ANTIDUMPING:

INDIAN PERSPECTIVE
CONTENTS
 Introduction
 Anti-Dumping Law with reference to WTO and Anti-Dumping
Agreement
 Anti-Dumping Law in India

 Competition Law and Anti-Dumping Law – Areas of Overlaps

and Conflicts
 Criticism of Anti-Dumping Law and its effect on Competition

 Few Instances of Anti –Dumping & Competition with

reference to India
 Effect on trade flow due to imposition of anti-dumping duties

 Anti-dumping scenario of China

 Conclusion

 References
INTRODUCTION
MEANING OF DUMPING
 Firm charges a lower price for exporting goods than it
does for the same goods sold domestically

 Price Discrimination: share of exports is usually lesser

than the domestic demand

 Capture new market

 Condition mandatory for dumping to take place:

 Presence of an imperfect market (firms are price setters)
 Segmented markets
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:
 Antidumping duty
 Price undertaking
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 a

result of dumping; difficult to restart

 Intention of dumping is to wipe out the domestic

industries and eventually acquire monopoly power
in the foreign market
 ANTI-DUMPING LAW WITH
REFERENCE TO WTO AND ANTI-
DUMPING AGREEMENT
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-dumping investigation
WTO AND ANTI-DUMPING AGREEMENT

 The Agreement governs the application of antidumping

measures by Members of the WTO

 The provisions of the Agreement were first negotiated

during the Kennedy Round (1967) of GATT
negotiations

 The Agreement lays the “sunset provision”

 The Agreement applies to trade in goods only

 Rules for the conduct of anti-dumping investigations
 initiation of cases,
 calculation of dumping margins,
 application of remedial measures,
 injury determinations,
 enforcement,
 reviews,
 duration of the measure and
 dispute settlement.

 Dispute settlement: strengthens the ability of national

governments to challenge anti-dumping actions by other
member nations

 “Public interest” requirement: Gains to the consumers

from lower prices more than outweigh the losses suffered
by the producers
ANTI-DUMPING LAW IN INDIA
LEGAL FRAMEWORK

 Based on Article VI of GATT 1994

 Customs Tariff Act, 1975 - Sec 9A, 9B (as amended
in 1995)
 Anti-Dumping Rules [Customs Tariff (Identification,
Assessment and Collection of Anti Dumping Duty
on Dumped Articles and for Determination of Injury)
Rules,1995]
 Investigations and Recommendations by
Designated Authority, Ministry of Commerce
 Imposition and Collection by Ministry of Finance
DETERMINATION OF DUMPING
 Difference between Normal Value and Export Price:
Margin of dumping (% of export price)

 Normal Value: comparable price at which the goods

under complaint are sold, in the ordinary course of trade,
in the domestic market of the exporting country

 If the normal value cannot be determined by means of

domestic sales, following two alternative methods :
 Comparable representative export price to an appropriate third
country
 Cost of production in the country of origin with reasonable
addition for administrative, selling and general costs and for
profits
 Export Price: price paid or payable for the goods
by the first independent buyer

 Like Articles: The article produced in India must

either be identical to the dumped goods in all
respects or in the absence of such an article,
another article that has characteristics closely
resembling those goods
INJURY TO THE DOMESTIC INDUSTRY
 The Indian industry must be able to show that dumped
imports are causing or are threatening to cause material
injury to the Indian „domestic industry‟
 Injury analysis can broadly be divided in two major areas:
 The Volume Effect: The Authority examines the volume of the
dumped imports, 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
 The Price Effect: Extent to which the dumped imports are
causing price depression or preventing price increases for the
goods which otherwise would have occurred
 Causal Link: A „causal link‟ must exist between the
material injury being suffered by Indian industry and
dumped imports
WHO CAN FILE AN APPLICATION
 A dumping investigation can be initiated only upon receipt
of a written application by or on behalf of the “Domestic
Industry”

 In order to constitute a valid application, there must be

support of those who account for more than 25% of total
domestic production, and more than 50% production by
those supporting and those opposing the application

 Domestic Industry: Indian producers of like articles as a

whole or those producers whose collective output
constitutes a major proportion of total Indian production.
The following are excluded:
 Importers
 Those related to importers or exporters
RELIEF TO THE DOMESTIC INDUSTRY
 ANTI-DUMPING DUTIES: Non-cooperative exporters are
required to pay the residuary duty (highest of the co-
operative exporters)

 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
 Injury Margin: Difference between the fair selling price due to the
domestic industry and the landed cost of the product under
consideration
 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
THE APPLICATION PROCEDURE

 Made by or on behalf of the concerned domestic

industry to the Designated Authority in the Ministry of
Commerce

 Period of Investigation: Not less than six months

 Confidentiality
INVESTIGATION PROCESS

 Preliminary Screening: Application scrutinized to ensure

that it is adequately documented and provides sufficient
evidence for initiation

 Initiation: Public Notice issued initiating an investigation

to determine the existence and effect of the alleged
dumping. Diplomatic representative of the Government of
the exporting country notified.

