WTO and Technical Barriers to Trade (TBT): Creating ...

VOL. 14 NO. 4 NOV.-DEC. 2012

FOCUS WTOFOCUS WTO

INDIAN INSTITUTE OF FOREIGN TRADE

ANTI-DUMPING

EditorDr. Anil K. Kanungo

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FOCUS WTO From the Director’s DeskVOL. 14 NO. 4 • NOV.-DEC. 2012

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Dr. Surajit Mitra

World economy since the Uruguay Roundand establishment of WTO has witnessedsubstantial reduction in tariffs. This reductionin tariffs, supported by complementaryliberalized policies have resulted in expansionof world trade. Both developed anddeveloping economies have benefitted from

such liberalization. However, with the reduction in tariff, world economyhas also simultaneously noticed rise in non-tariff barriers (NTBs).

Anti-dumping (AD) is one such NTB that has emerged as a significantbarrier to trade and competition especially in the Post Uruguay Roundperiod. A modern form of trade protection now widely used by a set ofdeveloped and developing countries seriously damaging free trade. Theissue of AD is therefore at the centre of ongoing Doha Negotiations.

Article VI of the GATT which provides the right to any contractingparty to apply anti-dumping measures, i.e. measures against imports of aproduct at an export price below its “normal value” and whose dumpedimports cause injury to a domestic industry in the importing country iscurrently challenged, as the mechanism of arriving at actual impact ofinjury is not very clear. Though AD actions are intended to counter unfaircompetition arising from price discrimination between differentgeographical markets, it is yet to provide a safety valve that was initiallythought of.

There are ambiguities in the very definition of dumping, calculation ofdumping and injury margin that such ambiguities facilitate dumpingfindings. Though the ministers from developing and developed countriesagreed to negotiations on the Anti-Dumping and Subsidies agreements,in order to clarify and improve disciplines while preserving the basicconcepts, principles of these agreements, and taking into account the needsof developing and least-developed countries (LDCs), yet they haven’tarrived at an amicable settlement in Doha. Whatever may be the intentionof the member countries of the WTO, in the larger interest of globalgood, the issue needs to be settled at the earliest so that the confidence ofmember countries especially developing and LDCs are restored in themultilateral trading system.

FOCUS WTO, November-December 2012 1

Lead ArticleLEAD ARTICLELEAD ARTICLELEAD ARTICLELEAD ARTICLELEAD ARTICLE

Future of WTO Anti-dumping Agreement :Issues in the Doha Development AgendaMitali Das Gupta*

Anti-dumping (AD) measures haveemerged as a significant non-tariffbarrier to trade and competitionparticularly in the post-UruguayRound period. Historically,multilateral negotiations on anti-dumping have been extremelycontentious. There are ambiguitiesin the various provisions of the ADAgreement. At the November 2001Ministerial meeting of the WTO inDoha, member countries launcheda new round of trade talks knownas the Doha Development Agenda(DDA). One of the negotiatingobjectives called for ‘clarifying andimproving disciplines’ under theWTO Anti-dumping Agreement.Even today trade remedy actions,particularly AD actions, continue tobe a subject of intense debatewithin the US Congress, the WTO,and the international businesscommunity. Issues like ban onzeroing, manadatory lesser dutyrule and price undertakings,changes in the injury determinationprocedure, mandatory terminationof AD orders and granting specialand differential treatment todeveloping countries, have beenaddressed.

* Post Doctoral Fellow, GlobalChange Programme, JadavpurUnivesity.

Introduction

ANTI-DUMPING (AD)measures have emerged as

a significant non-tariff barrier totrade and competitionparticularly in the post-UruguayRound period. Article VI of theGATT provides the right to anycontracting party to apply anti-dumping measures, i.e. measuresagainst imports of a product atan export price below its “normalvalue” (usually the price of theproduct in the domestic marketof the exporting country) if suchdumped imports cause injury toa domestic industry in theimporting country. Thus ADactions are intended to counterunfair competition arising fromprice discrimination betweendifferent geographical markets.

However, the economicrationale behind anti-dumpingactions is seriously disputed.There are ambiguities in the verydefinition of dumping, calculationof dumping and injury marginand that such ambiguities facilitatedumping findings (Tharakan1991, 1999; Tharakan andWaelbroeck 1994 among severalothers). Negotiations in theUruguay Round have resulted ina revision of this AD Agreementin terms of precision and detail.In the November 2001 declara-tion of the Fourth MinisterialConference in Doha (popularlyknown as the Doha Declaration)the ministers agreed to

negotiations on the Anti-Dumping and Subsidiesagreements, in order to clarifyand improve disciplines whilepreserving the basic concepts,principles of these agreements,and taking into account the needsof developing and least-developed countries. In the DohaDevelopment Agenda (DDA), acoalition of developed anddeveloping nations known as the“Friends of Anti-dumping”(FAN)1 pushed for reforms thatmany in Congress oppose and USnegotiators are resisting. Eventoday trade remedy actions,particularly AD actions, continueto be a subject of intense debatewithin the US Congress, theWTO, and the internationalbusiness community and it isincreasingly felt that this gap isdifficult to bridge.

In this background, the paperdiscusses some select provisionsin the AD Agreement and theirsystemic deficiencies, and therecent negotiations that are goingaround these issues.

Select AD Provisions in theWTO and their SystemicDeficiencies

The Anti-dumping Agree-ment clarifies and expands ArticleVI of GATT 1994 by laying outguidelines for determining ifdumping has occurred,identifying the “normal value” ofthe targeted product, and

2 FOCUS WTO, November-December 2012

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assessing the dumping margin. Inany AD investigation thefollowing three things have to beestablished first. These are: theactual occurrence of dumping,injury to the domestic industryproducing the like product, andcausal link between dumping andinjury.

One of the most complicatedissues in anti-dumping investiga-tions is the determinationwhether sales in the exportingcountry market are made in the“ordinary course of trade” or not.One of the basis on whichcountries may determine thatsales are not made in the ordinarycourse of trade is if sales in thedomestic market of the exporterare made below cost. TheAgreement states thatcircumstances in which homemarket sales are at prices belowthe cost of production, such salesmay not be considered to bemade in the ordinary course oftrade, and thus may bedisregarded in the determinationof normal value (Article 2). Insome cases where there are nosales in the exporting country ofthe product under investigation,it is not possible to base normalvalue on such sales, and theAgreement recognizes this. Twoalternatives are provided for thedetermination of normal value ifsales in the exporting countrymarket are not an appropriatebasis. These are (a) the price atwhich the product is sold to athird country; and (b) the"constructed value" of the product,which is calculated on the basisof the cost of production, plusselling, general, and adminis-trative expenses, and profits. Theexport price will normally bebased on the transaction price at

which the foreign producer sellsthe product to an importer in theimporting country. But againthere are exceptions to this if forinstance, the export transaction isan internal transfer, or if theproduct is exchanged in a bartertransaction. In all such cases,there are alternative methods ofcalculating the export price. Therehas been a submission by Canada(TN/RL/W/47) which talksabout identifying the manner inwhich Members haveoperationalized the criteria ofsales "in the ordinary course of trade"and "particular market situation",and arrive at an agreement as tothe conditions and circumstancesof sales that are to be consideredunder these specific provisions.

The Agreement contains rulesgoverning the calculation ofdumping margins. In the usualcase, the Agreement requireseither the comparison of theweighted average normal valueto the weighted average of allcomparable export prices, or at r a n s a c t i o n - t o - t r a n s a c t i o ncomparison of normal value andexport price (Article 2.4.2). Therehave been submissions2 made byseveral developing countries toclarify Article 2.4.2 to explicitlyprohibit the practice of zeroing(average dumping margins bydefinition should be based on theaverage of all comparisons,including those that generatenegative margins and thatregardless of the basis of thecomparison of export prices tonormal value, all positive andnegative margins of dumpingshould be added up.

The Agreement providesspecific rules for administrativeauthorities responsible for

conducting injury investigations.The Agreement defines the term“injury” to mean either(i) material injury to a domesticindustry, (ii) threat of materialinjury to a domestic industry, or(iii) material retardation of theestablishment of a domesticindustry, but is silent on theevaluation of material retardationof the establishment of a domesticindustry. However, the ADauthorities must identify thedomestic industry beforeaddressing the injury issues.Domestic industry is defined byArticle 4. It means "the domesticproducers as a whole of the likeproducts or those of them whosecollective output of the productsconstitutes a major proportion ofthe total domestic production ofthose products" (Article 4). Thelaw does not define the term“major proportion”. In practice,therefore, injury determinationsare normally based on the datasubmitted by the complainantsand the best availableinformation. Sometimes injuryanalysis may also be carried outfor producers who account for aslow as 25 per cent of the domesticproduction. Sometimes, injury isdefined to the domestic industrywithout the consideration ofnational or consumer welfare.Further the injury indicators arenot well established. Injurydetermination is just a matter ofjudgment and there is no scientificmethod to establish injury as oftoday.

The Agreement requires ademonstration that there is acausal relationship between thedumped imports and the injuryto the domestic industry. Thisdemonstration must be based onan examination of all relevant


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evidence. However, theAgreement does not specifyparticular factors or give guidanceas to how the causal relationshipwill be evaluated. India has madea second submission to theNegotiating Group on Rules so asto elaborate Article 3.5 so thatappropriate guidance can begiven to the investigatingauthorities while distinguishingthe injurious effects of otherfactors from the injurious effectscaused by the dumped importsand further mentioned that toinvoke anti-dumping measures,there is a need to specify anappropriate standard forestablishing causality betweendumped imports and materialinjury (TN/RL/W/26).

Anti-dumping investigationsare to end immediately in caseswhere the authorities determinethat the margin of dumping isinsignificantly small (defined asless than 2% of the export priceof the product, known as the de-minimis margin), or if the volumeof dumped imports is negligible(i.e. if the volume from onecountry is less than 3%of totalimports of that product) althoughinvestigations can proceed ifseveral countries, each supplyingless than 3 per cent of the imports,together account for 7 per cent ormore of total imports (Article5.8). These figures are same forexports from the developed aswell as the developing countries.There have been severalsubmissions on increasing thesethresholds particularly for thedeveloping countries and India inparticular has requested for thedeletion of the stipulation thatanti-dumping action can still betaken even if the volume ofimports is below the threshold of

3 per cent, provided countrieswhich individually account forless than the threshold volume,collectively account for more than7 per cent of the imports.

Article 8 of the Agreementcontains rules on the offering andacceptance of price undertakings,in lieu of the imposition of anti-dumping duties. It establishes theprinciple that undertakingsbetween any exporter and theimporting Member, to reviseprices, or cease exports atdumped prices, may be enteredinto to settle an investigation, butonly after a preliminaryaffirmative determination ofdumping, injury and causality hasbeen made. However, there is nosatisfactory definition of avoluntary price undertaking andArticles 8.1 and 8.3 should beelaborated to limit the discretionof investigating authorities inrejecting proposals for priceundertakings.

Another important aspect ofthe AD Agreement is the lesserduty rule. Article 9.1 specifiesthat it is desirable that the ADduty be less than the margin ofdumping if such lesser dutywould be adequate to remove theinjury. However, there is nobinding obligation to adhere tothe lesser duty rule. Somecountries do not even calculatethe injury margin and impose ADduty to the full extent of thedumping margin.

Article 11 of the Agreementestablishes rules for the durationof anti-dumping duties, andrequirements for periodic reviewof the continuing need, if any, forthe imposition of anti-dumpingduties or price undertakings. anti-dumping measures must expire

five years after the date ofimposition (sunset requirement),unless an investigation shows thatending the measure wouldcontinue to result in injury (Article11.3). These requirementsrespond to the concern raised bythe practice of some countries ofleaving anti-dumping duties inplace indefinitely. In practicealthough AD actions are supposedto be purely temporary, inpractice, they turn into a long-term obstacle for trade andcompetition.

