Post on 22-Jul-2015
Dumping:
Dumping is a situation of International price discrimination, where
the price of a product when sold to the importing country is less
than the price of the same product when sold in the market of the
exporting country.
Or
“sale below the normal value and sale below average cost.”
• Dumping may done by a producer, a group of producers, or a
nation.
• It support monopoly.
• acute competition from foreign producers often leads to charges
of dumping.
Dumping and Economics:
Adam Smith has famously quoted:
“If a foreign country can supply us with commodity cheaper
than we ourselves can make it, better buy it of them with some
part of the produce of our own industry, employed in a way in
which we have some advantage.”
Types of Dumping:
1. Sporadic Dumping
2. Predatory Dumping
3. Persistent Dumping
Conditions for Dumping:
1. Presence of an imperfect market
2. Segmented market
3. Different Elasticity’s of demand
Reasons for Dumping
1. Predatory Price (Predatory Dumping):
The practice of cutting prices in an attempt to drive a rival out of business or create
barriers to entry for potential new competitors.
2. Price Discrimination/Strategic Dumping
If a firm has a monopoly in its home market but faces strong competition in a
foreign market, it will charge a higher price in the home market.
3. Cyclical Dumping
Selling at low price because of over capacity due to downturn in demand.
4. Market Expansion Dumping
Selling at lower price for export than domestically in order to gain market share.
5. State Trading Dumping
Selling at lower price in order to gain hard currency.
Impact of Dumping:
1. Reduction its sales volume and market shares, as
well as its sales prices
2. Decline in profitability
3. Job losses
4. Domestic industry going out of business
5. Consumers benefit from the low prices
Dumping in Agriculture:
Dumping reflects a distorted market where production is supported
independently of demand leading to depressed international agricultural
prices, dumping causes unfair competition for small farmers in rural areas of
developing countries, where 70% of the world’s poor live.
Agricultural dumping causes structural price depression. It has two types of
effects ,
• Low cost imports drive away domestic farmers
• Lower cost competition undermines global market share exporters
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Calculation of Dumping Margin:
Normal Exportvalue price Margin of Dumping
• The price of the product in the home country, or when exported
to any third country, is called ‘normal value' of the product.
It can be determined in the following ways:
(a) The price of a like product in the exporting country.
(b) The price of a like product when exported to any third
country.
(c) Constructed normal value:
Export price:
Price of an imported product in the importing country is
called Export price.
Constructed export price:
•on the basis of the price at which the imported
articles are first resold to an independent buyer.
•reasonable basis.
Margin of dumping:
It is normally established on the basis of,
• A comparison of weighted average Normal Value with a
weighted average of prices of comparable export transactions;
or
• Comparison of normal values and export prices on a
transaction to transaction basis.
• The margin of dumping is generally expressed as a
percentage of the export price.
Injury to the domestic country:
Injury determination
The volume effect
(significant increase)
absolute relative
The price effect
Depression undercutting suppression
Economic and Financial impact of the dumped imports:
Decline in output
Loss of sales
Loss of market share
Reduced profits
Decline in productivity
Decline in capacity utilization
Reduced return on investments
Price effects
Adverse effects on cash flow, inventories, employment,
wages, growth, investments, ability to raise capital, etc.
Causal link:
Causal relationship to be demonstrated.
Other factors to be considered
Volume and price of other imports
Demand contraction
Productivity
Technology
Dumping Material injury
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.
Relief to the domestic industry:
Anti dumping:
‘charging extra import duty on the particular product from
the particular exporting country in order to bring its price
closer to the “normal value” or to remove the injury to
domestic industry in the importing country.’
1.Antidumping duties.
• Lesser Duty Rule:
• Injury Margin:
• De Minimis Margins:
2.Price undertakings.
WTO and Anti Dumping:
• The WTO provisions on anti-dumping are contained in GATT
Article VI and the Uruguay Round Agreement on Anti-dumping
(formally, Agreement on Implementation of Article VI).
• The WTO Anti-dumping Agreement sets out rules for the conduct
of anti-dumping investigations, including initiation of cases,
calculation of dumping margins, the application of remedial
measures, injury determinations, enforcement, reviews, duration of
the measure and dispute settlement.
• The AD Agreement applies to trade in goods only. Trade in
services is not covered by this agreement.
WTO Rule requires Three Critical tests :-
• There must be dumping:
• Material injury: profit falls or losses, reduced market shares, price
falls, negative impacts on employment, investments.
