Trend for anti dumping

Category: WTO Sub-category: Anti Dumping
Document type: article

Trends in Anti-dumping

Trade protectionism refers to the imposition of duties or quotas on imports, in order to safeguard domestic industry against foreign competition. Anti-dumping duty forms a pertinent part of such trade protection measures. When any article is exported from any country to another foreign at less than its normal value, then the government of the latter country imposes an anti dumping duty, not exceeding the margin of dumping in relation to the article. According to World Trade Organisation (WTO) rules, countries are allowed to slap restrictions on dumped goods if it is proved to cause damage to their domestic producers. It is to be understood that imposition of Anti Dumping Duty is based on Commodity to Commodity, country to country and suppliers in exporting countries.

Looking back over a long period of time, it is noted that global anti-dumping is cyclical, with lows in 1980s, around 1987-89, around 1995 and in 2007.Amidst wide speculations about increased anti- dumping during recession, the World Trade Organization in Geneva announced that there was a 17 per cent rise in its anti-dumping investigations in the second half of last year, compared with the same period in 2007. A WTO official said that during the ongoing economic slump, anti-dumping measures were something to 'keep an eye on.' Anti-dumping actions tend to increase in times of downturns and can be apprehended as early signs of other trade disputes between nations which may emerge in the future.

Countervailing duties: are duties imposed under WTO Rules to neutralise the negative effects of other duties. They are imposed when a foreign country subsidizes its exports, hurting domestic producers in the importing country. According to WTO rules, a country can launch its own investigation and decide to charge extra duties, provided such additional duties are in accordance with the GATT Article VI and the GATT - "Agreement on Subsidies and Countervailing Duties". Since countries can rule domestically whether domestic industries are in danger and the import goods are subsidized, the process involving the investigation and determination of countervailing duties, has a far reaching impact.

The countervailing duty (CVD) on subsidized products, exported from India, has often posed as a roadblock to the country's ambitious SEZ programme. According to WTO statistics, India accounted for the largest chunk among the total of 112 cases where countervailing measures were taken against products from different countries during 1995-2005. The country accounted for 25 cases, with EU imposing CVD on 11 cases and the US on six.

Average number of initiations
1980-89 139
1990-89 237
2000-08 243
Post WTO creation average
995-2007 245

Antidumping during recession

The exact number of cases in 2008 was 208. The following table depicts the average number of anti-dumping investigations initiated by various time periods. It shows that the figure of 208 investigations in 2008 is below average in terms of recent trends. Thus it can be said that the expected increase in anti-dumping as a result of economic crisis, has not yet taken place. However, there is often a delay before the deterioration in the economy is evident in the usual injury indicators. Of course, the injury caused by the global crisis cannot be attributed to any imports determined to be dumped as WTO obligations insists on the separation of other causes of injury from the dumped imports. But it is also true that, in good economic times, companies are less likely to make anti-dumping complaints. Thus, more difficult economic times make the use of anti-dumping more attractive to industries facing low price competition from imports. India reported 42 dumping investigations, making it the member with the highest number, followed by Brazil with 16.

Antidumping and the US:

The antidumping law of the U.S creates a lot of bitterness and ill will among the countries of the world. For many years, this law has been the instrumental in making domestic production flourish at the cost of foreign production. While the antidumping law is originally meant to redress unfair trade, a careful scrutiny exposes its fallacy.

In 2003, amidst claims of dumping, the U.S. imposed 37 to 64 percent tariffs on imports of catfish from Vietnam. As a result, Vietnamese exports of catfish to the U.S. market sharply declined. This also adversely affected the economic stability of Vietnam households engaged in catfish trade. In addition, the antidumping shock triggered significant exit from catfish farming. Households adjusted by moving out of catfish aquaculture and into wage labor markets and agriculture. Moreover, in 2004, the imposition of the preliminary anti-dumping duty on shrimp imports once again drew the global attention on the anti-dumping practices of America. US Commerce Department’s imposition of duties on shrimp imports from third world countries including China and India received severe criticism by the affected countries who decided to fight against this irrational use of antidumping policies by the US.

However, possibly the worst distortion of the antidumping law is the practice known as "zeroing." This method is responsible for the overestimation of dumping margins and subsequent application of inflated antidumping duties. In a typical antidumping investigation, the U.S. Department of Commerce calculates dumping margins by the zeroing method. Under this method, DOC calculates weighted-average net prices for each product sold in the US and compares them to the product's normal value. The difference between the normal value and that in US is treated as the dumping amount. Under zeroing, when the U.S. price is higher, the dumping amount is set to zero rather than its calculated negative value. All dumping amounts are then added and divided by the aggregate export sales amount to give the overall dumping margin. Zeroing thus eliminates negative dumping margins from the calculation and thus gives rise to an overstated dumping duty.

WTO Panels and the Appellate Body have considered various issues related to the issue of zeroing. Previous panels have found that dumping can be determined for individual transactions, and that simple zeroing is not WTO inconsistent, but this finding has been overturned by the Appellate Body. The panel in DS350 found the reasoning of earlier panels persuasive but noted the consistent reversing of findings by the AB. One of the 3 Members of the Appellate Body Division opined that “with respect to zeroing, that time has come”. Whether this request is accepted remains to be seen. Some observers claim that the WTO jurisprudence has established that all zeroing is now