Dumping and anti

dumping
 Dumping
The offering for sale of large quantities (of goods) on foreign markets at
low prices in order to maintain a high price in the home market obtain a
share of the foreign markets.
 Export price is less than the normal price in the exporting country.
 The sale of goods abroad at a price which is lower than the selling price
of the same goods at the same time in the same circumstances at
home, taking account of difference in transport costs.
 3
Objectives of Dumping
 To Find a Place in the foreign market:-
Due to perfect competition in the foreign market he lowest the price of his commodity in
comparison to the other competitors so that the demand for his commonly may increase.
 To Sell Surplus Commodity:-
When there is excessive production of a monopolist`s commodity.
 Expansion of Industry:-
The cost of production of his commodity is reduced.
 New Trade Relations:-
To sell his commodity at a low price in the foreign market.
Advantages and Disadvantages 4

of Dumping
The primary advantage of trade dumping is the ability to permeate a
market with product prices that are often considered unfair. The
exporting country may offer the producer a subsidy to counterbalance
the losses incurred when the products sell below their manufacturing
cost.
One of the biggest disadvantages of trade dumping is that subsidies
can become too costly over time to be sustainable. Additionally, trade
partners who wish to restrict this form of market activity may increase
restrictions on the good, which could result in increased export costs to
the affected country or limits on the quantity a country will import.
 5
International attitude on dumping
While the World Trade Organization (WTO) reserves judgement on
whether dumping is an unfair competitive practices, most nations are
not in favor of dumping. Dumping is legal under WTO rules unless the
foreign country can reliably show the negative effects the exporting
firm has caused its domestic producers. To country dumping and
protect their domestic industries from predatory pricing, most nation
use tariffs and quotas. Dumping is also prohibited when it causes
“material retardation” in the establishment of an industry in the
domestic market.
Types of Dumping 6

 Persistent Dumping
IT is the continuous tendency of a domestic monopolist to maximize total
profits by selling the commodity at a higher price in the domestic market
than internationally.
 Predatory Dumping
It is the temporary sale of a commodity at below cost or at a lower price
abroad in order to drive foreign producers out of business, after which
prices are raised to take advantage of the newly acquired monopoly
power abroad.
 Sporadic Dumping
It is the occasional sale of a commodity at below cost or at below price
abroad than domestically in the order to unload an unexpected and
temporary surplus of the commodity without reducing domestic prices.
 Determination of dumping 7
 Determination of the ‘normal value
• First, the sale must be ‘in the ordinary course of trade’;
• Secondly, it must be of the ‘like product’;
• Thirdly, the product must be ‘destined for consumption in the exporting country’; and
• Fourthly, the price must be ‘comparable’
 Alternative rules for the determination of the ‘normal value’
• Using a third country price as the normal value; or
• Constructing the normal value.
 Determination of the ‘export price’
The export price is ordinarily based on the transaction price at which the producer in the
exporting country sells the product to an importer in the importing country.
 Comparison between the export price and the ‘normal value’
To determine whether dumping, as defined above, exists, the export price is compared with
the normal value.
 Calculation of the margin of dumping
The margin of dumping is the difference between the export price and the 8
‘normal value’. This would appear simple enough. However, the methodology to
be applied when calculating the difference between the export price and the
‘normal value’ may raise difficult and controversial issues.
• Either the comparison of the weighted average ‘normal value’ to the
weighted average of prices of all comparable export transactions; or
• A transaction-to-transaction comparison of ‘normal value’ and export price.
 Determination of injury 9

Article VI of the GATT 1994 and the Anti-Dumping Agreement. Therefore, after having
determined the existence of dumping, the competent authorities must establish:
• The existence, or threat, of injury to the domestic industry; and
• The causal link between the dumping and the injury
An affirmative determination of injury to the domestic industry is a fundamental pre-
condition for the imposition of anti-dumping measures, along with a determination of the
causal link between the dumped imports and the injury. The Anti-Dumping Agreement
defines ‘injury’ to mean one of three things:
o Material injury to a domestic industry;
o Threat of material injury to a domestic industry; or
o Material retardation of the establishment of a domestic industry.
 Anti Dumping 10
Anti-dumping law was first introduced by Canada in 1903. In Kennedy Round (1967)
Anti-dumping Code come into existence.

Anti-dumping duty is imposed to protect local businesses and market from unfair
competition by foreign imports.

