PROJECT REPORT ON INTERNATIONAL TRADE

AND FINANCE

ASSIGNMENT ON ANTI DUMPING LAWS

SUBMITTED BY- SWAPNIL DUBEY

B.A.LLL.B 5TH SEMESTER (REGULAR)

ROLL NO-

SUBMITTED TO- MD. ENAM FIRDOS

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 ACKNOWLEDGEMENT

It gives me immense pleasure and gratitude to thank my International trade and finance
teacher, MD. ENAM FIRDOS SIR, who gave me opportunity to do this wonderful project
which helped me in doing a lot of research and I came to know about so many new things. I
am thankful to him.

Secondly, I would like to give thanks to all my seniors who have guided throughout the
research process.

Lastly, I feel that my project would not have been completed without the help of my parents
and friends.

YOURS SINCERELY,

SWAPNIL DUBEY

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 PREFACE

The General Agreement on Tariffs and Trade lays down the principles to be followed by the
member countries for imposition of anti-dumping duties, countervailing duties and safeguard
measures. Detailed guidelines and disciplines have been prescribed under the specific WTO
agreements which have also been incorporated in the national legislation of the member
countries of the WTO. It is well known that while temporary gains may accrue to consumers,
dumping can harm the domestic industry by reducing its sales volume, market shares and
revenues. This in turn can result in decline in profitability, job losses and, in the worst case,
the domestic industry going out of business. It is said to occur when the goods are exported
by a country to another country at a price lower than its normal value. Evidently, there is a
need for effective trade defence measure to counter such threats to domestic industry. Hence,
the need for Anti-dumping measures.

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 ANTI- DUMPING LAWS

INTRODUCTION-

Dumping is said to occur when the goods are exported by a country to another country at a
price lower than its normal value and this causes injury to domestic industry. This is an unfair
trade practice which can have a distortive effect on international trade as it keeps competitors
out of a particular market. Anti-dumping measures rectify the situation arising out of the
dumping of goods and its trade distortive effect. The use of anti-dumping measure as an
instrument of fair competition is permitted by the WTO. Anti-dumping duty is recognised as
an instrument for ensuring fair trade and is not a measure of protection per se for the
domestic industry. It provides relief to the domestic industry against the injury caused by
dumping.

Often, dumping is mistaken and simplified to mean cheap or low priced imports. However, it
is a misunderstanding of the term. Dumping, in its legal sense, means export of goods by a
country to another country at a price lower than its normal value. Thus, dumping implies low
priced imports only in the relative sense (relative to the normal value), and not in absolute
sense. In simple parlance, the normal value is the selling price of the product in the exporting
country. Import of undervalued products to evade customs duty or through illegal trade
channels like smuggling does not fall within the purview of anti-dumping measures.

The contracting parties recognize that dumping, by which products of one country are
introduced into the commerce of another country at less than the normal value of the
products, is to be condemned if it causes or threatens material injury to an established
industry in the territory of a contracting party or materially retards the establishment of a
domestic industry. For the purposes of this Article, a product is to be considered as being
introduced into the commerce of an importing country at less than its normal value, if the
price of the product exported from one country to another

(a) Is less than the comparable price, in the ordinary course of trade, for the like product
when destined for consumption in the exporting country, or,

(b) In the absence of such domestic price, is less than either

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  the highest comparable price for the like product for export to any third country in
the ordinary course of trade OR
 The cost of production of the product in the country of origin plus a reasonable
addition for selling cost and profit.

Due allowance shall be made in each case for differences in conditions and terms of
sale, for differences in taxation, and for other differences affecting price comparability.

• If the export price of the product from the country of export is less than its normal
value in the ordinary course of trade

• Dumping per se is not objectionable

• Injurious dumping has been condemned

• Dumping Margin = (Normal Value – Export Price) / Export Price

WHAT IS ANTI DUMPING AGREEMENT-

The Anti-Dumping Agreement of the World Trade Organization (WTO), commonly known
as the AD Agreement, governs the application of anti-dumping measures by WTO member
countries.

A product is considered to be "dumped" if it is exported to another country at a price below

the normal price of a like product in the exporting country. Anti-dumping measures are
unilateral remedies (the imposition of anti-dumping duties on the product in question) that the
government of the importing country may apply after a thorough investigation has
determined that the product is, in fact, being dumped, and that sales of the dumped product
are causing material injury to a domestic industry that produces a like product.