Article 15 of the ADAgreement says “……specialregard must be given bydeveloped country Members tothe special situation of developingcountry Members whenconsidering the application ofanti-dumping measures…..” Inpractice, major users of anti-dumping legislation do notdistinguish between developedor developing countries in theirapplication of AD instrument.Hence the provisions of Article15 should be concretized forinstance, elaborate on the idea of“special regard” and “constructiveremedies”, provide higher de-minimis margins in AD proceed-ings involving developingcountries, etc.

The provisions discussedhere are not exhaustive. There areseveral other loopholes in theentire AD Agreement. Despitethese provisions being ambi-guous and in some cases therequirements being stringent,experiences worldwide show thata large number of investigationsresult in affirmative findings. Asa matter of fact, rather than theeconomic motives, it is now thepolitical, strategic and retaliatory


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motives that are affecting theanti-dumping investigations andoutcomes the most.

AD StatisticsThe exclusive restriction of

AD initiations by the “Big Four”(Australia, Canada, EU and theUS) has been replaced by adiversified group of applicants.Between 1995 and 2012, ADinitiations all over the world haveincreased 26 times, from a totalof 157 initiations to 4125initiations. Argentina, Brazil,China, India, Mexico and SouthAfrica have become active usersof AD. Figure 1 shows the top 10countries as far as AD initiationsare concerned.

Between 1995 and 2012, Indiainitiated the maximum number ofAD investigations numberingabout 663, followed by the US(Figure 1). During this period, themaximum number of ADinitiations was against China (884initiations and 643 measures inJune 2012), followed by Korea,US, Japan and Indonesia. Indiafaced 160 initiations and 95

FIGURE 1

TOP TEN AD INITIATORS (BETWEEN 1995 AND 2012)

Source: WTO website.

measures. Traditional applicantslike the “Big Four” continue to beresponsible for a large share ofAD investigations, accounting forabout 32 per cent of all ADinvestigations initiated between1995-2012. Most of them aretargeted towards the developingcountries like China, India,Thailand, South Africa, Korea,etc.

Considering their meagreshare in world exports,developing countries are worstaffected by AD initiations.Further evidence of this is shownin Table 1, which shows the topten countries for whom thelargest number of ADinvestigations were initiated inthe year 2011. The table alsoshows the number of AD

TABLE 1NUMBER OF ANTI-DUMPING INITIATIONS PER BILLION DOLLAR OF EXPORTS IN 2011

Country/territory AD cases Total merchandise Share in world Average value of Number of casesin 2011 exports (US$ bn) exports(%) merchandise exports per billion dollar

per case of exports

China 49 1,898.3 10.40 38.74 0.026

Korea, Republic of 11 555.2 3.04 50.47 0.020

United States 10 1,480.4 8.11 148.04 0.007

Taipei, Chinese 8 308.2 1.69 38.53 0.026

Thailand 8 228.8 1.25 28.60 0.035

India 6 304.5 1.67 50.75 0.020

Japan 5 822.5 4.51 164.50 0.006

Indonesia 5 200.6 1.10 40.12 0.025

Russian Federation 3 522.1 2.86 174.03 0.006

Brazil 3 256 1.40 85.33 0.012

Source: WTO Trade Profiles 2012.

663

465

444

301

258

241

216

195

165

154

0 100 200 300 400 500 600 700

India

United States

EU

Argentina

Brazil

Australia

South Africa

China

Canada

Turkey


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initiations per billion dollar ofexports for these countries. Itappears that countries likeThailand, China, Indonesia andIndia are some of the worstsufferers of AD actions againsttheir exports. The table showsthat on an average Thailand facedone new case of AD initiation forevery $28.6 billion of exports.Compared to this, the US in 2011exported merchandise valued at$1,480 and faced 10 newinitiations, which on an averageaccounted for one new ADinitiation for $148.04 billion ofexports.

Apart from North-Southconflict over the imposition of ADmeasures, the South-Southconflict is very much in evidence.Initiation of AD investigations hasbecome an important

phenomenon among thedeveloping countries itself. Figure2 shows initiations by Indiaagainst other developingexporters. The maximum numberof cases that India has initiated isagainst China, followed by Korea.

If divided sector-wise, it canbe seen that over the period, ADcases have been divided intotwenty broad sectors. Of this,base metals and articles thereofhas been the most threatenedsector as far as the total numberof AD cases are concerned,followed by products of chemicalsand allied industries; resins,plastic and rubber articles;machinery and electricalequipment; textiles and paper. Sofar, India has faced the maximumnumber of initiations in the basemetals sector (about 50). On the

other hand, the country hasimposed a large number of ADmeasures against chemicals,plastics and rubber, textiles andmachinery and equipments.

Recent Development onNegotiations

It is important to note that theDDA mandate specifies thatnegotiations on trade remediesare intended to “clarify andimprove” the WTO Agreementsrather than to eliminate them.With this in mind, many WTOmembers have identified keyprovisions they seek to addressin future negotiations throughproposals formally submitted tothe WTO Negotiating Group onRules.

Ban on Zeroing

In the process of finding thedumping margin, sometimes aninvestigating authority disregardnegative dumping margins or puta value of zero on instances whenthe export price is higher than thehome market price. This practiceis called “zeroing”. By doing so,the authorities skew theircalculations in favour of higherdumping margins. This practiceis followed typically by theUSDOC. In a typical anti-dumping investigation, DOCcalculates weighted-average netprices for each product sold in theUS. It then compares each of thoseUS prices to the product’s normalvalue, which can be calculated ina number of ways, but is ideallythe weighted-average net price ofthe most similar product sold inthe home market. When normalvalue is higher than the US price,the difference is treated as thedumping amount for that sale ofSource: WTO website.

FIGURE 2

INDIA’S AD INITIATIONS AGAINST OTHER DEVELOPING COUNTRIES (1995-2012)

Others, 296

China, 150

Korea, 49

Chinese Taipei, 47

Thailand, 38Indonesia,

27Malaysia, 23

Singapore, 23

S. Africa, 10


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that comparison. However, whenthe US price is higher, thedumping amount is set to zerorather than its calculated negativevalue. All dumping amounts arethen added and divided by theaggregate export sales amount toyield the company’s overalldumping margin. This practicehas been challenged in the WTOon a number of fronts.

On 13 April 2004, a WTOdispute panel ruled against theUS practice of zeroing in a casebrought by Canada involvingsoftwood lumber. The panelfound that the United States hasviolated Article 2.4.2 of the ADAgreement by not taking intoaccount all comparable exporttransactions. The practice ofzeroing was also challengedearlier in a previous case broughtby India against the EuropeanUnion involving bed linen. In thatcase, the WTO Appellate Bodyruled in March 2001 that the EU’spractice was WTO-inconsistentfor the same reason. Since theEuropean Union’s and the UnitedStates’ practice of zeroing hadalready been found to violate theAnti-dumping Agreement in thedispute settlement cases broughtby India and Canadarespectively, many observersspeculated that any disputeproceeding against the UnitedStates on the practice willproduce similar results.However, the US practice ofzeroing is neither required, norprohibited, by US law. Hence itis not clear as to how and wherethis issue will be resolved. Theproblem of WTO anti-dumpingrulings is that they do not haveprecedentiary value. This meansthat the jurisprudence that

emerges from the Panel andAppellate Body reports to resolveissues in dispute is very muchcase-specific and does not haveany impact on other cases. Thereis no binding obligation, exceptwith respect to resolving theparticular dispute between theparties to that dispute. Hence thewronged country would have todrag the defaulting country to thePanel each time an infringementoccurs. As a result, a number ofAD investigations have beeninitiated on this account. Forinstance, on 24 November 2004,Japan requested consultationswith the United States on zeroing,citing 15 cases when the practicewas used while calculatingdumping margins on Japanesemerchandise (WT/DS322/1, G/L/720, G/ADP/D58/1). Mexicotoo requested consultations onzeroing with the US on 10January 2005, as it relatedspecifically to a dumpingdetermination on stainless steelproducts (WT/DS325/1). On 10December 2004, Thailand alsorequested WTO consultations onzeroing challenging use of USpractice when establishingprovisional duties on shrimpexports (WT/DS324/1).

India, as well as a majority ofWTO members, has called for thecomplete prohibition of zeroingmethodology in calculating anti-dumping margins as practiced bythe United States. The FANgroup, of which Pakistan is amember, took a very strongposition on zeroing and termed itas detrimental to the exportinterest of developing countries.Japan, which is leading the"friends of anti-dumpingcoalition", called for a complete

ban of zeroing methodology.Australia, Canada, and theEuropean Union (EU) also calledfor prohibiting zeroingmethodology.

Finally, on 6 February 2012,facing repeated confrontationwith countries, US TradeRepresentative Ron Kirkannounced that the United Statessigned an agreement with theEuropean Union (EU) and Japanthat will end a longstandingdispute at the World TradeOrganization (WTO) over theUnited States’ use of zeroing.Under the agreement, the UnitedStates has committed tocompleting the process ofbringing its anti-dumpingcalculation methodology intocompliance with the WTO rulings.However, it remains unclear asto how US will tackle the issueand whether the same practicewill be followed for goodsimported from non-EU countries.

Mandatory Lesser Duty Rule

Article 9.1 of the Anti-dumping Agreement encouragesthe imposition of an AD dutylower than the full dumpingmargin if investigating authoritiesdetermine that the lesser amountis sufficient to offset the injurysuffered or threatened to thedomestic industry. Many WTOmembers favour amending theAnti-dumping Agreement torequire a mandatory, rather thana discretionary “lesser duty rule”(Jones, 2006). Developingcountries are especially interestedin seeing a mandatory ruleapplied to exports from theircountries, and have proposed thismeasure as part of a “special anddifferential treatment” package of


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trade concessions offered bydeveloped nations to developingcountries. Proposals have beenmade by countries like Brazil,Hong Kong, China, India, andJapan to make the ‘‘lesser dutyrule” mandatory (TN/RL/GEN/99). This, in turn, would requireMembers to agree on disciplinesfor determination of the injurymargin first. But currently thereis no ‘‘lesser duty rule” in US lawor practice, and enactment of amandatory rule might requirecongressional action.

Price Undertakings

Article 8 of the Anti-dumping Agreement allows theuse of “voluntary undertakingsfrom any exporter to revise itsprices or to cease exports to thearea in question at dumpedprices” provided thatinvestigating authorities aresatisfied that the injurious effectof the dumping is eliminated.Many WTO members favormandatory use of “priceundertakings” because theybelieve that the practice is lessdamaging to exporters, while alsoeliminating the injury to domesticproducers. There have beenvarious proposals by countries tooperationalize this issue. Butbefore that there should beclarity on a number ofprocedural issues like definitionof “satisfactory” and “un-satisfactory” price undertaking;define ‘reasons of general policy’in the context of refusal byauthorities of proposals for priceundertakings in Article 8.3; takeinto account the needs ofdeveloping countries; provide anoutline of the procedure to befollowed in cases where only

some exporters submit priceundertakings, and others do not.

Proposed Changes in InjuryDeterminations

Another major focus ofproposals for amending the Anti-dumping Agreement isredefining and streamlining themethodology by whichadministrative authoritiesdetermine injury (Jones 2006).Some WTO members believe thatthe guidelines and definitions inthe Agreement are too subjectiveand that procedures lacktransparency in many countries.Sometimes price differentialsresult from applying normalbusiness pricing practices oradjustments to price levelsprevailing in the importingcountry, which should notconstitute unfair trade practicesand hence, should not bepenalized. Also sales below fullyallocated costs of production arenot contrary to normal businesspractices and this is recognized inthe competition policy of certaincountries. As a matter of fact,sales below fully allocated cost ofproduction but which permit therecovery of average variable costof production within a reasonabletime period should be consideredas having been made in theordinary course of trade. Also, forinstance, during global economicslowdown, a substantial numberof industries across the world arelikely to display symptoms ofinjury. Should all be eligible foranti-dumping protection, subjectto a demonstration of dumping?The industry complaining ofinjury may be suffering from awide variety of externalweaknesses like changes in

demand, changes in costs orchanges in the character of importcompetition. It may not be alwaysthat the cause of the industry’sill-health is dumped imports.