• causal link: the dumping is causing injury.
Procedure to file an anti dumping investigation:
Initiating an Anti -Dumping Investigation
Determining the injury to the domestic industry
Establishing link between dumping and injury to the domestic
industry
Interested parties in an Anti-dumping investigation
Extent of Anti-dumping duty
Minimum Level of Imports
INVESTIGATION PROCESS:
Preliminary Screening
Initiation
Access to Information
Preliminary Findings
Provisional Duty
Oral Evidence & Public Hearing
Disclosure of information
Final Determination
Time-limit
Interim Relief
Levy of anti-dumping duty
Appeal
Relief/ Remedy to the domestic industry
Global AD Investigations initiated
(1998-2008)
year AD investigation1998 2571999 3562000 2922001 3662002 3122003 2322004 2142005 2002006 2022007 1642008 208
Global Trade Protection Report 2009 (15 June 2009)
Table 2: Top 10 users of anti-dumping 1995-2011 (by
initiations)
country No. Of
investigations
India 656
US 458
EU 437
Argentina 291
Australia 235
Brazil 232
South Africa 216
China 191
Canada 155
Turkey 148
Source: Global Trade Protection Report, 2011
Table 4: Top 10 targets of AD investigations 1995-2011 (initiations)
Country AD Investigations
China 853
Korea 284
US 234
Taiwan 211
Indonesia 165
Japan 165
Thailand 164
India 155
Russia 124
Brazil 114
Source: global trade protection report, 2011
sector wise anti dumping initiation AD cases• Live animals and products 54
• Vegetable products 55
• Animal and vegetable fats, oils and waxes 14
• Prepared foodstuff; beverages, spirits, vinegar; tobacco 56
• Mineral products 73
• Products of the chemical and allied industries 839
• Resins, plastics and articles; rubber and articles 532
• Hides, skins and articles; saddlery and travel goods 5
• Wood, cork and articles; basket ware 91
• Paper, paperboard and articles 213
• Textiles and articles 307
• Footwear, headgear; feathers, artif. flowers, fans 32
• Articles of stone, plaster; ceramic prod.; glass 156
• Pearls, precious stones and metals; coin 1
• Base metals and articles 1158
• Machinery and electrical equipment 360
• Vehicles, aircraft and vessels 43
• Instruments, clocks, recorders and reproducers 48
• Miscellaneous manufactured articles 88
Total 4125
Anti-dumping Initiations: By Sector (1995 – 2012)
Source: Global Trade Protection Report,2012
Country No.of
investigations
India 19
Australia 18
European Union 17
Brazil 16
United States 15
Thailand 13
Argentina 7
Pakistan 6
Indonesia 6
Mexico 6
Ukraine 6
Source: Global Trade Protection Report, 2011
Table 1: Top 10 users of anti-dumping for 2011 (by
initiations)
Table 3: Top 8 targets of AD investigations 2011 (initiations)
country targets of AD
China 49
Korea 11
United States 10
Taiwan 8
Thailand 8
India 6
Indonesia 5
Japan 5
Source: Global Trade Protection Report, 2011
Sectors AD cases
Products of the chemical and allied industries 15
Resins, plastics and articles; rubber and
articles 19
Paper, paperboard and articles 5
Textiles and articles 2
Articles of stone, plaster; ceramic prod.; glass 3
Base metals and articles 58
Machinery and electrical equipment 10
Vehicles, aircraft and vessels 1
Miscellaneous manufactured articles 1
Total 114
Sectors targeted in 2012 AD initiations:
Anti-dumping in India:
The Anti-dumping investigation is handled by the Directorate
General of Anti-dumping and Allied Duties (DGAD)-1992 .
DGAD only recommends imposition of Anti-dumping
measures; the final decision is taken by the commerce
ministry.
The first Anti-dumping investigation in India was initiated in
1992 against China for dumping of Chemicals.
During 1995-2005, the total number of cases investigated is
179
Countries/custom territories involved are mainly China PR,
the European Union ,S. Korea , and Chinese Taipei
Anti-Dumping Duty Imposed against Various Countries by India
(2009-2010)
Item/Product
Country (IES)
Involved
Date of
Imposition of
Definitive Anti
Dumping Duty Rate of Duty
Cathode Ray Television Picture
Tubes
China PR., Korea
RP, Thailand and
Malaysia 15.05.2009
Difference between Range of
US$ 20.88 to 97.53 and
Landed Value of Imports/Piece.