Anti-dumping= Normal Value – Export Value

However, if the product does not exist in the domestic market, the government use
the prices of any similar product available in the market.
 Essentially deal with the price behavior of exporters.
 Dumping occurs when normal value is more than the export price.
 Injury can causal link are required to be proved.
 Anti-dumping investigation
11
The Anti-Dumping Agreement sets out, in considerable detail, how investigating authorities of
WTO Members have to initiate and conduct an anti-dumping investigation. This section
addresses:
o The initiation of an anti-dumping investigation;
o The period of an investigation; and
o The conduct of an investigation.
 Initiation of an investigation
Article 5 of the Anti-Dumping Agreement contains numerous requirements concerning the
initiation of an anti-dumping investigation. The domestic investigating authorities can instigate.
The Anti-Dumping Agreement contains guidance relating to the required contents of the
initiation request, including:
o Evidence of dumping;
• Evidence of injury to the domestic industry; and
• Evidence of a causal link between the dumped imports and the injury to the domestic
industry.
 Period of investigation
It is the common practice of WTO Members to conduct an anti-dumping investigation 12using
data for a fixed ‘investigation period’ which precedes the date of initiation of an investigation.
Measures are then imposed on the basis of the determinations on dumping and injury made
using the data from the ‘investigation period’. The Anti-Dumping Agreement refers to the
concept of a ‘period of investigation’, and the use of such an investigation period appears to
be implicit in several provisions of the Agreement.
 Conduct of the investigation
Article 6 of the Anti-Dumping Agreement contains detailed rules concerning the process of the
investigation, including evidentiary, informational and procedural elements. Article 6.1 requires
that all interested parties in an anti-dumping investigation be given notice of the information
which the authorities require and ample opportunity to present in writing all evidence which
they consider relevant in respect of the investigation. In practice, investigating authorities
typically send interested parties questionnaires in which they identify the information that they
require in order to conduct the investigation. Article 6.1 sets ‘flexible’ thirty-day minimum time
limits for submissions and responses to questionnaires from interested parties.
 Anti-Dumping Measures
13
The Anti-Dumping Agreement provides for three kinds of anti-dumping measures:
o Provisional measures;
o Price undertakings; and
o Definitive anti-dumping duties.
This section will discuss the rules on the imposition of each of these measures. It will also address
the issues of the duration, termination and review of antidumping measures.
 Imposition of provisional anti-dumping measures
Article 7 of the Anti-Dumping Agreement contains rules relating to the imposition of provisional
measures. To apply a provisional anti-dumping measure, investigating authorities must make a
preliminary affirmative determination of dumping, injury and causation.90 Furthermore, the
investigating authorities must judge that such a measure is necessary to prevent injury being
caused during the investigation.91 A provisional measure cannot be applied earlier than sixty
days following the initiation of the investigation.92 Provisional measures may take the form of a
provisional duty or, preferably, a security, by cash deposit or bond, equal to the amount of the
preliminarily determined margin of dumping.
 Price undertakings
Article 8 of the Anti-Dumping Agreement provides for the possibility of offering and 14
accepting price undertakings as an alternative to the imposition of anti-dumping
duties. Undertakings to revise prices or cease exports at the dumped price may be
entered into only after the investigating authorities have made an affirmative
preliminary determination of dumping, injury and causation. Such undertakings are
voluntary on the part of both exporters and investigating authorities. An exporter may
request the continuation of an investigation after the acceptance of an undertaking.
The undertaking would then automatically lapse in the event of a negative final
determination of dumping, injury or causation.
 Imposition and collection of anti-dumping duties
Article 9 of the Anti-Dumping Agreement governs the imposition and collection of
anti-dumping duties. This provision establishes the general principle that ‘it is
desirable’ that, even where all the requirements for imposition of duties have been
fulfilled, the imposition of anti-dumping duties remains optional. Article 9 also contains
the so-called ‘lesser duty rule’, under which ‘it is desirable’ that the duty imposed be
less than the margin of dumping if such lesser duty would be adequate to remove
the injury to the domestic industry.
 Duration, termination and review of anti-dumping measures
Responding to the concern of some Members that some countries were leaving
anti-dumping measures in place indefinitely, Article 11 of the Anti-Dumping 15
Agreement establishes rules governing the duration of anti-dumping measures and a
requirement for the periodic review of any continuing necessity for the imposition of
anti-dumping measures.
 Problem of circumvention of anti-dumping duties
As explained above, anti-dumping duties are typically levied on a specific product
of a specific exporter or producer from a specific country. An exporter or producer
may try to change the characteristics of the product concerned so that it no longer
responds to the characteristics of the product subjected to an anti-dumping duty.
An exporter or producer may move part of its assembly or manufacturing operations
to another country so that the product arguably no longer originates in the country
whose products are subjected to an anti-dumping duty.
 Public notice and judicial review
In order to increase the transparency of the determinations made by the
investigating authorities and to encourage solid and thorough reasoning underlying
such determinations, Article 12 of the Anti-Dumping Agreement contains detailed
requirements for public notice by investigating authorities of the initiation of an
investigation, preliminary and final determinations and price undertakings.
 Conclusion 16

These issues have led to recommendations that antitrust principles be used in

place of antidumping laws and regulations, or that safeguard mechanism
under Article XIX of the GATT 1994 and the URSA be used instead. Neither
proposition looks viable at this time in the evolution of international trade law.
Furthermore, antidumping measures have become commonplace, and the
global community regards them as the sole legal means of combating
dumping as specified by and decided by law. Despite significant lobbying,
neither local judicial systems nor treaty obligations have required a
“economy-wide” cost-benefit analysis of the proposed anti-dumping
measures. Although the URAA(Uruguay round) has improved the discipline
and made a lot of reforms, it cannot guarantee to have closed all loopholes
for antidumping abuse.
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