Mandatory Sunset ofAD Orders

The current Anti-dumpingAgreement specifies that eachanti-dumping order must beterminated after five years unlessauthorities determine in a reviewthat its expiration would be likelyto lead to a recurrence ofdumping and subsequent injuryto the domestic producer. Inparticular, many countries havecomplained that US authoritiesbase sunset review deter-minations inordinately onsubmissions by the domesticindustry. They claim that, US ADorders are likely to remain inplace as long as the domesticindustry opposes their removal.China has proposed that anti-dumping measures taken bydeveloped country Membersagainst exports from developingcountry Members shouldautomatically cease after fiveyears, and that no application ofany new investigation against thesame product from the samedeveloping country shall beaccepted before 365 days after theprevious measures have ceased(TN/RL/W/66). Canada hasproposed for the clarification ofcircumstances that might lead tothe continuation of a measure,and provide an indicative list offactors that authorities shouldconsider in determining whetherthe expiry of the duty would belikely to lead to continuation orrecurrence of dumping and injury(TN/RL/W/47).


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Special and DifferentialTreatment of DevelopingCountries

The most damaging impact ofAD actions on the developingcountries is their influence onexports. The process of openingan investigation have negativeeffects on trade flows regardlessof whether a duty will be finallyimposed or not. The mere threatof opening an investigationinduces a drop in exports. Thesituation is worsened by thepossibility to levy dutiesretroactively, which is mentionedin Article 10.8 of the WTOAgreement. Also involvement inAD investigations is veryexpensive, since legal costs aretoo high. Apart from legal costs,the opening up of an investigationties down the exportingenterprises with uncertainty overthe outcome, which can last foryears.

As a result of this, the FANGroup and several othercountries have requested thatArticle 15 should have specialprovisions so that the developingcountries can be actually providedwith meaningful special anddifferential treatment whenfacing AD actions. Recom-mendations involve acceptingprice undertakings and raisingthe de-minimis margins fordeveloping countries. Otherrecommendations also calls forstandardizing certain investi-gative procedures, so that ADinitiation is less costly (TN/RL/W/138).

ConclusionWith a large number of

systemic deficiencies in place, thelimitation of unjustified AD

investigations is one of the mostpressing issues. The negotiatingmandate for anti-dumping,agreed at Doha severely restrictsthe areas of possible change sincenegotiators have agreed that thebasic concepts of Anti-dumpingmust remain intact and that thecontemplated reforms werelimited to “improving andclarifying” the current system.According to Moore (2005),“major changes would only occur ifan overwhelming majority ofcountries required anti-dumpingreforms were the sine qua non ofbroader trade liberalization. This seemsparticularly unlikely given the rapidexpansion of anti-dumping’s use inmany new nations in the multilateralsystem”.

Moreover, the US negotiatorsare very reluctant to concede anynegotiating agenda, particularlyon anti-dumping that mightimpinge on American trade laws.Currently, the gap between theUS position on anti-dumpingand that of our WTO tradingpartners appears to be very wideand is difficult to bridge. Hencethe future of AD reforms seemsto be grim. The Chair of the WTONegotiating Group on Rules hasreported that based on hisconsultations, he has detected“very little appetite” forresuming the negotiations in theGroup. As a matter of fact thenegotiations on AD reformscannot proceed unless there is achange or shift in the underlyingdynamics in the Doha Round.

NOTES1 FAN includes Brazil, Chile,Colombia, Costa Rica, HongKong, Israel, Japan, Korea,Mexico, Norway, Singapore,

Switzerland, Taipei, Thailandand Turkey.

2 TN/RL/W/6; TN/RL/W/26;TN/RL/W/66; TN/RL/W/113

REFERENCES1. Jones, Vivian C. (2006): “WTO:

Anti-dumping Issues in theDoha Development Agenda”.CRS Report for Con-gress.Congressional ResearchService.

2. Moore, Michael O. (2005): “Anti-dumping Reform in the DohaRound: A PessimisticAppraisal”. Paper prepared forThe Economics of the Doha Roundand the WTO. University of HongKong, December 16-17.

3. Tharakan, P.K.M. (1991): PolicyImplication of Anti-dumpingMeasures, Amsterdam, Oxford,Toky: North Holland (ed.).

4. Tharakan, P.K.M. andJ . W a e l b r o e c k ( 1 9 9 4 ) :“Determinants of Anti-dumpingand Countervailing DutyDecisions in the EuropeanCommunities”, in MathiasDewatripont and VictorGinsburgh (eds.), EuropeanEconomic Integration: A Challengein the Changing World,Amsterdam, London, andTokyo: North Holland, 181-199.

5. Tharakan, P.K.M. (1999): “IsAnti-dumping Here to Stay”’.World Economy 22(2), 179-206

6. WTO website: http://www.wto.org

7. WTO Trade Profiles (2012):World Trade Organisation TradeProfiles 2012. Trade Flows andTrade Policy Measures

8. WTO documents from WTOwebsite

•


News

NEWSNEWSNEWSNEWSNEWS(NA(NA(NA(NA(NATIONAL/INTERNATIONAL/INTERNATIONAL/INTERNATIONAL/INTERNATIONAL/INTERNATIONAL)TIONAL)TIONAL)TIONAL)TIONAL)

US Asks Govt. Not to Raise Dutieson Power Gear ImportsTHE US Government has expressed concern overthe proposed duty hike on power equipmentimports.

The US Trade Representative, Mr. Ron Kirk,has written to the Prime Minister, Dr. ManmohanSingh, asking the Centre not to increase duties onimport of such equipment. The 21 per cent dutyhike proposed by the Power Ministry — meantmainly to protect local equipment firms such as L&Tand BHEL from “cheap and low quality” Chineseimports as well as create a level-playing field —will also hurt American equipment majors such asGE.

It is learnt that Mr. Kirk has written that theduty hike will make power equipment imports morecostly and, in turn, result in higher electricity costsfor consumers.

Recently, the Association of Power Producershad written to the Power Ministry saying thatincreasing customs duty on equipment importswould further increase electricity tariffs and alsolead to delays in capacity addition. About half ofthe coal-based capacities are dependent on powerequipment imports, it pointed out.

The private power producers’ body also saidthat financial problems, fuel availability concernsand the distribution utilities being in bad shape hadalready resulted in higher generation costs. Itadded that if import duties were hiked at this point,it would adversely affect not only the sector butalso the economy.

The Prime Minister’s Office had directed thePower Ministry to circulate a Cabinet note on the

proposed duty hike. Currently, the Ministries ofCommerce, Finance, Heavy Industries and Powerare holding discussions on the issue, the sourcessaid.

As of now, there is a 5 per cent customs dutyon equipment imports for below-1,000 MW projects.The proposal to hike duties would also affect ultramega power projects that are exempted as of now.

Differences

Mr. Kirk’s letter assumes significance in thebackdrop of the recent differences between Indiaand the US on a host of trade and investmentissues. The US had already taken India to theWorld Trade Organization (WTO) on the banon poultry imports from the US, while Indiamoved the WTO on US’ “high” visa fee forskilled workers as well as duties on some steelproducts.

The US Secretary of Commerce, Mr. John Bryson,during his visit to India in March, had also raisedthe issue of India’s “high tariffs” on capital goodssuch as power-generating equipment, some medicalproducts, grapes, citrus, and other fruits. He hadtermed these as “barriers” to building US-Indiaeconomic ties and also said local sourcingrequirements in sectors such as solar energy andIT/electronics (telecom) “makes it harder to investin India.”

The US Ambassador to India, Ms. Nancy J.Powell, in April expressed concerned over“challenges” to trade and investment in India,including “high tariff and non-tariff barriers,restrictions on foreign investment, lack oftransparency, and defence offset requirements”.

(The Hindu Business Line, 12 July 2012)


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Turkey Agrees to Remove PenalDuties on Indian Cotton YarnTURKEY has agreed to remove penal duties“wrongfully” imposed on Indian cotton yarn,spelling victory for New Delhi that is fightinggrowing protectionism in several countries againstits products.

The two countries are likely to sign amemorandum of understanding (MoU) on the issuesoon, following which India would withdraw itscomplaint against Turkey filed with the WTO.

“Both countries have reached a satisfactoryunderstanding on the penal duties,” the official said.“As soon as the memorandum of understandingspelling details of duty removal is signed, Indiawill withdraw its complaint.”

Global economic uncertainty has prompted anumber of countries including the US, Egypt andTurkey to raise protectionist walls against importsfrom other countries including India to safeguardtheir domestic firms.

Canada, too, has started investigations toimpose penal duties against certain Indian steelproducts. “It is true that protectionism worldwideis growing. India does not have a problem withimport restrictions as long as countries respect therules framed by the WTO. But we will definitelyfight against all violations,” the official said.

New Delhi has filed official complaints againstrestrictive duties imposed by the US on steelproducts and Egypt and Turkey on cotton yarn atthe WTO.

“In the case of Turkey, we are happy that theissue is being amicably settled without the needfor a dispute settlement panel,” the official said.Egypt and Turkey are the fifth and sixth largestexport destinations for Indian cotton.

Industry body Texprocil, which has beenworking with the government on the legal aspectsof the penal levies imposed by Turkey and Egypton Indian cotton yarn, says all wrongful attemptsto block exports have to be severely discouraged.

“If we do not take action against illegal measuresadopted by another country to curb imports, weare in a way encouraging other countries to followsuit.”

Turkey imposed safeguard duties between 12and 17 per cent over and above the customs dutyof 5 per cent with effect from July 2011. This madeIndian exports to the country costlier.

Egypt, on the other hand, imposed a specificduty of 55 cents per kilogram of yarn in December2011. Safeguard duties are import levies imposedover and above the existing duties to protectdomestic industry against a surge in imports. Indiacontested Turkey’s decision to extend safeguardduties after they expired last year, without carryingout a review to the WTO Committee on Subsidiesand Countervailing Duties.

(The Economic Times, 8 June 2012)

US Hikes Duty on Indian Steel PipeTHE United States piled another layer ofpreliminary duties in the past on a certain type ofsteel pipe from India, after India complained at theWTO about an earlier US round.

The US Commerce Department said it haddetermined that Indian companies were sellingcircular welded carbon-quality steel pipe in theUnited States at 48.43 per cent below fair marketvalue.

The duties will require importers to post bondsor cash deposits based on the preliminary ratesuntil a final decision on anti-dumping duties is madelater this year.

The department also set preliminary anti-dumping duties on this kind of pipe of zero to27.96 per cent for Vietnam, 5.59 per cent for Omanand 3.29 to 11.71 per cent for the United ArabEmirates.

The US companies – Allied Tube and Conduit,JMC Steel Group, Wheatland Tube and UnitedStates Steel Corp petitioned the government lastyear for import relief.

In March, the Commerce Department setpreliminary “countervailing” duties of nearly 286per cent on the same type of steel pipe from Indiato offset government subsidies.

That prompted India to request consultationswith the US on the action at the WTO, the firststage in filing a formal trade dispute.


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India rejects the US view that Indianmanufacturers are subsidized because a portion ofthe iron ore they use to produce the steel pipescomes from India’s top iron ore miner NMDC, astate-run company.

The United States in 2011 imported about $64.5million of the steel product from India, $53.9 millionfrom UAE, $50.1 million from Vietnam and $28.0million from Oman.

(Business Standard, 25 May 2012)

Canada Likely to Side with Indiaagainst USINDIA may get an ally in Canada in its fight againstthe US on imposition of penal import duties oncertain steel products.

Canada, a major exporter of steel products, iskeen on joining the talks between New Delhi andthe US at the WTO on 30 May. It has soughtpermission from the WTO to participate in the talkson countervailing duties on hot-rolled steelproducts exported by India.

If the talks fail, India may ask for establishmentof a dispute settlement panel to settle the issue.

“Canada has a substantial trade interest in theseconsultations since the US is the largest market forCanadian hot-rolled carbon steel flat products.Accordingly, Canada requests to join theseconsultations,” stated an official communication byCanada to the chairperson of the dispute settlementbody.