 Access to Information: The Authority provides access to

the non-confidential evidence presented to it

 Preliminary Findings: Made within 150 days of the date

of initiation
 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

 Oral Evidence: Interested parties can request the

Designated Authority for an opportunity to present
the relevant information orally

 Final Determination: Made within 150 days of the

date of preliminary determination

 Disclosure of Information: The Designated

Authority will inform all interested parties of the
essential facts which form the basis for its decision
 COMPETITION LAW AND
ANTI-DUMPING LAW – AREAS OF
OVERLAPS AND CONFLICTS
COMPETITION ACT, 2002

An Act to provide, keeping in view of the economic

development of the country, for the establishment of
a Commission to prevent practices having adverse
effect on competition, to promote and sustain
competition in markets, to protect the interests of
consumers and to ensure freedom of trade carried
on by other participants in markets, in India, and for
matters connected therewith or incidental thereto.
 The Act provides a very wide mandate for the
Competition Commission of India to enforce.

 The Act contains provisions which have rather

become standard in the competition jurisdictions all
across the globe.

 The provisions relate to anti-competitive

agreements, abuse of dominant position and
regulation of combinations.
 Dominance is not frowned upon by the Competition
Act, 2002 but the abuse of dominance is frowned
upon by the legislation.

 Anti-competitive agreements and abuse of

dominance are to be prohibited by the orders of the
Commission whereas the mergers are to be
regulated by the orders of the Commission.
CONFLICT BETWEEN ANTI DUMPING LAW AND
COMPETITION LAW

 Antidumping laws were initially enacted to address

the situation of „international price predation‟ .
 They were considered as extension of competition
laws.
 Antidumping laws as they exist today do not seem
to be concerned with the issue of predatory pricing.
 They attach sanctions to every instance of
international price discrimination which can be
shown to cause injury to the domestic industry.
 Objectives of Competition laws are
• Promotion of competition and prevention of anti-
competitive practices
• Protection and promotion of consumer interest
• Achieving economic efficiency
• Geographic/ regional integration
• Public interest
• Competition advocacy
 Objectives of Anti dumping laws
 Remedying the injury to the domestic industry due to
dumping
 Public interest
 Address predatory pricing
 Consumer welfare
OVERLAPS
 Competition laws are primarily aimed at protecting
and promoting competition in markets.

 Antidumping laws are aimed at remedying the injury

to the domestic industry which may arise due to
dumping.
PRICE DISCRIMINATION
 Under competition law, only the price
discrimination, which adversely affects competition
in markets and thus has negative consumer welfare
impact, is prohibited.

 Under anti dumping law, every instance of price

discrimination is prohibited.
PREDATORY PRICING
 Under competition law „predatory pricing‟ is
understood as a deliberate strategy, adopted by a
dominant firm, with an intent to drive competitors
out of the market by setting very low prices.

 Conditions to be met before imposing a sanction

 The firm should be in a position of dominance
 The sale of goods should be at a price below a relevant
measure of cost
 The firm should do so with the intent to reduce
competition or eliminate competitors.
 Antidumping law does not specifically address the
issue of predatory pricing.

