Dumping

Syllabus: General Studies Paper 3

In recent times, India’s optical fibre industry has seen unfair competition from cheap imports from China, Indonesia and South Korea. These countries have been dumping their products in India at rates lower than the market price.

What is Dumping?

When the goods are exported by a country to a foreign country at a price lower than the price it charges in its own home market is called dumping.

• Dumping is a situation of international price discrimination this unfair trade practice has a negative impact on international trade.

Dumping is legal: Under World Trade Organization (WTO) rules, dumping is illegal only if the foreign country can reliably show the negative effects the exporting firm has caused its domestic producers.

• In order to protect domestic producers from dumping, countries use tariffs and quotas.

What is “Anti-dumping”?

Anti-dumping is a protectionist tariff, imposed by a domestic government on foreign imports that are at a price lower than the price it normally charges in its own home market.

• Anti-dumping duty is imposed as a remedy to the distortive trade which arises due to the dumping of goods. This tool of fair competition is permitted by the WTO.
• From a long-term perspective, anti-dumping duties can reduce the international competition of domestic companies producing similar goods.

Difference between anti-dumping duty and Countervailing duty?

Countervailing Duty: It is a customs duty on those goods that have received some kind of government subsidies whether in the originating or exporting country.

• Whereas, anti-dumping duty is a form of customs duty on imports. It actually provides protection against the dumping of goods at prices substantially lower than the normal value.

Sunset clause for Anti-Dumping Duty:

Unless revoked earlier, the validity of anti-dumping duty is for five years from the date of imposition. It can be extended for a further period of five years through a sunset or expiry review investigation.

Which authority in India administers trade remedial measures like anti-dumping?

Directorate General of Trade Remedies, the apex national authority under the Ministry of Commerce and Industry administers all trade remedial measures.

• Trade remedial measures include anti-dumping, countervailing duties and safeguard measures.
• Its job is to provide trade defence support to the domestic industry.
• It provides safeguards to the exporters in dealing with increasing instances of trade remedy investigations instituted against them by other countries.