New Delhi dragged Washington to the WTOon the steel issue, after it failed to persuade the USto revoke penal duties imposed on hot-rolled steelproducts that are exported by Indian companies,such as Essar, Tata and Jindal. These duties are ashigh as 500 per cent in some cases.

India has objected to the US treating the sale ofiron ore by NMDC as a subsidy.

“We should not have a problem in allowingCanada to participate in our consultations. We may,in fact, benefit from the arguments that it bringsin,” told a government official, who did not wishto be quoted.

As Canada itself has been at the receiving endof random imposition of countervailing and anti-dumping duties by the US, they would mostcertainly have interesting observations on US’conduct, believes Abhijit Das, Head of the Centrefor WTO Studies, IIFT. “Canada may want to airits views on how the US conducts its investigationswhich may be beneficial for India,” Shri Das said.

Canada has also been fighting against penalduties imposed by the US on a number of steelproducts, including wires exported by it at theNAFTA, or North American Free TradeAgreement.

(The Economic Times, 25 May 2012)

US, EU Question India’s SpecialImport Levies to “Safeguard”Domestic Industry from ImportTHE US and the EU have questioned India’s specialimport levies to “safeguard” domestic industryfrom import, saying they may have been calculatedin a non-transparent manner.

India has said the safeguard duties were withinthe bounds of WTO rules.

“Our representatives at the meeting made itabsolutely clear to those raising concerns that oursafeguard procedures are fully consistent with theWTO.”

The US and the EU expressed concerns aboutthe transparency and due process in India’ssafeguard investigations at a recent meeting of theWTO’s safeguard committee.

Despite India’s assurance that duties were inorder, the US said it would be submitting specificconcerns to New Delhi within a few days.

“We would gladly answer all queries, but theyhave to be made first,” the official added.

The WTO allows member countries to imposesafeguard duties, which are short-term importlevies over and above the existing import duties, ifthere is evidence of a surge in import of a particularproduct. The affected country also has to prove thatthe surge in imports was causing injury to thedomestic industry.


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“We have a detailed procedure on the lines ofnorms prescribed by the WTO to carry out oursafeguard investigations and duties are imposedonly when we are fully satisfied that all conditionshave been met,” the official said.

There were about 10 instances of safeguardduties imposed on imports by India between 1998and 2004. The country did not impose anysafeguard duties between 2004 and 2008 when itrelied mainly on anti-dumping duties to checkcheap imports.

(The Economic Times, 3 May 2012)

Pakistan Imports: Duty Cut on 260Items in Four MonthsINDIA will honour its promise to Pakistan toreduce import duties on about 260 items within thenext four months according to a senior governmentofficial.

Both countries are also ready with a new visaagreement that will allow business visitors a one-year multiple entry visa for multiple cities. “SincePakistan started its trade normalization process withIndia in March, we will abide by our commitmentof reducing our sensitive list by July-end”, theofficial told.

Pakistan Commerce Minister Mr. MakhdoomAmin Fahim will discuss the items where it wantsduty cuts in his meeting with his Indian counterpartShri Anand Sharma.

India had promised Pakistan that it wouldreduce its sensitive list of 865 items not givenpreferential market access under the South Asiafree trade agreement by 30 per cent within fourmonths of Pakistan starting its tradenormalization process. Pakistan had recentlyswitched over to a negative list allowing importof all items from India other than about 1,209in the list which will be dismantled by the year-end.

(The Economic Times, 13 April 2012)

Higher Import Duty to Affect AutoExports to Sri LankaINDIAN auto makers exporting to Sri Lanka willpass on the burden of an import duty hike toconsumers, hitting demand, analysts said.

In a bid to contain the rising fiscal deficit, thelocal government sharply increased the import dutyon automobiles with effect from 1 April. The importduty on cars has gone up from 120-291 per cent to200-350 per cent; on three-wheelers, it has gone upfrom 51-61 per cent to 100 per cent, and on two-wheelers, from 61 to 100 per cent.

Duty on buses, trucks and tractors remainsunchanged.

Sri Lanka is an important export destination forseveral Indian auto makers, including Bajaj AutoLtd and Maruti Suzuki India Ltd.

Executives at the auto firms conceded saleswould get affected at least in the medium term asthe market is price sensitive.

Bajaj Auto, India’s largest exporter ofmotorcycles and three-wheelers, draws 20 per centof its total exports from Sri Lanka. In the fiscal yearending March 2012, the Pune-based firm exported107691 units, an expansion of 54 per cent over lastyear.

Rakesh Sharma, president, internationalbusiness, at the firm, said, “The increase is sosignificant that we have no choice but to pass it on(to consumers).” The hike, according to Shri Sharma,is likely to deter consumers from buying newvehicles at least for the time being.

With Sri Lanka’s economy improving andshowing a fundamental upward trend, buyers willcome to terms with the price hike over a period oftime, he said.

With Bajaj Auto having a relatively highexposure to the Sri Lankan market, it will feel themaximum impact among Indian auto makers, wroteJoseph George, analyst at brokerage IIFL Ltd in a2 April research report.

While Bajaj Auto’s three-wheelers have 80 percent of the Sri Lankan market, its two-wheelersaccount for half, he said. “Sri Lanka accounts for35-40 per cent of Bajaj’s three-wheeler and 10 per


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cent of two-wheeler exports. This is equivalent toabout 7 per cent of Bajaj’s total revenue and anestimated 9 per cent of earnings before interest,tax and depreciation.”

The firm estimates that the import duty hikeled to a 20-30 per cent increase in the price ofvehicles.

Car market leader Maruti Suzuki’s 5 per centof exports sales comes from Sri Lanka. MayankPareek, managing executive officer, marketing andsales at Maruti Suzuki, said: “It’s quite a significantmarket for us and bound to have an adverse impacton sales as Sri Lanka is a price-sensitive market.”The company is awaiting clarity on duty on second-hand vehicles in the market.

Currently, duty on pre-owned cars in Sri Lankais higher than new vehicles. If there is no change, itwill give a boost to the second-hand car market inthe region, which accounts for 80-85 per cent oftotal car sales, said Shri Pareek.

Although Sri Lanka is a big market for TVSMotor Co. Ltd and Hero MotoCorp Ltd, overallexports are not as big a revenue generator for thesecompanies as they are for Bajaj Auto. Mint wasn’table to reach these two firms for comment.

Among other measures including a halfpercentage point hike in the policy rate, imposingcredit growth targets for banks and substantial pricehikes on petroleum products, the higher import dutyon vehicles has been viewed favourably by theInternational Monetary Fund, which recentlydisbursed the last tranche of $427 million of the$2.1 billion it had committed to the country.

(Livemint, 3 April 2012)

European Union Whines DespiteIndia Agreeing to Halve ImportDuty on its WinesINDIA has proposed to halve import duties onwines and spirits bought from the European Unionunder the bilateral free trade agreement beingnegotiated between the two, but the 27-countryunion is demanding steeper cuts.

EU officials argued liquor imported from theregion would become affordable for Indian

customers only if there are “meaningful” cuts induties.

“They said that state taxes on liquor wereextremely high in some cases which raised theincidence of duty on foreign liquor to very highlevels. Customs duty on liquor, therefore, neededto be reduced substantially,” an official familiarwith the talks said.

India imposes 150 per cent customs duty onwines and spirits, which it has now proposed tocut to about 75 per cent for the EU countries.

New Delhi has also offered to reduce dutiesfurther to about 40 per cent on some categories ofalcohol over the next four years afterimplementation of the FTA.

The EU has demanded an immediate reductionin import duties to about 30 per cent so that thereis a substantial dent in the total incidence of taxes,an official said.

EU trade commissioner Mr. Karel De Gucht hadexpressed his unhappiness with India’s offers. Dueto high taxes imposed by states, incidence of taxeson foreign liquor was as high as 200-790 per cent ofthe sale price, depending on the type of liquor andits price and also the state in which it is being sold.

India’s import of alcoholic beverages went up55 per cent in the first three quarters of the fiscal to`593 crore, compared to `382 crore in the sameperiod last year, according to figures compiled bythe commerce department.

Given these imports, India is reluctant to makesteeper cuts as its domestic industry is still in itsnascent stage and slashing tariffs is a politicallysensitive issue.

“We have insulated the liquor sector from allFTAs we have signed so far. Although we are readyto cut duties on both wines and spirits for the EU,it cannot expect us to be insensitive to the demandsof our industry” remarked an official.

These offers are, of course, linked to EU’sreadiness to open markets for items such as textilesand fisheries and substantially liberalize its servicessector. Both sides hope to implement the FTA ingoods, services and investments, later this year.

(The Economic Times, 22 March 2012)


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Some Respite for Steel MakersTHE Finance Minister has proposed to increase thecustoms duty on flat steel import to 7.5 per centfrom the present 5 per cent. Nittin Johari, Director(Finance), Bhushan Steel, said, “This will help localcompanies sell more, as imports will get expensive.Also, local steel makers may look to increase theprice by one to two per cent, or `500-1,000 pertonne.” Ravindra Deshpande, equity analyst, ElaraCapital India, said, “This is good news for Indiansteel companies. They have been asking this forsome time.”

The current financial year has been a difficultone for makers at home, battling slowing demandamid a high input cost regime. Shri Deshpandesaid, “Demand growth this year has beenexcessively below expectations. Companies will(now) try to raise prices by at least `1,000 pertonne.”

With the demand slowdown, prices could notbe increased to address the higher input costs.

Steel demand in India was expected to grow ateight to 10 per cent this year. However, at the endof the April-February period, it had risen by only5.2 per cent. And, imports in these 11 months havegone up by 3.4 per cent, to 6.23 million tonnes, muchto the vexation of domestic steel companies, whosaw this as a lost opportunity for them. They nowhope the increase in customs duty would help bringdown imports.

Despite the slowing witnessed in home steeldemand, the government’s Economic Survey for theyear, was fairly satisfied with the sector’sperformance and termed it “optimistic”. The Surveyblamed inflationary pressures, interest rate risesand the depressed global economic scenario for thelower growth in steel demand here.

India consumed 70 million tonnes of steel in2010-11. The number, assuming a 10 per centgrowth rate, should have reached 77 milliontonnes at the end of the current financial year.However, the apparent consumption in April-February was about 66 million tonnes and isexpected to be no more than 71-72 million tonnesfor the full year.

(Business Standard, 17 March 2012)

Anti-dumping Duty Likely onImports of Soda AshINDIA may impose an anti-dumping duty of up toUS$38.79 per tonne on a chemical, used mainly indetergents, imported from seven places includingChina, EU, Pakistan and the US, to protect domesticplayers against cheaper imports.

The Directorate General of Anti-dumping andAllied Duties (DGAD) has recommendedimposition of the duty on imports of “soda ash”,the Commerce Ministry said in a notification dated17 February.

The Directorate’s recommendation comes on thebasis of its findings that increased imports havecaused “material injury” to the domestic industry,it said.

Alkali Manufacturers’ Association of India hadfiled a petition for imposition of an anti-dumpingduty on behalf of the domestic industry.

The duty ranged between US$2.38 per tonneand US$38.79 per tonne, it said.

The DGAD, which is under the CommerceMinistry, in its recommendations said that thechemical has been exported to India below itsnormal value from China, European Union (EU),Kenya, Iran, Pakistan, Ukraine and the US.

“... the Authority is of the view that impositionof definitive anti-dumping duty is required to offsetthe dumping and injury,” it added.

Soda ash is an essential ingredient in themanufacturing of detergents, soaps, cleaningcompounds, float glass, container and specialtyglasses and other industrial chemicals. It is alsowidely used in textiles, paper, metallurgicalindustries and desalination plants.

The country has already imposed anti-dumpingduty on imports of fabric, yarn, nylon tyre cordand several chemicals.

Unlike safeguard duties, which are levied in auniform way, anti-dumping duties vary fromproduct to product and from country to country.

Countries initiate anti-dumping probes to checkif domestic industry has been hurt because of asurge in cheap imports.


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As a counter-measure, they impose duties underthe multilateral WTO regime.