All members of the WTO (offsite link) are parties to this Agreement, whose full name is the
"Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade
1994". It went into effect on January 1, 1995. Pursuant to the Doha Ministerial Declaration,
negotiations for the Anti-Dumping Agreement are currently underway. The agreement has no
expiration date. The negotiations are scheduled to be completed by January 1, 2005.

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Any company involved in international trade can benefit from clear and predictable rules for
the application of anti-dumping measures.

BENEFITS-

The AD Agreement ensures that WTO members will not apply anti-dumping measures
arbitrarily. It provides detailed substantive requirements for determining whether dumping
and injury are, in fact, taking place, and sets forth elaborate procedures that governments
must follow when they conduct anti-dumping investigations and impose anti-dumping duties.
The Agreement ensures that all proceedings will be transparent and that all interested parties
have a full opportunity to defend their interests.

Substantive Requirements

Since a determination of dumping requires a comparison between the export price of a

product and its normal value in the exporting country, the AD Agreement sets forth rules for
the calculation of export price and normal value. It then explains how a "fair comparison" is
made between the two. The government conducting an anti-dumping investigation uses this
fair comparison as the basis for determining the "margin of dumping".

The Agreement then sets forth rules for determining whether dumped imports are causing
injury to a domestic industry that produces a like product. Injury is defined to mean material
injury itself, the threat of material injury or material retardation in the establishment of a
domestic industry. The government authorities must establish injury to the domestic industry
and that the dumped imports are a cause of that injury. The AD Agreement provides for
"cumulative assessments" of the effects of imports on a domestic industry when imports of a
product from more than one country are simultaneously subject to anti-dumping
investigations.

Investigations

A government normally initiates an anti-dumping investigation on the basis of a written

application by a domestic industry, although in special circumstances the government itself
can initiate the investigation on the industry's behalf. The application must provide evidence
of dumping, injury and a causal link between the two. It must include a complete description
of the allegedly dumped product, information on the like product produced by the applicant,

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evidence regarding export price and normal value, an assessment of the impact of the imports
on the domestic industry and information concerning industry support for the application.

The rules set forth in the Agreement for the collection of evidence state that as soon as
government authorities initiate an investigation, they must provide the full text of the written
application to all known exporters. All interested parties are given access to non-confidential
information and the opportunity to meet with the parties that have adverse interests, so that
opposing views can be presented and rebuttal arguments offered. Before they make a final
determination of whether dumping has occurred, the government authorities must inform all
interested parties of the essential facts under consideration, giving them sufficient time to
defend their interests.

An application will be rejected, according to the Agreement, and an investigation promptly

terminated if the government authorities conclude that there is insufficient evidence of either
dumping or injury. The Agreement provides that unless there are special circumstances,
investigations will be concluded within one year and will continue in no case more than 18
months after their initiation.

Price Undertakings

The Agreement provides that government authorities can suspend or terminate an anti-
dumping proceeding if they receive voluntary undertakings from an exporter that it will
revise its prices or cease exporting to the area in question at dumped prices. Investigating
authorities have the option of accepting price increases that are less than the margin of
dumping if they are adequate to remove the injury to the domestic industry.

Imposition of Anti-dumping Duties

Under the Agreement, it is up to the government of the importing country to decide whether
or not to impose anti-dumping duties. (The Agreement provides an option of not imposing
duties in cases where all requirements for imposing such duties have been fulfilled, but not all
authorities allow such an option.) The amount of the duty set by the government cannot
exceed the margin of dumping, but the Agreement permits it to be lower if it is adequate to
remove the injury to the domestic industry.

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Normally anti-dumping duties are applied to all imports of the subject merchandise made on
or after the date on which there is a preliminary determination of dumping, injury and
causality.

The Agreement states that an anti-dumping duty shall remain in force as long as necessary to
counteract dumping that is causing injury. It contains a "sunset" provision that provides that
the duty will be terminated five years from the date of its imposition unless the government
authorities determine in a review that termination of the duty would lead to continuation or
recurrence of dumping and injury.

The Committee; Notifications

The Agreement established a Committee on Anti-dumping Practices, composed of

representatives of each WTO member country. This Committee meets not less than twice a
year and affords members the opportunity to consult on any matters relating to the operation
of the Agreement. Member countries are required to notify this Committee of their anti-
dumping legislation and/or regulations, their anti-dumping actions and the names, addresses
and contact numbers of officials responsible for anti-dumping matters.

PRACTICAL EXAMPLES

In June 2015, American steel companies United States Steel Corp., Nucor Corp., Steel
Dynamics Inc., ArcelorMittal USA, AK Steel Corp., and California Steel Industries filed a
complaint with the Department of Commerce and the ITC alleging that China (and other
countries) were dumping steel on the U.S. market and keeping prices unfairly low.

