has never dumped its shrimp, and its shrimp have been sold at market prices.’
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Source: WTO Secretariat, Rules Division Anti-dumping DatabaseGroup 3 SIIB AB
Indonesia protests as well Rokhmin Dahiri, the Indonesian Maritime
and Fisheries Minister, denied allegations that the Indonesian government subsidized its shrimp farmers.
He said that the price of shrimp on the domestic market was much lower than the export price.
“The dumping charge was baseless and, therefore, the United States should exclude Indonesia from the proposed anti-dumping investigations. ”
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65
The Indian government and the Indian shrimp industry were aware of the threat.
Arun Jaitley, the then Minister for Commerce, made a statement in June 2003 after his official visit to the United States: ‘We are anticipating an action against our shrimp exports because our share in the US market is on the rise.
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The main contentions of the petitioners
The six named countries accounted for 74% of
shrimp imports in the US market.
Imports from the six countries increased from 466
million lbs. in 2000 to 650 million lbs in 2002.
Import prices of the targeted countries had
dropped by 28% in the previous three years.
The average unit value of the targeted countries
in 2000 was $3.54; this had fallen to $2.55 in
2002, on a headless, shell-on equivalent basis.66Group 3 SIIB AB
The main contentions of the petitioners
The average dockside price for one count size of
gulf shrimp dropped from $6.08 to $3.30 per pound
from 2000 to 2002.
The United States was the most open market in the
world.
High tariff rates in other large importing countries
provided a powerful incentive for exporters to
increase shrimp shipments to the United States. 67Group 3 SIIB AB
III. The Indian shrimp industry and its response
The anti-dumping investigations against Indian
shrimp imports might be initiated was hinted at
during bilateral talks when the then Commerce
and Industry Minister Arun Jaitley had met his
counterpart in Washington at that time.
The reason given was that India’s shrimp exports
to the United States had been rising rapidly
during the previous three years, from $255.93
million during 2000-1 to $299.05 million during
2002-3.
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III. The Indian shrimp industry response
The United States, traditionally a buyer of small-sized shrimp from India, has now started buying many other varieties, including black tiger shrimp, resulting in its occupying the top slot in India’s export markets of marine products, replacing Japan in 2002-3.
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Commerce Minister on the possible threat to Indian shrimp exports to the United States, SEAI(Seafood Exporters Association of India (Kochi, Kerala, India). and MPEDA(The Marine Products Export Development Authority) went into action.
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The SEAI (Sea food export Association of India) has estimated a total budgetary requirement of Rs. 70 million to fight the case. Of this, SEAI would mobilize Rs. 40 million internally and the remaining Rs 30 million would be collected from its members, depending on the volume and value of their individual exports to the US market. 71Group 3 SIIB AB
Indian argument
First, there are specific variations between the shrimp caught off the south-west coast of the United States and in Indian waters, so that prices are bound to be different.
India’s shrimp exports are predominantly of black tiger and scampi varieties which are not cultivated in the United States’, according to the president of SEAI. 72Group 3 SIIB AB
Even more arguments…
Second, while fishing in the United States is a capital-intensive activity calling for major investment, in India shrimp capture is carried out with a very low level of capital and requiring hardly any investment.
This makes the cost of production considerably lower in India compared with that for shrimp sea-caught off the US coast.
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DOC is confident
Department of Commerce observed that India had a strong case as India was exporting mainly ‘tiger shrimps which are not found there and that too, in unprocessed form’. Noting that 80% of shrimp consumption in the United States is met through imports.
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75
Shrimp exports to the United States
had come almost to a standstill due
to the uncertainty regarding the
contingent applicability and
incidence of the anti-dumping duty.
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US Has Quarreled Before In 1976 US banned shrimps ,It was on the
ground that trawling for shrimp by mechanized means had been adversely affecting certain varieties of sea turtles.
The WTO ruled against the United States and asked it to make the regime WTO-compatible.
However, since that had not yet happened, India’s exports to the United States of aqua-culture shrimp and shrimp caught by non-mechanized means were being made on the basis of certification by the MPEDA, as required under the law.
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IV. Lessons learnt
Several visits by the representatives of those two bodies to Washington at critical points also helped to bring an understanding of the nature of the problem and how to face it.
This resulted in the selection and appointment of the legal counsel, in September 2003.
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Lessons learnt
The speedy resolution of the issue of financing helped Indian case.
The shrimp industry in India shouldn’t have been focused on only one or two major markets for growth.
Previously it was Japan and during the last few years, it has been the United States.
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Finally
India learnt the importance of diversification.
A. J. Tharakan, the SEAI president,
has said that they are exploring alternative markets to make up for the loss of the lucrative US market.
‘But it will be a long drawn-out process. It is not easy to establish your presence.’
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VICTORY for INDIA!!“On 27 th Jan exports to US were resumed.”
Business line newspaper– 1st Feb, 2010
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Bibliography
Websites www.google.com www.e-businessline.com exim.indiamart.com commerce.nic.in/Anti-Dum.PDF www.wto.org/english/tratop_E/adp_e/adp
_e.htmTexts and literature Anti-dumping and countervailing
Measures-A detailed study.Group 3 SIIB AB 81
THANK YOU…Questions
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