Compact fluorescent lamps
(CFL) China PR & Vietnam 26.05.2009
Difference between Range of
US$ 0.364 to 1.908 and
Landed Value of Imports/Piece.
Compact Disc Recordable
(CD-R)
Iran, Malaysia,
Korea RP, Thailand,
UAE and Vietnam 5.06.2009
US$ 17.52 to 33.84 Per 1000
Pieces
Plain Medium Density Fibre
Board
China PR, Malaysia,
Thailand & Sri
Lanka 08.10.2009
Difference between Range of
US$ 308.72 to 395.52 and
Landed Value of Imports/MT
Nylon Tyre Cord Fabrics Belarus 30.10.2009 US$ 0.77 to 0.92/Kg.
All Fully Drawn or Fully
Oriented Yarn/Spin Draw
Yarn/Flat Yarn of Polyester
(FDY)
China PR, Thailand
& Vietnam
11.11.2009 US$
80 - 547/MT. US$ 80 to 547/MT.
Ceramic tiles China PR 02.12.2009 Rs. Nil to 137/Sq.M.
Cathode Ray Television
Picture Tubes Indonesia 09.12.2009
Difference between Range
of US$ 21.76 to 92.06 and
Landed Value of Imports/Per
Piece .
Flax Fabrics
China PR and Hong
Kong 21.12.2009
Difference between Range
of Rs. 206.24 to 209.72 and
Landed Value of
Imports/Metre.
Tyres Curing Presses China PR 08.01.2010 10% of CIF Value of Imports
Bus and Truck Radial Tyres
China PR and
Thailand 19.02.2010
US$ 24.97 to 95.05/One Set
TTF
Phosphoric Acid Korea RP 15.12.2009 US$ 221.64/MT .
Carbon Black
China PR, Russia,
Australia, Thailand 28.01.2010 US$ 0.089 to 0.423/Kg.
Cold Rolled Flat Products
of Stainless Steel
China PR, Korea RP,
European Union,
South Africa, Taiwan,
Thailand and USA 20.02.2010 US $ Nil to 2254.69/MT.
Plastic Processing
Machinery China PR 23.03.2010
60% to 174% of CIF Value of
Imports
Item/Product
Country (IES)
Involved
Date of
Imposition of
Definitive Anti
Dumping Duty Rate of Duty
Table 7: Selected country wise Anti-dumping cases against India
(01.01.1995 to 31.12.2003)
Importing Country India
Argentina 3
Australia 4
Brazil 3
Canada 5
China, Rep. of 2
Egypt 2
European Union 26
Indonesia 10
Korea, Rep. of 1
Malaysia 1
Poland 1
Contd…
Importing Country India
South Africa 16
Thailand 2
Trinidad and Tobago 2
Turkey 4
United States 18
Venezuela 1
Total 139
Continued……..
Source : www.indiastat.com
Table 8: List Of Anti-Dumping Cases Against Exports From India:
Country Name of Product
Argentina Bicycle Tyres and Tubes , Cypermethrin
Brazil Jute Bags
Canada Carbon Steel Plates, Stainless Steel Round Bars
EU Polyester Textured Filament Yarn , Polyester Stapl,
Fibre ,Synthetic Fibre Ropes, Synthetic Fibres of
Polyester, Unbleached Cotton Fabric
South Africa Antibiotics, Blankets
Indonesia Wheat Flour
Thailand Hydrogen Peroxide, Pthalic Anhydride
Turkey Polyester Texturized Yarn (PTY)
USA Shrimps, Preserved Mushrooms
Source: Annual Report of Directorate of Anti-dumping and Allied duties, 2005-06
Case study:1
Anti-dumping investigation concerning imports of Silk
Fabrics 20-100 gms per meter from People’s Republic
of China.
Domestic Industry:
The application has been filed by the Central Silk Board, Bangalore on
behalf of the following co-operative / fedrn. / associations representing the
power loom silk fabric producers in India viz.
a) The Mysore Power Loom Silk Manufacturers Co-operative
Society Ltd., Bangalore, Karnataka;
b) M/s Karnataka Weavers Federation, Bangalore, Karnataka;
c) M/s Bangalore District and Bangalore Rural District Power-
Loom Weavers Production and Sales Co-operative Federation
Ltd., Dodda Ballapur, Karnataka;
d) M/s Silk Trade Association (Regd), Varanasi, UP;
e) M/s Pure Silk Weavers Association, Surat, Gujarat.
