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8/12/2019 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