(The Economic Times, 23 February 2012)

Anti-Dumping on 4 Items Importedfrom China Extended for 5 yearIN the backdrop of widening trade gap with China,effecting January 2012, India extended for five yearsanti-dumping duty on import of four Chineseproducts, including silk fabrics and a sweetener.

The duty is imposed to protect the domesticindustry from cheap imports.

Import of certain type of silk fabrics from Chinawill attract anti-dumping duty of US$1.82 toUS$7.59 per metre, a notification of the RevenueDepartment said.

The duty was first imposed on the fabrics inDecember 2006 till December 2011.

India had a trade deficit of US$16 billion againstChina during 2010-11. It has already crossed US$20billion in the first seven months of the current fiscal.

The Directorate General of Anti-Dumping(DGAD) had carried a suo motu sunset review probein December 2010 to examine whether cessation ofthe duty would lead to continuation of dumpingand injury to the domestic players.

Following the review, the DGAD hadrecommended continuation and enhancement of theanti-dumping duty.

“The anti-dumping duty imposed shall belevied for a period of five years (unless revoked,superseded or amended earlier) ...,” the RevenueDepartment said.

It further said the duty on import of certaintype of nylon filament yarn from China, ChineseTaipei, Malaysia, Thailand and Korea will beimposed at US$0.20 to US$1.51 per kg. for anotherfive years. Notifications for extension of anti-dumping duty on imports of cellophane transparentfilm and saccharin from China for five years havealso been issued.

Saccharin is a non-nutritive sweetener andconsidered to be low calorie substitute for canesugar.

Meanwhile, the government has also leviedprovisional anti-dumping duty on import ofphosphoric acid (excluding agriculture/fertilizergrade) from Israel and Taiwan. The duty atUS$116.25 to US$260.26 per tonne has been imposedfor six months.

India has so far initiated about 150 anti-dumping cases against China, which account forover half of such actions taken by the countryagainst foreign nations.

(The Economic Times, 13 January 2012)

No Freezing of Customs Duty atCurrent Level, Says SharmaINDIA has ruled out any freezing of Customs dutiesat current level. It has also deflated the pressurefor any dilution of the flexibilities available underthe World Trade Organization (WTO) regime forimposing export restrictions and taxes in case ofthe agricultural produces.

Addressing a group of 20 countries ahead ofthe 8th Ministerial Conference of the WTO inGeneva, the Commerce and Industry Minister, ShriAnand Sharma said, “Tariff standstill (freezing ofthe custom duties at the current levels) will amountto the developing countries ceding their policyspace and being denied any recognition for theirautonomous liberalization.”

Besides unhinging the negotiated formula ontariff reductions, it would force the developingcountries to take on commitments going muchbeyond what was envisaged for at the end of theDoha Round, he added. Shri Sharma desired thatWTO, while taking up all manner of the newchallenges, does not forget the traditional challengeof development.

He called for continued solidarity andreinvigorated engagement so that the currentimpasse in the Doha negotiations is broken and theattempts to replace the development centric agendaare thwarted.

He cautioned against the possibility of losingthe progress and the balance achieved sopainstakingly over the last decade, particularly onthe reforms of the agricultural trading system. Heurged the global community not to allow this


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opportunity to slip away or allow a dilution ofthe Doha mandate. Earlier, speaking at themeeting of the G33 countries (a coalition ofagricultural economies, coordinated by Indonesia)he called for ushering in much delayed changesin the current agricultural trading regime whichnegatively impact the livelihood concerns ofbillions of subsistence farmers in the developingworld.

(The Hindu Business Line, 15 December 2011)

Palmolein Import Tax Unlikelyto be RaisedINDIA, the world’s second-biggest user ofcooking oil, will resist calls from local processorsto increase tax on refined palmolein imports, as aplunge in the rupee makes overseas purchasesabroad more expensive, according to thegovernment officials.

The government will keep $484 a tonne as thebase price for taxing imports at 7.5 per cent at leastthe next three months, said the officials, who havedirect knowledge of the matter. An increase in thebase rate would have raised the prices of importedoil, fuelling inflation. The rate may be raised in theannual budget in February.

India’s rupee fell to a record 52.73 per dollaron 22 November, on concern Europe’s debt crisiswould hurt demand for emerging market assets.The 14.6 per cent slump in the currency this yearthreatens to boost import costs, fueling inflation.The food price index has stayed above 9 per centfor the last 16 weeks.

“If the current base price continues, refined oilimports will likely increase and hurt domesticrefiners.” “Unfortunately, the government is moreconcerned about the food inflation.”

The processors in September asked thegovernment to increase the base price and importduty on refined palmolein after Indonesia, India’sbiggest supplier, cut export tax on refined palm oiland raised export duty on crude palm oil.

Food Minister Mr. K.V. Thomas declined tocomment. India set the base price for variouscooking oils more than five years ago, while theactual cost of imported fats have surged, according

to processors’ group. Refined palmolein is importedat about $1,080 a tonne, while buyers need to paytax only at $484 a tonne, it said. The benchmarkprices, introduced to prevent traders from payinglower import duties by understating edible oilprices, are revised in line with international edibleoil prices.

(Bloomberg, 1 December 2011)

Anti-Dumping Duty on CausticSoda ImportsIN a major blow to the manufacturing industry,the finance ministry has imposed an anti-dumpingduty on the use of caustic soda till 2013.

The duty will be levied on all importsoriginating from Saudi Arabia, Korea and the US.While the notification issued by the anti-dumpingdirectorate has not spelt out the duty amount, ithas clarified that it would be based on thereference rate which is around $400 and landedcost of the commodity.

Companies such as Hindustan Unilever, Procter& Gamble, Hygiene and Health Care, Colgate-Palmolive, Godrej Consumers Products, Nirma,Reckitt Benckiser and Henkel SPIC (India) Ltd aresome of the major consumers of caustic soda,besides the paper industry, textiles and pharmasector.

The decision of the Union finance ministry toimpose an anti-dumping duty on imports ofcaustic soda, have failed to impress the domesticindustry.

Caustic soda makers termed the quantum ofduty “very low” against the already lowerinternational prices, while consumer industriesincluding soap makers, textiles and paper industrycried foul over the sudden spike in caustic sodaprices in the domestic market, while import optionwill be more costly once the government decisioncomes into effect.

An official with one of the petrochemicalcompanies said: “Caustic soda is a major chemicalingredient and domestic manufacturers have beensuppressing a price rise for some time, since importwas cheap. Many domestic manufacturers of thischemical refrained from a price rise, even at the


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cost of lower margins or loss and many industrieshave leaned down production. But now, with thisanti-dumping duty, chemical manufacturers canincrease prices which could trigger a price rise ofits end products.”

Despite representations by domestic soapmakers, including Hindustan Unilever, that theirrequirements are not met by supplies fromdomestic companies and they have to resort toimports, the anti-dumping directorate hasadvocated that the duty is required to providelevel-playing field for domestic manufacturers vis-a-vis imports.

Caustic soda is a soapy, strongly alkaline,odourless liquid widely used in paper, viscose yarnand staple fibre, aluminium, textiles, toilet andlaundry soaps, detergents, dyestuffs, drugs andpharmaceuticals, vanaspati and petroleum refiningindustry, among others.

Caustic soda companies also see the size ofthe duty as lower than expected. “The impositionof duty on caustic soda imports is not going tobenefit the domestic industry as the quantum ofthe duty seems to be very low. This duty fails tosettle the prevailing disparity betweeninternational and domestic prices of caustic soda.Even after paying the duty, international priceswould continue to remain lower,” said anindustry source.

According to industry insiders, companies thatare dependent on imported caustic soda may haveto shell out more. Domestic supplies of caustic sodamay also get costlier.

It is evident from the fact that soon after theimposition of the duty, the sentiments have alreadyturned bullish as the prices of caustic soda in thedomestic markets have started showing upwardsigns. In the past one week, caustic soda prices havejumped by `3,000 to `4,000 per tonne.

Caustic soda liquid was priced in the range of`28,000 to `29,000 per tonne, while flax priceshovered around `31,000 to `32,000 per tonne.

“Caustic soda prices have already started risingin the domestic market as a fallout of the impositionof import duty. But it is less likely that consumerindustries would pass on this price hike to itsfinished products, because they are already faced

with low demand. Rather they (consumer industry)are more likely to adopt a wait-and-watch strategyfor prices to fluctuate,” said an Ahmedabad-basedleading caustic soda trader.

But to some, the imposition of import duty mayprove to be irrelevant. “We have our own causticsoda plant, with all the in-house raw materialsupplies available. Hence we do not depend onother companies for our requirements. So it isirrelevant to us if the anti-dumping duty stays orgoes,” said a source at Nirma Limited, India’s largestdetergent maker.

Meanwhile, sources from Tata Chemicals,India’s leading caustic soda maker, maintained thatthe imposition of duty would benefit the Indiancaustic soda industry. “The move will surely helpdomestic manufacturers. Going forward, therecould be some impact on prices as imports wouldget costlier,” said a company official, requestinganonymity.

The anti-dumping directorate was conductinga sunset review of the duty which had expired in2008.

The initial appellants were Gujarat Alkalies& Chemicals Limited, Grasim Industries Limited,DCM Shriram Consolidated Limited, SIELIndustrial Complex and Bihar Caustic & ChemicalsLimited

Later, the petition had been supported by a hostof other companies, including Reliance IndustriesLimited, Kanoria Chemicals & Industries Limited,Gujarat Fluorochemicals Limited, Solaris ChemtechLimited, DCM Limited and Jayshree ChemicalsLimited.

Officials said the views of all stakeholders,including importers were taken before the decisionwas made. Some of the major importers who haveresponded are National Aluminium Company(NALCO) and Hindusthan Lever Ltd.

The anti-dumping duty on imports fromIndonesia, European Union and Taiwan had beenlevied between 2006 and 2008. The directorateinitiated a review of the duty in 2010 followingrepresentations from the industry.

(Business Standard, 16 October 2011)

•


Books/Articles Notes

BOOKS/ARTICLESBOOKS/ARTICLESBOOKS/ARTICLESBOOKS/ARTICLESBOOKS/ARTICLESNONONONONOTESTESTESTESTES

BOOKS

The Anti-Dumping Agreement and DevelopingCountries: An Introduction by AradhnaAggarwal; Oxford University Press; 16 July 2007;pp. 299.

IN the era of globalization, trade policy hasbecome a key development tool and exportsexpansion a major policy objective. Butthroughout the global economy, pressures forprotectionism are abundant, threatening toreverse developing countries’ gains. In thiscontext, anti-dumping has emerged as a criticaltopic of international debate.

This book analyzes the importance of the anti-dumping issue from the perspective of developingcountries and discusses their roles and concerns.The author’s analysis reveals biases againstdeveloping countries and stresses the need forreform of current anti-dumping codes.

The book traces the genesis and evolution ofthe existing anti-dumping agreement and its legalporvisions, discusses various economic and non-economic justifications of anti-dumping use,empirically analyzes the macroeconomic factorsmotivating developed and developing countriesto use anti-dumping rules and examines wideranging proposals for reform of the WTO anti-dumping code.

The author analyses various plausibleapproaches for refining the existing provisionsand explores the possibility of reform by includinga Public Interest Test. She also suggests updatingthe Special & Differential Treatment instrumentsto remedy the existing imbalances.

ARTICLES

Reforming Anti-Dumping Law: Balancing theInterests of Consumers and DomesticIndustries by Jean-Marc Leclerc, McGill LawJournal, 1999, (1999) 44 McGill L.J. 111

THE paper analyzes various issues relating to antidumping. While GATT has been largely successfulin reducing barriers to trade, anti-dumpingprovisions remain a significant obstacle toliberalized trade that would benefit consumers.Numerous studies demonstrate the extent to whichanti-dumping legislation does not appear to bemotivated by anything other than protectionism.It does not prevent predatory pricing, sincepredatory pricing is an improbable phenomenon atbest; nor does it prevent the alleged harm causedby sporadic dumping, since that too is unlikely. Evenif consumers are harmed by sporadic dumping, thismay not be a valid reason to prohibit the practice,since it is rational, pro-competitive behaviour onan international scale. Moreover, anti-dumpinglegislation cannot be supported on non-efficiencygrounds, since the protection of small communitiesand less fortunate people are usually not the focusof an anti-dumping investigation.