Summary of Dumping Margins
a) Volume effects
• i) Volume of dumped imports and impact on domestic
industry
Impact of Dumped imports on domestic industry
2. The capacities and production of the domestic industry has been
estimated as follows:
Particulars 2000-01 2003-04
No of Power Looms 75000 29900
Capacity in MT 11250 4485
Qty of silk fabrics produced MT
10408.5 3163.2
Capacity Utilization 93% 71%
The capacity has been assessed based on average production of 10
meter of 50 gms per meter fabrics per loom per day.
Qtty in MT
iii) Domestic sales, Demand and Market share
B) Price effects
i) Trend in Import Prices
ii) Domestic selling prices and price undercutting
iii) Price suppression and depression
c) Other injury parameters
i) Actual and Potential impact on Profitability, return on investment
and :cash flow
ii) Actual and potential effect on Employment and Wages:
• Having estimated the decline of number of working looms from a level
of 75,000 in 2000-01 to about 30,000 during the period of
investigation.
• direct loss of job is about 1,35,000 and
• indirect job loss is estimated to be much higher than this figure.
iii) Actual and potential impact on growth:
• Capacity, production and turn over- more than 50% decline.
iv) Ability of the domestic Industry to raise capital investment have been
seriously affected.
v) Magnitude of dumping margin : ranging from 42% to 77%.
Anti dumping duty:.
The Authority recommends imposition of definitive anti
dumping duties, from the date of notification to be issued in this
regard, by the Central Government, on imports of Silk Fabric of
weight 20-100 gms per meter, originating in or exported from
subject country.
Case study 2:
Dumping of Shrimp in USA by China, Vietnam, India, Thailand, Ecuador, and Brazil
The Case History:
•31stDecember, 2003
Ad Hoc Shrimp Trade Action Committee (ASTAC) filed anti-dumping petition against six
countries
• Brazil
• China
• Ecuador
• India
• Thailand
• Vietnam
•Allegation: Shrimps dumped in the US market.
• 21stJanuary 2004
US Department of Commerce (DoC) announced anti-dumping action
against the six countries
• 17thFebruary 2004
International Trade Commission (ITC) announced -the US shrimp
industry is materially injured or threatened with material injury, by
imports, allegedly at less than fair value, from the six identified
countries.
Petitioners’ Contentions:
•The six named countries accounted for 74% of shrimp imports
in the US market
•Imports from the six countries increased from 466 million lb. in
2000 to 650 million lb. in 2002
•Import prices had dropped by 28% in the past three years
•US was the most open market in the world
–High tariff rates in other countries was not an incentive for
exporters
•US was also the last resort for shrimp exports
–The EU had banned them due to unacceptable level of
contaminants.
country Dumping margin
Named exporter Non named exporter
China 27.9% to 84.9% 55.2% to 112.8%
Vietnam 4.1% to 25.8% 4.4% or 25.8%
Ecuadorian 2.3% to 4.5%. 3.3%.
Thailand 6% 6%
India 10%. 10%
Brazilian 10% to almost 70% 10.4%
Final estimated Dumping margins: ( by the USDO, 2005-06)
Product, Country name 2006 2007 2008 2009 2010 2011
Total
shrimp (in
Pounds)
Thailand 4,27,525 4,15,988 4,04,373 4,24,979 4,48,178 4,09,548
Indonesia 1,29,521 1,30,285 1,85,298 1,52,843 1,34,690 1,55,061
Ecuador 1,30,734 1,30,221 1,24,199 1,35,754 1,43,356 1,62,681
China
(Mainland)
1,50,660 1,07,167 1,06,179 97,134 1,06,031 94,738
Vietnam 81,659 86,731 1,06,487 93,046 1,06,622 1,00,144
Mexico 77,995 89,418 76,047 90,658 51,889 68,036
India 60,533 46,209 34,026 43,950 66,586 1,05,976
Other countries 2,47,996 2,24,670 2,12,288 1,79,053 1,79,374 1,75,453
Total 13,06,623 12,30,688 12,48,896 12,17,416 12,36,725 12,71,638
U.S. shrimp imports,volume by selected sources (1,000 pounds)
Source: Department of Commerce, Bureau of the Census.
