Anti Dumping,Indo China

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    Dumping andAntidumping

    Measures,Indo-china relations

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    Meaning Of Dumping Firm charges a lower price for exporting goods

    than it does for the same goods solddomestically

    Price Discrimination: share of exports is usuallylesser than the domestic demand

    Capture new market

    Condition mandatory for dumping to takeplace:o Presence of an imperfect market (firms are price setters)

    o Segmented markets

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    Antidumping Antidumping duties: nullify the effect of market

    distortions created due to unfair trade practices(dumping)

    Remedial in nature

    Levied on the exporting country

    Antidumping measures:o Antidumping duty

    o Price undertaking

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    Justifications Material injury to domestic producers

    Long start up period and high start-up costs

    Once these firms are forced out of the market as aresult of dumping; difficult to restart

    Intention of dumping is to wipe out the domesticindustries and eventually acquire monopoly powerin the foreign market

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    Introduction GATT/WTO (1995) : promote free trade

    Barriers to free trade: tariff barrier or non-tariff

    barrier (Antidumping, countervailing measures)

    Article VI of the GATT, 1945

    Agreement to give effect to Article VI (1994):provisions strictly followed during anti-dumpinginvestigation

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    WTO and Anti-Dumping Agreement

    The Agreement governs the application ofantidumping measures by Members of the WTO

    The provisions of the Agreement were first

    negotiated during the Kennedy Round (1967) ofGATT negotiations

    The Agreement lays the sunset provision

    The Agreement applies to trade in goods only

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    Anti-Dumping Law inIndia ,Legal Framework

    Based on Article VI of GATT 1994

    Customs Tariff Act, 1975 - Sec 9A, 9B (as amendedin 1995)

    Anti-Dumping Rules [Customs Tariff (Identification,Assessment and Collection of Anti Dumping Duty onDumped Articles and for Determination of Injury)Rules,1995]

    Investigations and Recommendations byDesignated Authority, Ministry of Commerce

    Imposition and Collection by Ministry of Finance

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    Determination Of Dumping Difference between Normal Value and Export Price: Margin of

    dumping (% of export price)

    Normal Value: comparable price at which the goods undercomplaint are sold, in the ordinary course of trade, in thedomestic market of the exporting country

    If the normal value cannot be determined by means ofdomestic sales, following two alternative methods

    Export Price: price paid or payable for the goods by the firstindependent buyer

    Like Articles: The article produced in India must either beidentical to the dumped goods in all respects or in the absenceof such an article, another article that has characteristicsclosely resembling those goods

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    Injury To The Domestic Industry

    The Indian industry must be able to show that

    dumped imports are causing or are threatening tocause material injury to the Indian domestic industry

    Injury analysis can broadly be divided in two majorareas:o

    The Volume Effect: The Authority examines the volume of the dumpedimports, including the extent to which there has been or is likely to be a

    significant increase in the volume of dumped imports, either in absolute

    terms or in relation to production or consumption in India

    o The Price Effect:Extent to which the dumped imports are causing pricedepression or preventing price increases for the goods which otherwise

    would have occurred

    Causal Link: A causal link must exist between thematerial injury being suffered by Indian industry anddumped imports

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    Relief To The Domestic Industry

    ANTI-DUMPING DUTIES: Non-cooperative exporters

    are required to pay the residuary duty (highest of theco-operative exporters)

    o Lesser Duty Rule: Government is obliged to restrict the anti-dumping duty to

    the lower of the two i.e. dumping margin and the injury margin

    o Injury Margin: Difference between the fair selling price due to the domestic

    industry and the landed cost of the product under considerationo De Minimis Margins: Any exporter, whose margin of dumping is less than 2%

    of the export price and the volume of the dumped imports are below 3% of

    the total imports, shall be excluded from duties

    PRICE UNDERTAKINGS: Exporter concerned must

    furnish an undertaking to revise his price

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    Shortcomings Related To The

    Enforcement of Antidumping Laws Under current anti-dumping rules, national authorities are

    allowed to exercise enormous discretion.