Despite these conclusions, however, theredoes not appear to be a realistic chance of reformof either GATT or SIMA in the near future. Anychance for reform is caught in a “catch-22”situation. Domestic legislatures are unwilling todrop protectionist measures unless their tradingpartners do likewise. Hence, SIMA seems out ofreach. GATT does not appear ripe for reformeither, since without anti-dumping laws, manycountries would balk at further liberalized trade.Finally, any opportunity for advocates ofconsumer welfare interests to work within thesystem, whether under section 45 of SIMA or



through representations made by the Director ofCompetition, have effectively been denied by theGATT’s narrow reading of the purpose of anti-dumping laws. Even recommendations made byParliamentary Sub-Committees charged with thetask of reforming SIMA are far removed fromreal reform which would balance the interests ofconsumers against domestic industries faced withdumping.

Perhaps the only hope that consumer welfareadvocates can find in this state of affairs is inregional free trade agreements (RTAs). TheEuropean Union, for instance, no longer engagesin anti-dumping actions against its trade partners,and limits any investigations of unfair trade throughdumping to instances where predatory pricing isat issue. However, in the NAFTA context, theUnited States “has shown extreme unwillingnessto participate in any meaningful negotiations toeliminate the use of anti-dumping ... laws”’ On abright note, Canada has succeeded in “phasing outthe use of anti-dumping remedies in the recentlyconcluded Canada-Chile Free Trade Agreement.”Furthermore, since the United States is unwillingto compromise its anti-dumping duties withinNAFTA, recent reports have suggested that Canadaand Mexico are considering exempting each otherfrom the application of their respective anti-dumping laws. While they will first seek anagreement between themselves, reports say theyapparently hope to later include the United Statesin the agreement.

As RTAs proliferate, and as countries realizethat repealing anti-dumping laws does not hurttheir economies, perhaps the trend to eliminate anti-dumping laws in RTAs will extend itself to GATT.For instance, if Canada does not feel threatened byChile dumping its products into Canada, why wouldit feel the need to protect against dumped productsfrom a country like Spain? Also, if it is true thatCanada does not feel threatened by dumpedproducts originating from its largest tradingpartner, would it feel threatened by dumpedproducts coming from smaller trading partners?Through incremental changes in regional tradeagreements, countries like Canada will increasinglyrealize that national economies (and consumers inparticular) benefit from dumping. Hopefully anunderstanding that Article 6 of GATT is veiled

protectionism, devoid of valid economic or politicalrationale, will follow.

The WTO and Anti-dumping in DevelopingCountries by Chad P. Bown, Brandeis University,November 2007, www.brandeis.edu/...

SINCE the 1995 inception of the World TradeOrganization (WTO), developing countries havebecome some of the most frequent users of theWTO-sanctioned anti-dumping trade policyinstrument. However, little is known about thepattern of actual industrial use of anti-dumping indeveloping countries. This paper exploits availabledata to examine nine of the major “new user”developing countries, matching data on productionin 28 different 3-digit ISIC industries to data onanti-dumping investigations, outcomes and importsat the 6-digit Harmonized System product level.The author has used a cross-country panel ofindustry-level data to estimate determinants ofanti-dumping protection. The author presentsevidence consistent with theory that developingcountry industries that seek and receive anti-dumping import protection are responding tomacroeconomic shocks, exhibit characteristicsconsistent with endogenous trade policy formation,and face some changing market conditionsconsistent with requirements of the WTO Anti-dumping Agreement. On average, a one standarddeviation change in the key determinants affectsthe probability of an industry-level anti-dumpinginvestigation by 50 per cent. However, the evidencealso suggests substantial heterogeneity indeterminants of anti-dumping use acrossdeveloping countries, which highlights theflexibility of this policy as a protectionist toolresponsive to many different types of political-economic shocks. Nevertheless, this also indicatesthat WTO rules may have imposed relatively littlediscipline on national use of the policy during thistime period.

The paper investigates determinants of industrypursuit of anti-dumping across nine majordeveloping countries in the 1995-2002 period andprovides evidence that this use is consistent withindustry characteristics predicted by the WTO’sevidentiary requirements, the theory ofendogenous trade policy and macroeconomicshocks. After controlling for country-specific effects,



a general increase in anti-dumping use in thesecountries over this time period, and that industrieslike chemicals and steel are major users acrosscountries. It is found that the industries thatsuccessfully pursue new import protection via anti-dumping have the following characteristics: theyare larger, they face substantial import competitionand more rapidly declining industry output, andthey are more likely to have been confronted withnegative exchange rate and real GDP shocks. Theresults by the author are statistically andeconomically significant, and they are robust tosubsamples of data. Nevertheless, the results arethe average across countries, and estimates oncountry-specific subsamples of data indicatesubstantial heterogeneity in the key determinantsof anti-dumping use at the industry level. Thishighlights both the flexibility of the trade policyinstrument, and the lack of discipline that WTOrules have likely had on limiting its use during thistime period.

Understanding the causes of developingcountry’s use of anti-dumping is important for anumber of reasons. First, many of these countriesare increasingly taking on the WTO commitmentsthat restrict their ability to use other trade-restricting policies. The resulting pattern of anti-dumping import protection may thus be anincreasingly important indicator for their overallpattern of industrial import protection.Furthermore, the increase in anti-dumping useby developing countries raises the concern thatmuch of the trade liberalization commitmentsthey undertook as part of the Uruguay Roundnegotiations may be offset de facto by newprotection. However, some analysts havesuggested a potentially important function of theanti-dumping undertaken by these developingcountries. Finger and Nogués (2005), for example,contains arguments that anti-dumping in manyof the Latin American countries in author’ssample helped provided an escape valve tomanage an overall programme of tradeliberalization. The theory is that anti-dumpingmay positively affect the sustainability of theoverall liberalization commitment and/orincrease a country’s ex ante willingness to takeon more extensive liberalization commitmentsthan it would take on without such an option.

Even if anti-dumping contributes to acountry’s process of trade liberalization, it isequally important to identify the potential long-term economic costs of this contribution. As acaveat, the author concludes by pointing to someof the costs experienced by the historical usersof anti-dumping where the policy has a longertrack record. First, there is evidence that it isdifficult for governments to remove an anti-dumping measure once it has been imposed andan industry is benefiting from the protection itprovides. While Article 11 of the WTO Anti-dumping Agreement introduced a mandatory 5-year “sunset review” investigative procedure foreach imposed measure, evidence for the USsuggests that this requirement has little impacton the removal of already imposed measures(Moore, 2006; Liebman, 2004). Furthermore,among WTO members, there is no historicalprecedent for a country that has been an intensiveuser of anti-dumping suddenly to curtail that use(Zanardi 2004; table 2). These combined findingssuggest that over time, the cumulative impact ofimposed anti-dumping measures may besubstantial even though each distinct new ADinvestigation may cover only a few products andmay thus seem to pose little overall economicthreat. Indeed, in a study of the cumulative effectsof the US use of anti-dumping law, Gallaway,Blonigen and Flynn (1999) conclude that US-imposed import protection under anti-dumpingmade it the second most costly trade policyprogramme in terms of lost US economic welfarein 1993, trailing only the Multi-FibreArrangement.

Anti-Dumping Law and Practice: An IndianPerspective by Aradhna Aggarwal, ICRIERWorking Paper No. 85, April 2002, www.icrier.org.

TRADE policy regimes in most countries havetransformed from inward oriented protectionistregimes to more outward and liberal traderegimes. However, any government thatmaintains a liberal trade policy is subject topressures for temporary protection to specificindustries. GATT therefore contains somecontingent measures, which permit the signatoriesto withdraw their normal obligations underspecified circumstances and impose higher



protection against import of one or more goodsfrom one or more countries. Contingent protectionmeasures fall under three categories – anti-dumping,countervailing and safeguard measures.

The present study focuses on anti-dumpingmeasures. Broadly speaking a product is said tohave been dumped if it is introduced into thecommerce of another country at less than thenormal value of the product and it causes/threatens material injury to an establishedindustry of the country. Article VI of the GATTstipulates that ‘in order to offset or preventdumping a contracting party may levy on anydumped product an anti-dumping duty notgreater in amount than the margin of dumping inrespect of such countries’. Almost all WTOmember countries have adopted/amended theiranti-dumping legislation largely in accordancewith the GATT provisions to deal with dumpedimports. Some of the countries that are notmembers of WTO, have also acquired their anti-dumping legislation. Almost 90 per cent of totalworld imports are now entering countries inwhich anti-dumping laws are in place.

There has been a spectacular growth of anti-dumping investigations in recent years. Thenumber of such investigations launched in 1999was more than double that of those started in1995. It increased from around 156 in 1995 to 358in 1999

(WTO, 2001). Moreover, the use of anti-

dumping is no longer confined to a limitednumber of industrialized countries. A largenumber of developing countries are nowlaunching anti-dumping investigations. The shareof developing countries in total cases was 10 percent at the beginning of the 1990s; it is almost 50per cent now. A large-scale recourse to anti-dumping has raised fears among researchers,analysts and specialists of its (mis)use as aprotectionist measure. While some have raisedquestions about the ambiguities in anti-dumpingregulations and procedures, others havequestioned economic rationale behind suchactions. Economic analysis by many scholarssuggests that anti-dumping legislation iseconomically inefficient and that anti-dumpingpractices do not conform to the economicexplanation of protection [Hutton and Trebilcock1990, Hyun Ja Shin 1998, Bourgeoise and Messerlin

1998, Willig 1998, Leclerc 1999, Prusa and Skeath2001]. The analyses of the legal provisions andanti-dumping practices in various countries[Murray and Rousslang 1989, Lindsey 2000,Araujo et.al 2001, Vermulst 1989, Tharakan 1994,1995, Didier 2001, Hsu 1998, Almstedt andNorton 2000 among others], at the same time,indicate that the anti-dumping code is vague andthat this vagueness has allowed the countries tohave their own interpretation of the law. As thereare ambiguities in the very definition of dumpingand in every step of calculating dumping andinjury margin, such ambiguities facilitate dumpingfindings (see, Tharakan 1991,1996,1999 Tharakanand Waelbroeck 1994).

The paper aims at addressing the issuesconcerning anti-dumping system in the Indiancontext. India has emerged as one of the mostfrequent users of anti-dumping measures amongthe developing countries. The first anti-dumpingduty in India was levied in 1993. Between 1995 and2000 India initiated 176 cases (individual country-wise) which is 12 per cent of the total cases initiatedover the world.

The analysis is organized in two sections.Section II of the paper analyzes various economicjustifications offered to support anti-dumpinglegislation and explores whether there are anyreasons based on economic efficiency to supportthe imposition of anti-dumping duties in India.It addresses the questions: What are the differentforms that dumping may take? Under whatconditions might dumping be harmful? Whatindicators could help determine whether theseconditions will be met in practice? Have actualanti-dumping cases in India met these conditions?Section III addresses anti-dumping related issuesin India at the legal and the operational level. Itexamines anti-dumping provisions and theadministration of these provisions in India. Whileanalyzing the legal and operational aspects of theanti-dumping legislation, this study heavilydraws on the existing studies, as well as the anti-dumping provisions in the selected active usercountries - US, Canada, European Union, Mexico,Argentina, Brazil and Korea. Finally, Section IVconcludes the analysis by drawing policyimplications for reforming the anti-dumpingsystem.