Product, country name 2006 2007 2008 2009 2010 2011
Total value of imported shrimp
Thailand 12,78,572 12,37,880 12,87,535 13,54,215 15,14,617 17,18,653
Indonesia 4,30,547 4,47,600 6,32,453 4,92,548 4,92,593 6,95,099
Vietnam 4,29,424 4,59,597 4,81,304 3,82,478 5,13,274 5,21,146
Ecuador 3,24,045 3,08,700 3,39,875 3,29,789 4,07,471 5,31,021
Mexico 3,21,856 3,58,515 3,40,292 3,32,352 2,27,754 2,90,937
China (Mainland) 3,31,944 2,36,354 2,52,129 2,35,180 2,74,486 2,89,350
India 2,53,106 1,94,916 1,43,129 1,66,493 3,09,601 5,23,900
Other countries 7,66,541 6,67,428 6,28,749 4,85,079 5,56,747 5,93,957
Total 41,36,035 39,10,990 41,05,467 37,78,133 42,96,542 51,64,064
Source: Department of Commerce, Bureau of the Census.
U.S. shrimp imports, value by selected sources (1,000 U.S. dollars):
The Indian Shrimp Industry
•Indian Shrimp Exports:
–$255.93 million in 2000-01 to $299.05 million in 2002-03
•Japan –biggest export market
•US replaced Japan in 2002-03
•Marine Products Export Development Authority (MPEDA) developed shrimp culture
–Direct employment: 300,000 and Indirect Employment: over 700,000
•Sea foods Exporters Association of India (SEAI)
•September 2003
–SEAI hired law firm Garvey Schubert and Barer as their US counsel
•MPEDA and SEAI together:
–Approached the Central Government
–Developed contacts with counterpart bodies in other countries
–Put their house in order to raise resources
Anti dumping Duty against India by US:
The US anti-dumping duty on frozen shrimp imports from India was imposed
from August 4, 2004.
The average duty imposed on Indian companies was 10.17 per cent and in
the first AR this was cut to 7.22 per cent.
It was further reduced to 1.69 per cent in the second AR and to 0.79 per cent
in the third.
In the fifth AR, this was raised to 1.69 per cent and in 2009 it has been
further enhanced to 2.51 per cent.
Imposition of anti-dumping duty by the US on Indian shrimp :
2005-06. 2006-07
Export of marine products 55,817 tonnes 43,758 tonnes
Number of marine
product exporter
107 80
2ndReview of imposed Duty
•March 2005:
–India and Thailand together filed an appeal before the US ITC
•Marine production was destroyed in the two countries
–Backdrop of Tsunami
•ITC agreed to consider a CCR in the wake of the natural disaster
•Anti-Dumping duty lowered to 1.69%
India’s Competitive Advantage:
•Competing countries now have to pay a higher anti-dumping duty as
compared to India:
–Ecuador: 2.09%
–Thailand: 4.51%
–Vietnam: 25.76%
–China: 112.81%
Conclusion• The share of Agricultural commodities in dumping is less.• Imposition of anti-dumping measures would remove the unfair advantages gained by dumping practices, would prevent the decline of the domestic industry • Anti-dumping duties also affect domestic producers as it may cause rise in price of imported commodities and leads to smuggling of commodities
• Imposition of anti-dumping measures would not restrict imports from the subject country in any way, and therefore would not affect the availability of the product to the consumers• Technological improvements in the production of silk have to be made to improve the quality of silk thereby reducing the imports of silk i.e, efforts should be made to achieve self-sufficiency in production
Reference:
Annual Report, Directorate of Anti-dumping and Allied Duties, , 2011-12.
CLIFF STEVENSON, 2007, Global Trade Protection Report-Data and Analysis,
P: 1-18
Global Trade Protection Report 2010-11- antidumpingpublishing.com
NANDANA BARUAH, (2005), Anti dumping duty as a measure of contingent
protection: An Analysis of Indian Experience. Working paper No. 377.
WALTER R. KEITHLY, JR. PAWAN POUDEL, 2008, The Southeast U.S.A. Shrimp
Industry, Issues Related to Trade and Antidumping Duties, Louisiana
State University, Marine Resource Economics, Volume 23, pp. 459–483.
http://www.antidumpingpublishing.com
http://www.indiastat.com
http://www.eximkey.com
WTO website.