A year later, the United States, after a review and much public debate, announced that it
would be imposing a 500% import duty on certain steel imported from China. China may
bring the debate before the WTO by China if it feels the tariffs are unfair.

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INITIATION OF INVESTIGATION

• Objective- to determine the existence, degree and effect of alleged dumping

• Usually initiated at the written request by or on behalf of the domestic industry •

Application can be made by associations

• In special circumstances suo moto initiation possible without written request from domestic
industry

• If there is insufficient prima facie evidence that injurious dumping has taken place,
application rejected, otherwise investigation initiated against the specified product.

Initiation- obligations on investigating authority

• Standing requirement – Article 5.4

 25 % test and 50% test

 Those supporting the petition must account for at least 25% of the total domestic
production of the product concerned.

 Those supporting the petition must account for at least 50 % of the production in
respect of those expressing an opinion on the petition.

 Suo moto initiation also possible.

Initiation- obligations on domestic industry

• To meet standing requirement (Art 5.4)

• To present sufficient evidence in the application on dumping injury and causal link – mere
assertion, conjecture or allegation not adequate (Art 5.2)

Petition Proforma – Domestic Industry

• Description of product under consideration (PUC).

• Details of the imports of PUC.

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• Details of the exporters and importers of the product.

• Indian industry profile • Evidence of dumping.

• Evidence of injury –

 Changes in market share

 Decline in production of petitioners
 Decline in capacity utilization
 Evidence of price erosion, price under cutting
 Details of profitability

Initiation of investigation

• Notify the exporting country before initiation (Art 5.5)

• Provide full text of the written application to the known exporters and to the authorities of
the exporting Member as soon as the investigation has been initiated (Art 6.1.3)

• Upon request, the text of the application must be made available to other interested parties
(Art 6.1.3)

• Questionnaires sent to exporters, importers, domestic industry and other interested parties.
Exporters or foreign producers must be given at least 30 days to reply (Art 6.1.1)

• NCV of submissions to be made available to interested parties (Art 6.5)

Questionnaire response- exporters

• Domestic sales and its price structure

• Customer-wise export sales to India

• Sales price structure for exports to India

• Sales price structure for exports to other countries

• Statement of raw material consumption

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• Allocation and apportionment of expenditure

• Statement of cost of production.

Rights of interested parties

• Throughout the investigation all interested parties shall have a full opportunity for the
defence of their interests

• NCV of written submissions to be made available

• Entitled to be heard

• Entitled to have access to public file

• May submit comments

Data Analysis by IA

• Exporters’ data analysed to determine whether dumping exists Determining export price
Determining normal value

• Domestic industry data analysed to determine whether injury caused due to dumping

Normal Value

RULE: Domestic price of the like product in the country of exports

Two exceptions

• Export price to a third country

• Constructed normal value

Export Price

Price paid by importers

Exception-

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• Constructed export price

• If export price unreliable because of association or compensatory arrangement between

exporter and importer then resort to constructed export price at which imported products are
first resold to an independent buyer.

Fair Comparison Between NV and EP

• Same level of trade

• ...as nearly as possible the same time

• Make suitable adjustments for

 physical difference channels of sale

 taxation

Illustrations

• Ex- factory price for NV = Gross selling price – (freight and insurance + selling
expenses +discounts and rebates + taxes not borne by exports +credit expenses)

• Ex-factory Export price = Gross export price – (freight and insurance + selling expenses
+discounts and rebates + credit expenses) + export subsidies

• Some adjustments can be made on either NV or EP

• Anti-dumping investigations to be terminated if

Dumping margin is less than 2% or

Volume of dumped imports from particular country is less than 3% subject to 7%

cumulation.

DETERMINATION OF INJURY

 Material injury
 Threat of material injury: no current injury but it is likely to occur...
 Material retardation
 All producers or major proportion of the domestic industry

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 • Objective examination
• Positive evidence

Injury determination

• Effect of the dumped imports on prices in the domestic market for the like product Price
under-cutting

 Price depression
 Prevent price increases
• Consequent impact of the dumped imports on domestic producers of such products
Having a bearing on state of industry- actual and potential decline in sales, profits,
output, market share, productivity, ROI etc Affecting domestic prices
Magnitude of margin of
dumping Actual and potential
negative effects on cash flows, stock, employment, wages etc.