 Antidumping law is concerned only about the price

at which the product alleged to be dumped is sold
in the two markets and not directly about the cost of
production of the product or intent behind the
discrimination.
CRITICISM OF ANTI-DUMPING LAW
AND ITS EFFECT ON COMPETITION
 From the economics point of view, there is no
reason to support any anti-dumping law, since price
differentiation across markets is a perfectly rational
and legitimate profit-maximization action.
 Domestic price discrimination normally is not
penalized.
 They do not afford effective assistance to the
domestic industry they are intended to protect.
 They protect producers at the expense of
consumers, which results in higher prices, lower
quality products, less consumer choice and a
general lowering of the standard of living for the
vast majority of people.
 Domestic producers can enlist the help of
government to prevent foreign competition even
when there has been no dumping.
 They provide good for the minority i.e. producers at
the expense of the greatest number i.e. consumers.
 They reduce rather than enhance social
cooperation and harmony.
 They redistribute income in the wrong direction i.e.
from the poor and middle classes to the rich.
 Domestic producers can raise their prices with little
fear of being underpriced by foreign suppliers.
 Thus existence of antidumping law hurts
competition both ways,
 by forcing exporters to sell at higher prices and
 by providing the domestic producers the freedom to
charge higher prices than what would be otherwise
possible.
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 dumping at
will.
 It can lead to the protection of inefficient domestic
industry.
 A firm is likely to be subject to an anti-dumping
investigation 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.
SHORTCOMINGS RELATED TO THE
ENFORCEMENT OF ANTIDUMPING LAWS
 Anti-dumping rules allow exporters to avoid
antidumping actions if exporters agree to raise their
prices.
 Such agreements are a means of suspending
ongoing anti-dumping cases and can be used to
promote anticompetitive behaviour.
FEW INSTANCES OF ANTI –
DUMPING & COMPETITION WITH
REFERENCE TO INDIA
ANTI-DUMPING CASES INITIATED BY INDIA
Country No of cases initiated
in year 1995-2009
India 596
United states 440
European Union 406
Argentina 270
South Africa 212
Australia 208
Brazil 179
China 178
Canada 151
turkey 144
Korean Republic 108
Source: http://www.wto.org/english/tratop_e/adp_e/adp_e.htm
SECTORS GETTING AFFECTED
Sectors in Anti-dumping % of total anti-dumping cases
investigations 1995-2008 initiated by India
Chemicals 33
Metals 28
Machinery 11
Textiles & Footwear 9
Paper & Wood 6
Agriculture 5
Other 8
Source: http://commerce.nic.in/traderemedies/productprofile/cases_1.pdf
ANTI-DUMPING DUTY ON POLY-
PROPYLENE(PP) EXPORTED INTO INDIA
 PP – used as a raw material in a variety of
industries including packaging, woven sacks for
cement, fertilizers, sugar and various consumer
items such as house ware, auto components,
pipes, water tanks, furniture, and medical
appliances

 Appeal by Reliance Industries, supported by Haldia

Petrochemicals corporation Ltd. (HPCL), the only
two producers of PP in the country, against PP
imports from Saudi Arabia, Oman and Singapore.
 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 PP imported
from Saudi Arabia, Oman and Singapore.
 Government's justification of the duty
• imports from the subject countries have increased in
absolute terms as well as in relation to total imports,
total demand and total production in India.
• the market share of the duopolistic domestic industry
has come down, while the demand has increased.
• Despite increase in demand, the prices of the domestic
industry have been suppressed.

 However, according to the Indian Plastic Federation

(IPF), imports from Saudi Arabia, Oman and
Singapore have increased only marginally from 5%
in 2005-06 to 6% in 2008-09.
 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.
CHINA ACCUSED OF „PREDATORY PRICING‟
TACTICS

 According to a survey conducted by Federation of

Indian Chambers of Commerce and Industry
(FICCI), majority of small and medium-sized
manufacturers (SMEs) had suffered a serious
erosion of their market share, because of cheaper
Chinese products.
 Chinese imports were 10 to 70 percent cheaper
than comparable Indian products.
 claimed that China is not a fair trading partner and
is capturing Indian market at a very fast pace
through anticompetitive trade practices such as
„predatory pricing‟.
 Range of sectors included processed food, light
engineering, building materials and heavy
engineering, chemicals and textiles

 Due to high rise in imports of Chinese toys,

Government announced a six-month ban on the
import of Chinese toys.
 The ban was lifted after two months, when Beijing
threatened to take the issue to the World Trade
Organization (WTO).