The paper provides some in-depth analysisand useful findings. The paper provides manyeconomic perspectives and examines whether thepolicy could be justified using economicarguments. The most frequently offeredjustification for anti-dumping laws is theprevention of predatory pricing. The paperexamines whether predatory behaviour wasactually present when protection was granted.The analysis was carried out with the aid of fourcriteria, which, it was argued, must be met ifpredatory dumping is to be a likely explanation:the number of foreign sellers should be small;the share of subject countries should be high intotal imports; import penetration should be high;and finally, exporters should be enjoyingdominant position in their markets. Cases thatfail to meet any of these criteria probably do notinvolve predatory dumping. Applying thesecriteria to anti-dumping investigations in Indiabetween 1993 and 2001, this paper found thatthey were met only in a few cases. Although themethodology and the data set were subject tosevere limitations and could not be expected toidentify accurately every instance of predation,the analysis did indicate that anti-dumpinginvestigations in India did not deal withpredatory behaviour in general. The paper alsoexamined whether the anti-dumping actions couldbe justified on the grounds of the optimal tariffargument and the strategic trade policyarguments. The analysis indicated that conditionsattached with these arguments were not satisfiedin the Indian case. It may therefore be concludedthat in the majority of the cases anti-dumpingpolicy cannot be justified on economic grounds.Preliminary evidence presented in the paperindicates that the political economy argument isthe strongest argument in explaining India’scurrent anti-dumping actions. Such actions havegiven protection to highly concentratedindustries. Dominant producers lobby and litigateanti-dumping cases. In the process, they incurhuge expenditure sacrificing economic efficiency.Besides, since most cases are in the intermediateproducts’ markets higher prices may be havingadverse effects throughout the economy. Onemay therefore conclude that anti-dumping policythat is designed to ensure fair competition andimprove economic efficiency may in fact reduce

them. These results are consistent with evidencereported elsewhere in the literature.

Analysis in Part II focused on legal provisionsand discussed shortcomings in the anti-dumpingcode in India. As per the agreement, India hasspecially undertaken to bring its anti-dumpinglegislation in conformity with the anti-dumpingagreement. However, it would still requiredrafting of regulations to fill gaps in the anti-dumping agreement, to address issues where theagreement explicitly offers members choicesbetween different approaches. These are forinstance, treatment of various adjustments,definition of control, consumer interest, reviewmechanism and so on. Several ambiguities in thelegal provisions such as a number of allowableadjustments with limited interpretation; the useof constructed normal and export values andunrealistic adjustments, use of surrogate countrymethodology for non-market economies,asymmetrical comparisons between the exportand normal values introduce bias in favour offinding positive dumping margins. Determinationof injury margin is subject to even more severeambiguities and is highly discretionary. Theadministrative procedure is considered highlyconfidential increasing the risk of its misuse. Tominimize the manipulation of the law forprotectionist purpose and to limit discretionarypowers of the authorities, more explicit rulesshould be developed and definitions of differentconcepts used in the process should be givenclearly and the procedure of determiningdumping should be made more transparent.

It may, however, be noted, that further fine-tuning and refining of the anti-dumping policy isnot the answer to prevent its misuse. Scholars arguethat the antidote is competition policies. Effortsshould be directed at integrating anti-dumpingpolicy with the competition policies. Thecompetitive merits of anti-dumping requests in thatcase will be evaluated by the competitionauthorities using the same standards and theframework of competition policies. This will resultin the adoption of stricter criteria for determiningpredation in such cases and will prevent its misuse.Moreover, the injury standard for anti-dumpingcases should also be brought closer to the antitruststandard, which takes into account the behaviour’s



effect on the competitive structure of the industryas a whole, rather than the material injury it causesto domestic firms. This, however, requires theimplementation of comprehensive competitionpolicies and credible enforcement agencies. Thishas not been the case in India. The existing legalframework is weak and has been marked by anotable lack of economic analysis in itsimplementation. The current law does not evenhave a properly defined concept of predatorypricing. In similar cases of alleged predatorypricing, the Commission used different standardsand came to very different conclusions. In recentyears, there seems to have been a growing use ofthe section of the Act dealing with predatorypricing in cases dealing with international trade(the case of soda ash from the US). However,evidence suggests that the current law is notefficient in tackling such cases. Some scholars inIndia therefore argue that the use of competitionpolicy framework for anti-dumping actions maynot prevent their misuse. However, the problemis due to weak and ineffective law and thesolution is: make it more effective. The newcompetition policy bill has been pending with theparliament. It should be of utmost importance toget it passed and integrate the anti-dumpingpolicy with this law.

The paper concludes by highlighting that thefirst best option would be to abolish anti-dumping altogether. Governments must attemptto dismantle the anti-dumping mechanism andmerge it with the competition policy. While thiswould be preferable, it may not be feasible inpractice to pursue it unilaterally. It could bepursued through bilateral agreement or in thecontext of plurilateral arrangements. The twoinstances - the EEC and the ANZCERTA, ofsuccessful abolition of the anti-dumping lawindicate that there is possibility of doing awaywith this form of protection within the frameworkof regional integration agreements. Countriescould also negotiate “cease-fire” arrangements onanti-dumping measures with those major tradingpartners who arewilling to reciprocate throughbilateral agreements. Another option would beto follow a strict predation standard ininvestigating anti-dumping cases and limit thescope of anti-dumping to predatory cases alone.This requires a major revision of the definition

of dumping in the next round of multilateralnegotiations limiting the concept of anti-dumpingto predatory pricing. The national authorities canthen pattern their anti-dumping procedures alongthe lines used by competition authorities incountries where competition law is welldeveloped.

Some Aspects of Anti-dumping In Law andPractice by Raj Krishna, www.kita.net

THE paper tries to suggest that in recent years anti-dumping (hereinafter sometimes “AD”) has beencatapulted to the forefront of the mostcontroversial practices in international trade.While politicians scarcely hide their support foranti-dumping, there is little love lost between itand economists as well as trade reformers.Interestingly in World Bank’s trade policy loansor loans in which trade policy reforms are asignificant element, anti-dumping has generallynot been a major issue either within the Bank orbetween the Bank and the borrowingGovernment. In most cases anti-dumping hasbeen dealt with according to the exigencies ofthe situation. In view of the importance of anti-dumping to international trade and the fact thatStates do not appear to be too eager to renounceit in the near future, this paper discusses somesignificant issues involved and the changesintroduced by the Uruguay Round of tradenegotiations, with the hope that such discussionwill be useful to policy- and decision-makers inthe international trade arena.

The last fifteen years have witnessed aphenomenal growth in the literature relating todumping in international trade. The politicians,economists and lawyers have all participated in theongoing debate on dumping with a zeal that issomewhat unprecedented even in respect of a tradeissue. To a considerable extent the intensity of thedebate is the direct outcome of the proliferation ofanti-dumping laws and the increase in the incidenceof the anti-dumping actions in the principalpractitioners of this art among the developedcountries and some developing countries who seemwell set to catch up with the former. Although bothCanada and US have emerged as major users ofanti-dumping and countervailing against each otheras well as against other countries including



developing countries and the US is regarded as the“world’s leading prosecutor of unfair trade”, Brazil,Korea and Mexico “have been rapidly attemptingto turn the tables.” According to the USInternational Trade Commission (USITC), from 1980through 1993, 682 anti-dumping and 358 CVD caseswere filed in the United States. Of these, 39.4 percent of the anti-dumping and 21.2 per cent of CVDcases resulted in affirmative final determinationsand remedies.

Anti-dumping and CVD investigationsdramatically increased during the 1980s. Boltuckand Litan show that between 1980-89, the numberof anti-dumping investigations in the US alonereached 451 and that of CVD to 301 and that whilethe majority of investigations related to steel andlumber products even products of everyday usehave not escaped such investigations. During1980-89, 1789 AD investigations were launchedin the US, EU, Australia and Canada. The numberis much larger if investigations under variousmodalities of safeguard actions are taken intoaccount.

In the last two years, however, as reportedto GATT/WTO, a downward trend in the anti-dumping actions taken globally is discernible.During the period 1 July 1993 – 30 June 1994 thetotal number of anti-dumping investigationsreached 222, two less than the previouscorresponding period. The initiation of actionsreported was: EU (47), US (47), Australia (45),Brazil (30), Mexico (23), Canada (22), NewZealand (2), India (1), Japan (1) and Korea (4).During the period 1 July 1994-30 June 1995, thetotal number of anti-dumping investigationsdeclined further. Of the 142 investigationsinitiated during this period, Argentina reported(6), Australia (6), Brazil (12), Canada (9),Colombia (1), EU (37), India (9), Korea (3), Mexico(18), New Zealand (9), Singapore (2), and the US(30). By June 1995, the total number of measuresin force was 724 of which the US accounted for(305), EU (178), Canada (91), Australia (86) andMexico (42).

With the increase in its pendinginvestigations, Mexico has now earned thedubious distinction of having the greatest anti-dumping caseload in the world. A recent entrantinto this field is India and China is likely to follow

soon. Along with trade liberalization measuresof the early 1990s, India energized its anti-dumping procedures which had been lyingdormant in the statute book for about a decade.By January 1995, one final determination ofdumping had been made and ADD imposed, oneprovisional anti-dumping ADD imposed and sixinvestigations were in the pipeline. From 1993through July 1996 about 40 complaints are saidto have been received. Another new user of anti-dumping is Thailand. Two investigations havebeen carried out so far with one resulting in theimposition of anti-dumping duty against India.The spread of anti-dumping actions to developingcountries was anticipated and should not comeas a shock or surprise.

While the number of countries resorting to anti-dumping weaponry has increased, the overallgrowth rate of AD actions, as pointed out earlier,appears to be slowing down for the principal users.This may very well be the result of the enhanceddiscipline introduced by the Uruguay Round oftrade negotiations.

Anti-dumping actions have often proved to bedilatory and cumbersome. At times more than 25companies have been subject to investigations. Thefiling of 72 trade cases against 20 countries by theUS steel producers in 1992 and the subsequentimposition of preliminary ADD and CVD“provoked outrage in the world steel community.”The US Department of Commerce ruled that steelproducts from 19 countries were being dumped inthe US.

The paper finally concludes that the alarmingincrease in the number of anti-dumping actionspursued by the developed and developingcountries has caused considerable concern amongeconomists and trade reformers. These concernshave led to the suggestions of substitutingantitrust principles for anti-dumping laws andregulations or for using safeguard measures underArticle XIX of GATT 1994 and the URSA. At thecurrent stage of the development of internationaltrade law neither proposal appears feasible.Moreover, anti-dumping actions have become afact of life and the international communityrecognizes such actions as the only legitimate toolto combat dumping as defined by and determinedin accordance with law. Despite the urgings in



some quarters neither municipal legal systems norinternational agreements have mandated an“economy-wide” cost-benefit analysis ofproposed anti-dumping actions. Due to political,technical and other implications, the acceptanceof such a methodology in the near future isunlikely. The Uruguay Round Agreements(URAA) Act has enhanced the discipline andmade a number of improvements, although itcannot claim to have plugged all loopholes forthe misuse of anti-dumping. In those matterswhere URAA is silent, ambiguous or providesroom for flexibility in adopting a rule, nationalauthorities should adopt a less trade restrictiverule or practice. A case in point is the US practicerelating to voting in the ITC. A 3-3 vote in ADand CVD investigations constitutes an affirmativedecision. It will be preferable to require a clearmajority rather than to treat an evenly divided

vote as sufficient to establish a finding of injury.The URAA in conjunction with the DisputeSettlement Mechanism of the WTO is expected tofurther curb the proliferation and misuse of anti-dumping. Thus, a US business executive, Intel’sMaibach, is quoted as observing: “Almost everystep of the procedure is going to be more difficultfor United States petitioners.. . Higherrequirements for information will make it moredifficult to file complaints... Proving injury willbe harder because of changes in standards thatrelate to proof of injury... Proving the actual sizeof dumping margins will also be more difficultbecause of technical changes affecting how profitsare calculated and other factors... Cases will alsobe likely to end up before a World TradeOrganization panel, which may have judges thatare less sympathetic, and possibly less objective,in interpreting dumping laws...”