    Since the criteria for determining the export price and

    the normal value are neither stringent nor specific, the

    importing country can determine incidents of dumpingat will.

    It can lead to the protection of inefficient domestic

    industry.

    A firm is likely to be subject to an anti-dumpinginvestigation if it exports a product at a price lower than

    the normal value in the home market, regardless of

    whether there is a predatory intent or not.

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    Shortcomings Related To The

    Enforcement of Antidumping Laws Anti-dumping rules allow exporters to avoid

    antidumping actions if exporters agree to raise theirprices.

    Such agreements are a means of suspendingongoing anti-dumping cases and can be used topromote anticompetitive behaviour.

    t t t

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    nt - ump ng cases n t ate y

    India

    Source: http://www.wto.org/english/tratop_e/adp_e/adp_e.htm

    Country No of cases initiatedin year 1995-2009

    India 596

    United states 440

    European Union 406

    Argentina 270

    South Africa 212

    Australia 208

    Brazil 179

    China 178Canada 151

    turkey 144

    Korean Republic 108

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    Sectors getting affected

    Source:http://commerce.nic.in/traderemedies/productprofile/cases_1.pdf

    Sectors in Anti-dumpinginvestigations 1995-2008

    % of total anti-dumping casesinitiated by India

    Chemicals 33

    Metals 28

    Machinery 11Textiles & Footwear 9

    Paper & Wood 6

    Agriculture 5

    Other 8

    A i d i d P l

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    Anti-dumping duty on Poly-

    Propylene(PP) exported into India

    PP used as a raw material in a variety ofindustries including packaging, woven sacksfor cement, fertilizers, sugar and variousconsumer items such as house ware, auto

    components, pipes, water tanks, furniture, andmedical appliances

    Appeal by Reliance Industries, supported by

    Haldia Petrochemicals corporation Ltd.(HPCL), the only two producers of PP in thecountry, against PP imports from Saudi Arabia,Oman and Singapore.

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    Reliance industriesand Anti-dumping

    Reliance industries among the top 8 producers in world.

    holds a 70 percent share of the domestic market

    caters to 3 percent of global consumption of PP

    Directorate General of Anti-dumping and Allied Duties (DGAD) has

    imposed definitive anti-dumping duty of up to USD 323.5 per tone of PPimported from Saudi Arabia, Oman and Singapore.

    It will lead to a significant price rise of the raw material (PP); in some cases the price

    may rise to almost double as the amount of duty is almost equivalent to

    the international market price. most of the units associated with processing industry are small and

    medium enterprises (SMEs) and there is a fear of hurting them in case of

    price rise in the domestic market.

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    INDO-CHINA SCENARIO

    According to a survey conducted by Federation ofIndian Chambers of Commerce and Industry(FICCI), majority of small and medium-sizedmanufacturers (SMEs) had suffered a serious erosion

    of their market share, because of cheaper Chineseproducts.

    Chinese imports were 10 to 70 percent cheaperthan comparable Indian products.

    claimed that China is not a fair trading partner and

    is capturing Indian market at a very fast pacethrough anticompetitive trade practices such aspredatorypricing.

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    Range of sectors included processed food, lightengineering, building materials and heavy

    engineering, chemicals and textiles

    Due to high rise in imports of Chinese toys,Government announced a six-month ban on theimport of Chinese toys.

    The ban was lifted after two months, when Beijingthreatened to take the issue to the World TradeOrganization (WTO).

    In India, it takes 10 to 12 months for investigationwhich is more than enough for Chinese firms todamage the Indian industry.

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    Conclusion It can be agreed that overall the anti-dumping

    policy of India helps to check unwanted importsand hence might qualify as effective.

    Do little when it comes to the trade diversion thattakes place during the initiation of an anti-dumpingcase against a certain country

    Re-initiation and re-investigation on the potentialsimilar imports from a different country is time

    consuming

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    Thank You