 In India, it takes 10 to 12 months for investigation

which is more than enough for Chinese firms to
damage the Indian industry.
OTHER CASES
 “green veneer tape” from Taiwan
 phosphoric acid from Korea

 acetone from Japan and Thailand

 CTV picture tubes from Indonesia for five years

from March 2009 onwards
 Definitive duty was imposed on dry battery cells,
Sports Shoes, measuring tapes, plastic ophthalmic
lens, non- brass metal flashlights from PR China
ANTI-DUMPING DUTIES AGAINST INDIA
Country No of cases initiated
in year 1995-2009
China 761
Korean Republic 264
United States 205
Taipei, Chinese 198
Indonesia 156
Japan 155
Thailand 150
India 145
Russia 119
Brazil 108
Malaysia 97
Source: http://www.wto.org/english/tratop_e/adp_e/adp_e.htm
CASE OF INDIAN SHRIMP EXPORTS TO US
 US has raised the average anti-dumping duty to
2.67% up from 0.79% – a near 300% increase that
follows the Fourth Administrative review by the US
authorities.
 puts seafood exporters of India into trouble

 There is a provision for these small producers to

challenge the duty imposed by the US, if they think
they are not dumping
 Though doing so might prove to be very expensive
and time consuming
 Since there is not much local market it is difficult to
identify the normal price
 Also, due to lower operational or transportation or
labor costs, low cost could be fair
EFFECT ON TRADE FLOW DUE TO
IMPOSITION OF ANTI-DUMPING
DUTIES
 A decline in the aggregate annual import of about
7% in the year 1993 from a growth of 17.4% in
imports arising due to trade liberalization in 1992.
 In general, trade from the subject country is
restricted when the anti-dumping duties are levied.
 Right after the case is filed and during the duration
of investigation, imports drop by a large amount
(91%) from pre-petition level.
 by the next year after the case has been filed,
imports start going up again (rise by 53%).
 However, they never again regain their pre-petition
high.
 anti-dumping investigations have restrictive impact
on imports from the subject Countries, other
countries benefit by increasing their sales.

 This diversion of trade from subject to non-subject

countries can offset the restrictive effects of anti-
dumping.

 the existence of trade diversion does not

necessarily imply that anti-dumping duties have no
effect at all on overall import trade.

 Overall imports fall in response to anti-dumping

duties, by a small but considerable amount.
ANTI-DUMPING SCENARIO OF
CHINA
 Anti-dumping export ratio (ADER), defined as
economy‟s share of anti-dumping cases in the
world divided by economy‟s share in world exports,
 If ADER>1, then that economy is targeted more
than its share in the exports.
 China‟s ADER = 4.

 Also the ADERs of Korea, India and South Africa

are more than 1,
WHY DOES CHINA TOP THE LIST?
1)
 After 1992, when Foreign Direct Investments (FDI) into
China was allowed, many companies have invested
heavily in China
 Started exporting from China rather than from the home
country.
 As the labor and transportation costs in China were
relatively very low
 Exporting the produce from these firms was seemed to
be economical
 There were instances of anti-dumping duties on these
companies which seem to have Chinese origin.
  reduced cases against other countries as opposed to
increased cases against China.

2)
 Also, China is considered as a non-market economy
 liberty to the investigating economy to calculate cost
incurred by referring to costs of some neighboring
countries like India where labor, transportation and other
factors determining price of a commodity is
comparatively high
 unfair calculation of normal prices and the injury
calculation in domestic market, might result in more
number of antidumping measures against China.
3)
 In first decade of facing anti-dumping investigations
Chinese enterprises have not coordinated well in
dealing with anti-dumping cases in an effective manner.
 This reflects the weakness in the Chinese enterprises in
terms of backward corporate governance practice and
also the overall weakness of nationwide legal
infrastructure.

 This applies to Indian context in some instances as well.

 We are not effective in defending the anti-dumping
duties being imposed against our domestic exporters,
especially with the small and medium size enterprises
(SMEs) as in the shrimp exporters case.
CONCLUSION
 It can be agreed that overall the anti-dumping policy
of India helps to check unwanted imports and
hence might qualify as “effective”.
 Do little when it comes to the trade diversion that
takes place during the initiation of an anti-dumping
case against a certain country
 Re-initiation and re-investigation on the potential
similar imports from a different country is time
consuming
REFERENCES
 http://www.wto.org/english/tratop_e/adp_e/adp_e.htm
 Anti-Dumping and competition law: An Indian perspective – by
Naveen Chugh
 http://www.atimes.com/atimes/South_Asia/KE15Df01.html
 http://www.blonnet.com/
 The Trade Effects of Indian Antidumping Actions - Bodhisattva
Ganguli
 http://commerce.nic.in/traderemedies/
 The Reasons for and the Impact of Antidumping Protection:
The case of People's Republic of China – Prusa
 Article VI, GATT (General Agreement on Tariffs and
Trade)1994
 Global Trade Protection Report 2009 -
antidumpingpublishing.com
THANK YOU