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No.14/25/2012-DGAD: M/s Gold Plus GlassIndustry Ltd., M/s HNG Float Glass Ltd. and M/s Saint-Gobain Glass India Ltd., have jointly filedan application before the Designated Authority(hereinafter also referred to as the Authority) inaccordance with the Customs Tariff Act, 1975 asamended from time to time (hereinafter alsoreferred to as the Act) and Customs Tariff(Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and forDetermination of Injury) Rules, 1995 as amendedfrom time to time (hereinafter also referred to asthe Rules) for initiation of anti-dumpinginvestigation concerning imports of Clear FloatGlass (hereinafter also referred to as the subjectgoods), originating in or exported from Pakistan,Saudi Arabia and United Arab Emirates (UAE)(hereinafter also referred to as the subjectcountries).

2. And whereas, the Authority prima facie finds thatsufficient evidence of dumping of the subject goods,originating in or exported from the subject

countries, ‘injury’ to the domestic industry andcausal link between the alleged dumping and ‘injury’exist to justify initiation of an anti-dumpinginvestigation; the Authority hereby initiates aninvestigation into the alleged dumping, andconsequent injury to the domestic industry in termsof Rule 5 of the Rules, to determine the existence,degree and effect of any alleged dumping and torecommend the amount of anti-dumping duty,which if levied, would be adequate to remove the‘injury’ to the domestic industry.

Domestic Industry & ‘Standing’

3. The Application has been filed by M/s Gold PlusGlass Industry Ltd., M/s HNG Float Glass Ltd. andM/s Saint-Gobain Glass India Ltd., on behalf ofthe domestic industry. Apart from the abovedomestic producers M/s Asahi India Glass Limited(AIS) and Gujarat Guardian Ltd. (GGL) alsoproduce the subject goods. Since AIS is an importerfrom the subject countries and GGL has its relatedparty in Saudi Arabia, the Authority proceeds to

To be published in Par-I Section I of the Gazette of India Extraordinary

No. 14/25/2012-DGADDepartment of Commerce,

Ministry of Commerce & Industry(Directorate General of Anti-Dumping & Allied Duties)

Udyog Bhawan, New DelhiDated the 11th April 2013

INITIATION NOTIFICATIONSubject: Initiation of Anti-dumping investigation concerning imports of Clear Float Glass

originating in or exported from Pakistan, Saudi Arabia and UAE.


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consider the applicant eligible as part of thedomestic industry and does not consider AIS andGGL as part of the domestic industry. As per theevidence available on record, the production ofM/s Gold Plus Glass Industry Ltd., M/s HNGFloat Glass Ltd. and M/s Saint-Gobain Glass IndiaLtd, accounts for a major proportion of the totaldomestic production of the like article and is morethan 50% of Indian production of the like article.The Authority, therefore, determines that theapplicant constitutes domestic industry within themeaning of Rule 2 (b) and the application satisfiesthe criteria of standing in terms of Rule 5 (3) ofthe Rules supra.

Product under Consideration

4. The Product under Consideration in the presentapplication is “Clear Float Glass of nominalthicknesses ranging from 4mm to 12mm (bothinclusive)”, the nominal thickness being as perBIS14900:2000 (hereinafter referred to as the “subjectgoods” or the “Product under Consideration”). Thesubject goods are used in interior construction insuspended ceiling and partition applications. Thesubject goods are classified under Chapter Heading70 “Glass and glassware”. The classification at the8-digit level is 70051090 even though the same arebeing classified and imported under various sub-headings like 7003, 7004, 7005, 7009, 7019, 7013, 7015,7016, 7018, 7020, etc. The customs classification isindicative only and in no way, it is binding uponthe product scope of the investigation.

Like Article

5. The applicant has claimed that the subject goods,which are being dumped into India, are identicalto the goods produced by the domestic industry.There are no differences either in the technicalspecifications, quality, functions or end-uses of thedumped imports and the domestically producedsubject goods and the product under considerationmanufactured by the applicant. The two aretechnically and commercially substitutable andhence should be treated as ‘like article’ under theRules. Therefore, for the purpose of the presentinvestigation, the subject goods produced by theapplicant in India are being treated as ‘Like Article’to the subject goods being imported from thesubject countries.

Countries Involved

6. The countries involved in the presentinvestigation are Pakistan, Saudi Arabia and UnitedArab Emirates.

Normal Value

7. The applicant has constructed the normal valuesin respect of these subject countries stating thatneither they were able to get any documentaryevidence or reliable information with regard todomestic prices of the subject goods in the subjectcountries nor the same are available in the publicdomain. The Authority has prima-facie consideredthe normal value of subject goods in subjectcountries on the basis of constructed values asmade available by the applicant for the purpose ofinitiating this investigation.

Export Price

7. The applicant has claimed export prices on thebasis of data obtained from Infodrive India Pvt.Ltd, Kolkata. Price adjustments have beenallowed on account of ocean freight, marineinsurance, inland transportation, commission,port handling, port charges, etc. to arrive at thenet export price. There is sufficient evidence ofthe export prices of the subject goods from thesubject countries to justify initiation of an anti-dumping investigation.

Dumping Margin

8. The normal value and the export price have beencompared at ex-factory level, which shows primafacie significant dumping margin in respect of thesubject countries. There is sufficient prima facieevidence that the normal value of the subject goodsin the subject countries are significantly higher thanthe ex-factory export price, indicating, prima facie,that the subject goods are being dumped into theIndian market by the exporters from the subjectcountries. The dumping margins are estimated tobe above de minimis.

Injury and Causal Link

9. The applicant has furnished evidence regardingthe ‘injury’ having taken place as a result of thealleged dumping in the form of increased volumeof dumped imports, price undercutting, price


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underselling, price suppression and decline inprofitability, return on capital employed, cash flow,market share, production, capacity utilization, etc.of the domestic industry. There is sufficient primafacie evidence of ‘injury’ being suffered by thedomestic industry caused by dumped imports fromsubject countries to justify initiation of an anti-dumping investigation.

Period of Investigation (POI)

10. The Period of Investigation, as proposed bythe applicants, was from 1st October 2011 to 30thSeptember 2012 (12 months). However, to makerequired analysis on the basis of more updateddata, the Authority has determined the POI as1st October 2011 to 31st December 2012 (15months). For the purpose of analyzing injury, thedata of previous three years, i.e. April 2009-March 2010, April 2010–March 2011, April 2011-March 2012 and the period of investigation willbe considered.

Submission of Information

12. The known exporters in the subject countriesand their Governments through their Embassies inIndia, importers/users in India known to beconcerned and the domestic industry are beinginformed separately to enable them to file requiredinformation in the form and manner prescribed.Any other interested party may also make itssubmissions relevant to the investigation within thetime-limit set out below and write to: TheDesignated Authority, Directorate General of Anti-Dumping & Allied Duties, Ministry of Commerce& Industry, Department of Commerce, UdyogBhawan, New Delhi -110011.

Time limit

13. Any information relating to this investigationshould be sent in writing so as to reach theAuthority at the above address not later than 40days from the date of publication of this notification.If no information is received within the prescribedtime limit or the information received is incomplete,the Authority may record their findings on the basisof the ‘facts available’ on record in accordance withthe AD Rules.

Submission of Information onNon-Confidential Basis

14. In terms of Rule 6(7) of the Anti-dumping Rules,the interested parties are required to submit non-confidential summary of any confidentialinformation provided to the Authority and if inthe opinion of the party providing such information,such information is not susceptible tosummarization, a statement of reason thereof, isrequired to be provided. In case where aninterested party refuses access to, or otherwise doesnot provide necessary information within areasonable period, or significantly impedes theinvestigation, the Designated Authority may recordfindings on the basis of facts available and makesuch recommendations to the Central Governmentas deemed fit.

15. Notwithstanding anything contained in paraabove, if the Authority is satisfied that the requestfor confidentiality is not warranted or the supplierof the information is either unwilling to make theinformation public or to authorize its disclosure ina generalized or summary form, it may disregardsuch information.

Inspection of Public File

16. In terms of Rule 6(7) any interested party mayinspect the public file containing non-confidentialversions of the evidence submitted by otherinterested parties.

Non-cooperation

17. In case any interested party refuses access toand otherwise does not provide necessaryinformation within a reasonable period, orsignificantly impedes the investigation, theAuthority may record its findings on the basis ofthe facts available to it and make suchrecommendations to the Central Government asdeemed fit.

Sd/-(J.S. Deepak)

Designated Authority

(Source: http://commerce.nic.in/writereaddata/traderemedies/adint_Clear_Float_Glass_Pakistan_Saudi_Arabia_UAE.pdf)

1. India’s Regional Trade Agreements: Impact onIndian Economy, Vijaya Katti, Sunitha Raju andRajan Sudesh Ratna, 2010, ̀ 375

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OCCASIONAL PAPERS

Orders for publications may be sent to:Section Officer (Publications)Indian Institute of Foreign Trade,B-21 Qutab Institutional Area, New Delhi-110016Phones: 26965124, 26965051, 26966563, 26965300Fax: 91-11-26853956, 26859520, 26867851E-mail: [email protected]

1. Competing for the Indian Market: Local Firmsvs. MNCs, Aneel Karnani, 1996, ̀ 50 (out of Stock)

2. Foreign Direct Investment in India: Facts andIssues, B. Bhattacharyya and Satinder Palaha,1996, ̀ 50

3. Regional Trade Enhancement: SAPTA andBeyond, B. Bhattacharyya and Vijaya Katti, 1996,`50

4. Towards Economic Integration throughRegional Trade Blocs, Satinder Palaha andH.L. Sharma, 1996, ̀ 50

5. Duty Free Access to India within SAPTAFramework, B. Bhattacharyya andSomasri Mukhopadhyay, 1996, ̀ 50

6. India’s Trade Liberalisation Since 1991:A Statistical Appraisal, B. Bhattacharyya,Somasri Mukhopadhyay and Bimal K. Panda,1996, ̀ 50

7. Indian Garments Industry in the Post-MFAPeriod, Satinder Bhatia, 1997, `50

8. Impact of Economic Reforms on India’s MajorExports: Policy Guidelines, H.A.C. Prasad,1997, ̀ 50

9. Intellectual Property Rights in the PresentIndian Context, Shahid Alikhan, 1997, ̀ 50

10. India’s Competitiveness in Export of Garmentsin the MFA Phase-Out and Post-MFA Phase-OutPeriods, H. Ashok Chandra Prasad, 1997, ̀ 50

11. Democracy and Human Rights,Justice P.N. Bhagwati, 1997, ̀ 50

12. Currency Turmoil in South East and East Asia:Impact on India’s Exports, B. Bhattacharyya,1998, ̀ 50

13. Chinese Response to Asian Economic Crisis:Implications for India’s Trade,B. Bhattacharyya, 1998, `50

14. Trade and Environment Issue in the WTO:Indian Experience, B. Bhattacharyya andL.D. Mago, 1998, ̀ 50

15. Advent of Euro: Implications for India,B. Bhattacharyya and Vinayak N. Ghatate, 1998,`50

16. Non-Tariff Measures on India’s Exports: AnAssessment, B. Bhattacharyya, 1999, ̀ 50

17. Export Product Diversification in the USMarket Indian Experience, B. Bhattacharyya andPrithwis K. De, 2000, ̀ 50

18. Export Performance: IncreasingCompetitiveness through New Sources ofProductivity Growth, B. Bhattacharyya, 2001, ̀ 50

19. Dispute Settlement System under World TradeOrganisation, Sumitra Chishti, 2001, ̀ 50

20. Impact of WTO on Marketing Cooperatives,B. Bhattacharyya, 2002, `50

21. Food Trade, Trade Flows and Trade Policies:A Comparative Analysis of World and India,Sunitha Raju and Tamanna Chaturvedi, 2004, ̀ 50

22. Rules of Origin under Generalised System ofPreferences as a Market Access Barrier toIndian Textiles and Clothing Exports: WithSpecial Reference to US and EU Markets,K. Rangarajan, 2004, ̀ 50

23. Development of an Enduring InvolvementScale Using Flow Concept in HypermediaComputer Mediated Environments,Anshu Saxena and D.P. Kothari, 2005, `50

24. A Review of India-Sri Lanka TradeCooperation, Biswajit Nag, 2006, ̀ 50

25. ASEAN-India FTA: Emerging Issues for Trade inAgriculture, Sunitha Raju, 2010, ̀ 50

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