In the global trade scenario, dumping activity is seen as a potential threat, to address which WTO has a provision of Anti-dumping duties.
However, practical constrains with anti-dumping duties diminish the global trade growth.
What is dumping?
An export sale of a commodity at a price lower than the normal value (the price at which goods is ordinarily sold) prevailing in the exporting country is construed as dumping.
A country can exercise trade remedial action against dumping only if dumping causes or has a threat of causing any adverse impact its domestic industry.
What is anti-dumping agreement?
Anti-dumping Agreement (AD Agreement) provides for the right of contracting members to apply anti-dumping measures.
This is to safeguard their domestic industry against the dumping and its injurious effect.
By this, no country shall export a commodity to another WTO member country at a price that is lower than the price at which a similar commodity is traded in the exportingcountry.
The purpose of the trade remedy action against dumping is to provide a level playing field to the domestic industry by imposing additional duty.
How does an Anti-dumping duty work?
A country impacted by unfair anti-dumping duties can get it resolved either through mutual consultation or through the mechanism of the dispute settlement body of the WTO.
Anti-dumping investigation conducted by affected countries involves the process of “non-injurious price”.
To do this the authorities call for costing information from the complainant.
And undertakes detailed analysis of relevant factors of the costs involved.
This allows the authority to compute the anti-dumping duty based on the cost data and in the manner it thinks appropriate.
What are the practical constrains with this?
In order to disprove the assertion that dumping has harmed the importing economy, producers/exporters have an uphill task of convincing the customs authorities.
They need to demonstrate that the export price is higher than the price at which they themselves sell the same products in their own domestic market.
Due to this, many of the producers/exporters are unable to satisfy the investigating officials of the importing economy about levying either a nil or lower anti-dumping rate.
Genuine competitive disadvantages should not be masked by the cloak of anti-dumping duties.
Member countries of the WTO have the responsibility to exercise restraint in invoking the unfair anti-dumping provisions.
