This post has been created by Monesh Kumar, a third year law student from Guru Gobind Singh Indraprastha University, New Delhi.
“Eliminating business taxes makes us best at manufacturing- Jim Demint”
Anti-dumping laws are gimmicks used for fortifying domestic industries from overflow of cheap foreign imports. Although the WTO attempts to banish all trade barriers, it recognizes that nations require flexibility to modify to economic shocks as multilateral agreements increasingly liberalize trade. Thus, these measures allow nations to temporarily protect their economies against alterations in trading patterns. Although anti-dumping measures share an often edgy relationship with the WTO’s core principles, many member nations consider them essential to encouraging fair and free trade.
Anti-dumping duty is a measure to correct the situation arising out of the dumping of goods and its contorting effect on domestic producers of similar goods. Rapid industrialization has resulted in large-scale production and in this situation dumping allows the producer to establish a pre-potent position in the market. This is common in international commercial practice for export prices to be lower than the domestic ones. However, when dumping causes or threatens to cause, material injury to the domestic industry it is viewed gravely.
Meaning, scope and nature
Dumping is when the goods are exported by a country to another country at a price lower than its normal cost and value. A product is considered as being dumped if the export price of the product from one country to another is less than the comparable price, in the same course of trade, for the like product when placed for consumption in the exporting country itself. Views may differ as to whether or not this practice constitutes unfair price competition. Anti-dumping is a measure to ameliorate the situation arising out of the dumping of goods and its trade twisted and contorted effect. Thus, the purpose of anti-dumping duty is to correct the trade twisted effect of dumping and re-establish fair trade.
Anti-dumping, in simple meaning is a measure of shielding the domestic industry. However, anti-dumping measures do not provide any kind of protection to the domestic industry. It only acts for the motive of providing remedy to the domestic industry against the harm and infringement caused by the unfair trade practice of dumping. Dumping is often mistaken and explained as cheap priced imports. However, it is a misapprehension of the term. Dumping means low priced imports only in the relation to the normal value, and not in absolute way.
Section 9A of the Customs Tariff Act, 1975 and the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 form the legal basis for anti-dumping investigations and for the imposition of anti-dumping duties. The Customs Tariff Act, 1975 lays down the circumstances in which the Central Government can impose anti-dumping duties on dumped goods in Indian domestic market. The anti-dumping rules included by the 1995 amendment states the provisions for identification, assessment and collection of anti-dumping duty from the importer.
These are in concordance with the WTO Agreement on anti-dumping measures. These rules form the legislative framework for all matters relating to dumping of products, which include the rules relating to practice, procedure, regulatory mechanism and administration.
Anti-dumping measures have presumed greater and wider importance today than any time in the history, with the upcoming of globalization and Liberalization Foreign trade policy that has been growing rapidly. Every day new manufacturers and traders are entering new markets of the world and coming into the picture so it becomes important for every nation to protect its domestic manufacturer from unfair practices. A majority of the countries today make effective use of Anti-dumping measures. Dumping is a threat to the domestic market and to the economy as a whole for any country. Some egregious results which dumping can cause are as follows:
- Reduction in output by domestic manufacturers due to losses occurred by the advent of cheap products in the market.
- Loss of Market Share for domestic Products and commodities, which in turn affects the secondary sector of the economy.
- Reduced wages for the workers due to decreased overall prices of the goods.
It is often suggested to substitute anti-dumping law through competition law, which expunges the issue by its roots and does not twist and complicates the production through protection of non-competitive domestic producers. The tension between competition and trade policy can be elaborated as a battle between two ideologically similar concepts with differing opinions as to the means of achieving the same goal. The enforcement of competition law in trade cases is of particular importance as it reduces and demarcates the risk that domestic producers may use the threat of initiating action under domestic trade remedies law or importune protection in order to prompt and make foreign exporters to enter into unlawful restrictive agreements. Efforts should be made at integrating anti-dumping policy with the competition law. The competitive merits of anti-dumping initiatives in that case will be examined and checked by the Competition Commission of India, with its policies. This will result in the adoption of stricter design for determining plundering in such cases and will prevent its misuse.
In the approach of subject of jurisprudence also, anti-dumping is not reasonable. From a freedom and rights perspective, anti-dumping laws restrict and stop the consenting adults from entering into contracts which are mutually agreed. Anti-dumping laws cannot be justified by any theory of free democracy. They are not unadorned because they do not result in providing the maximum betterment for the majority. Indeed, they provide good just for the minority i.e. producers at the sake and cost of the consumers. They reduce the scope and limit for social cooperation and communal harmony.
The best opinion and choice of an individual would be deleting and repealing anti-dumping laws and merge the anti-dumping framework with the competition laws, it might not be possible to follow this one-sided. If consensus does not reach at the international level, then the use of anti-dumping laws could be minimized through mutual bilateral agreements. Moreover, it would do good to follow the vigorous and active standards in investigating anti-dumping cases and limit the scope of anti-dumping to predatory cases only.
Anti-dumping is a perilous to developing countries like India, where often Chinese products are dumped. Accordingly, adequate anti-dumping legislations are necessary to protect the domestic industry. Implementing a separate legislation dealing with anti-dumping will help the judiciary by bestowing all the rules related to anti-dumping on a single platform. Thus, India should enact and enforce a separate statute to deal with anti-dumping issues.