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

8

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.