International Trade - Anti Dumping

8/7/2019 International Trade - Anti Dumping

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Antidumping:

India versus the worldInternational Trade Project

MG 680

Submitted By:

Akshay Dalmia 09927871

Palak Kumar 09927862

Vishwas Gupta 09927906


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Definition

Dumping is a situation of international pricediscrimination, where the price of a product when soldto the importing country is less than the price of thesame product when sold in the market of the exportingcountry.

As a short-term predatory pricing strategy to drive competitors out of themarket

As a result of market intervention or state subsidies that enable companiesto artificially lower their prices

Why?


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Background

WTO members initiated a total of 2646 AD cases between January 1995 toDecember 2004, out of which 1656 (62.6%) resulted in measures of somesort.

Increase after original GATT Agreement

236% anti-dumping duty on Chinese, Israeli equipment (Sep 12, 2009) byIndian Govt

India has imposed an anti-dumping duty of up to US$608.57 per tonne ona chemical used in manufacturing toys and adhesives for seven countries

including Thailand, the Press Trust of India reported.( August 2, 2010)

India imposed anti-dumping duty on 12 products imported from China in2009-10 to protect the domestic industry (August 25,2010)


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Important Terms

Dumping

Normal Value

Exporter Price

Constructed Export Price

Margin of Dumping


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What is anti-dumping?

It is a measure to rectify the situation arising out of the dumping of goods and itstrade 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.

Applicability of Measure

Existence of dumped imports;

Material injury to a domestic industry; and

Causal link between the dumped imports and the injury.

The Volume Effect The Price EffectInjury analysis can broadly be divided in two major areas:


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Action against Dumping

Anti-dumping action can be taken onlywhen there is an Indian industry whichproduces like articles

Based on article VI of GATT, 1994

Customs tariff act, 1975 sec 9A, 9B (asamended in 1995)

Investigations by designated authority,Ministry of Commerce

Injury parametersinclude factorssuch as:

o Actual or potentialdecline in sales

o Loss of profits

o Market share

o Capacity utilization

o Employmento Wages

o Ability to raise capital

o Lost contracts

If there is dumping but no injurythen no duty can be imposed.

Duty remains in force for 5 years. Yearly administrative reviews if

requested by

domestic industry or exporter.


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39%

13%11%

9%

7%

4%

17%

ME TAL C HE MIC AL P LAS TIC T EX TILE S M& E A& F OTH ER


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ANTI-DUMPING DUTIES

Lesser Duty Rule

Injury Margin

De Minimis Margins

PRICE UNDERTAKINGS


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Channels through which antidumping can affect

trade

Trade Destruction Effects

Trade Diversion Effects

Downstream Effects Deterrent effects

Collusive device

FDI effects


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Effects of AD in India

Significant restrictive impact from many subjectcountries

Trade diversion to non-subject countries

Political economy argument

Protection to highly concentrated industries

Huge expenditure sacrificing economic efficiency AD policies hence sometimes have opposite

effects

Pros

Prevents Monopolies

Protects VulnerableIndustries

Allows Firms to Compete

Preserves Jobs

Cons

Against Free Trade Concept

Trade Barrier LowersEconomic Growth

Distorts the Market

Protects Firms from

Competition

Hurts Consumers


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References

1. http://en.wikipedia.org/

2. http://www.wto.org/english/news_e/pres09_e/pr556_e.htm

3. http://www.sciencedirect.com/science?_

4. http://www.cci.gov.in/images/media/ResearchReports5. European Economic Review 54 (2010) 760777, The chilling trade

effects of antidumping proliferation.

6. Anti-dumping: A Growing Problem in International Trade, Thomas J.Prusa

7. Anti dumping law and practice: an indian perspective, aradhnaaggarwal, indian council for research on international economicrelations


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Thank You

International Trade - Anti Dumping

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