WHY NOW? The Central Board of Indirect Taxes and Customs (CBIC) recently imposed anti-dumping duty on five Chinese goods, including vacuum-insulated flasks of a certain thickness and aluminium foil. WHAT IS DUMPING, AND IS IT LEGAL? It’s when a country sells goods in another country’s market at a lower price than its own market. The World Trade Organisation (WTO) describes it as “a situation of international price discrimination”. To determine “dumping”, the prices of the same goods are compared in both markets. However, WTO notes, “The situation is rarely, if ever, that simple, and in most cases it is necessary to undertake a series of complex analytical steps in order to determine the appropriate price in the market of the exporting country (known as the “normal value”) and the appropriate price in the market of the importing country (known as the “export price”).” HOW ARE ANTI-DUMPING DUTIES LEVIED? Under WTO rules, a country has the option to impose anti-dumping countermeasures to balance the effects of dumping. To do so, the investigating authorities of the importing country must determine the “injury” suffered due to dumping. This includes material injury to a domestic industry or a threat of it, or material retardation of the establishment of a domestic industry. According to India’s Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce and Industry, “injury” may be analysed in terms of the volume effect and price effect of the dumped imports. Countries can impose duties up to the margin of dumping – the difference between the normal value and the export price. Indian law also provides that the anti-dumping duty to be recommended/levied shall not exceed the dumping margin. Further, the anti-dumping duty is levied over and above the normal customs duty chargeable on importing the goods. For instance, in the recent case of Chinese goods, an anti-dumping duty of up to $873 per tonne has been provisionally imposed on aluminium foil for six months. In India, while the Department of Commerce recommends the anti-dumping duty, the Ministry of Finance levies them. The CBIC has to accept or refuse DGTR’s anti-dumping duty recommendation within three months from the date of the final hearing in such cases. The national authority of a country also has the remedy to terminate or suspend the investigation after the preliminary findings, if the exporter concerned furnishes an undertaking to revise her price to remove the dumping. WHY IS DUMPING SO CONTENTIOUS? As the concepts of free trade and lowering trade barriers have gained currency across the world, dumping has been seen as an unfair practice that takes undue advantage of such economic systems. In particular, manufacturing giants such as China have been accused of lowering the price of their goods to an unsustainable degree with the help of cheap labour costs, government subsidies and other advantages given to domestic manufacturers. In 2018, the European Parliament noted, “It is very difficult for European companies to compete with this and in the worst cases can lead to firms closing and workers losing their job.”