Causal link between dumping and injury

• Dumped imports are causing injury

• The causal link to be demonstrated

• Any injury caused by known factors other than dumping must not be attributed to dumped
imports

• Relevant factors: Contraction in demand

Provisional Measures

• Applied if preliminary affirmative determination has been made of dumping and

consequent causal injury to a domestic industry

• Necessary to prevent injury being caused during investigations

• Not applied sooner than 60 days after initiation of investigation

• Publication of a notice required

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Price undertakings

• Proceedings may be suspended or terminated without imposition of provisional measures

or anti-dumping duties

• Exporter has to give voluntary undertaking to revise its prices or to cease exports at
dumped prices. • Authorities must be satisfied that injurious effect of the dumping is
eliminated.

Verification visits

• On-the-spot verification of exporters and domestic industry normally undertaken

• Objective is to verify the information submitted or to obtain further details

• Explicit agreement of the firms in exporting country needed prior to verification visit

• Prior to visit firm should be informed of the general nature of information to be verified and
any further information to be provided.

Disclosure

• Before a final determination is made the investigating authority is required to inform all the
interested parties of the essential facts under consideration which the basis of the final
decision

• Interested parties must be given sufficient time to defend their interests

• Analysis of comments by interested parties necessary.

Time-limit- 18 months from initiation Imposition and collection of antidumping duties

• Anti-dumping duties to be imposed shall be to the full margin of dumping or less if it is

adequate to remove injury.

• Duties imposed and collected on nondiscriminatory basis on such product from all sources
found to be dumped and causing injury (exception undertaking)

• Duty levied mainly on prospective basis.

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Public Notice and Explanation

• All relevant information which have led to imposition of the measure-

 on matters of fact and law

 reasons

• Reasons for acceptance/ rejection of relevant arguments

• Basis for decisions.

Duration and Review of measures

• Duty in force only as long as necessary to counteract dumping causing injury.

• Review after a reasonable period of time.

• Duties to terminate before 5 years unless in the sunset review a conclusion that expiry of
duty would lead to continuation or recurrence of dumping and injury.

Misuse/ abuse of anti-dumping duty:

Remedies available

• Requirement of a mechanism for judicial review of final anti-dumping duty in the

importing country

• Possibility of raising a dispute under WTO’s Dispute Settlement Mechanism.

Different systems of duty assessment

• Prospective system: easier to administer.

• Retrospective system: more effective in addressing dumping.

WTO Committee on A D practices

• Meets twice a year.

• All preliminary and final action to be notified to the committee • Members to submit six
monthly reports on anti-dumping action.

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 CONCLUSION

Conclusively it can be said that while studying the effects of price dumping on Indian
economy with special reference to dumping from china, it was established that China is the
chief dumping country in India since 1995. Dumping from China is most troublesome in
major industries like chemical industry, mechanical, machinery and electrical industry,
plastic and rubber industry and textile industry of India. Dumping from China has negatively
affected growth of Indian industries and caused serious material injury to most of the
products of Indian domestic industries. There were serious volume effect, price effect and
economic and financial effects on Indian industries.

The volume effect can be seen in the form of volume of imports from China in absolute terms
and relative to Indian production and consumption. Price effect can be understood in terms of
price undercutting and underselling by Indian manufacturers. Economic and financial effect
is clearly visible in the form of material injury to Indian industries. It was realized that
dumping from China has been a serious trade distorting practice and was predatory in nature.
By and large on execution of an anti-dumping duty equal to the dumping margin on dumped
imports, the price effect was controlled but the volume effect persisted even after imposition
of anti-dumping measures by Indian Government. However there was almost no effect of
anti-dumping duty on volume of imports in India from China.

The Chinese exporters, once gaining access in Indian market during the period of dumping
achieved market power which lasted long and even anti-dumping measures taken by India to
counter dumping were largely fruitless.

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BIBLIOGRAPHY

BOOKS

 S.R. Myneni: International Trade Law, Allahabad Law Agency, Allahabad.

 A.K Kaul: Guide to WTO & GATT: Economics, Law & Politics, Kluwer Law
International, Netherlands.
 Raj Bhalla: International Trade Law: Theory & Practice, Lexis Nexis India, Gurgaon.

WEBSITES

 http://www.uncitral.org/uncitral/en/uncitral_texts/sale_goods/1980CISG.html.
 https://en.wikipedia.org/wiki/United_Nations_Convention_on_Contracts_for_the_Inte
rnational_Sale_of_Goods
 https://www.lexology.com/library/detail.aspx.

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