International Trade L aw |0
Name: Purva Chandrakant Thavi
Year: 04
Semester: 08
Seat No: 18024 (Roll No)
Subject: International Trade Law
Topic: Anti - Dumping Measures under Article VI
of GATT 1994 and the Anti - Dumping
Agreement
Table of Content
Topics Page Number
Meaning of Dumping and Anti – Dumping 01
Article VI of GATT and the Anti-Dumping 01
Agreement
The Anti-Dumping Agreement 02
India and Anti - Dumping Laws 05
ANTIDUMPING MEASURES UNDER ARTICLE VI OF GATT 1994
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Antidumping Measures under Article VI of GATT 1994 and the Antidumping
Agreement
Meaning of Dumping and Anti – Dumping
Dumping, in general, is a situation of international price discrimination, where the price
of a product when sold in the importing country is less than the price of that product in
the market of the exporting country. The contracting parties, as per Article VI of The
General Agreement on Trade Tariff recognizes dumping as when products of one
country are introduced into the commerce of another country at less than the normal
value of the products. Dumping impacts the price of that product in the importing
country, hitting the margins and profits of local manufacturing firms.
For example, if United Nations (US) businesses started selling apples to the India for
less than what they’re worth in the India, then Indian apple producers would have a
hard time selling their products to the domestic market. The goal of dumping is almost
always to gain a competitive advantage in a foreign market.
In order to offset or prevent dumping, a contracting party may levy on any dumped
product an anti-dumping duty not greater in amount than margin of dumping in respect
of such product.
An anti-dumping duty is a protectionist tariff that a domestic government imposes on
foreign imports that it believes are priced below fair market value. In order to protect
their respective economy, many countries impose duties on products they believe are
being dumped in their national market; this is done with the rationale that these
products have the potential to undercut local businesses and the local economy.
Article VI of GATT and the Anti-Dumping Agreement
The GATT 1994 sets forth a number of basic principles applicable in trade between
Members of the WTO, including the “most favoured nation” principle. It also stated that
the imported products should not be subjected to internal taxes or other changes in
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excess of those imposed on domestic goods, and that imported goods in other respects
be accorded treatment no less favourable than domestic goods under domestic laws and
regulations, and establishes rules regarding quantitative restrictions, fees and
formalities related to importation, and customs valuation.
Members of the WTO also agreed to the establishment of schedules of bound tariff rates.
Article VI of GATT 1994, on the other hand, explicitly authorizes the imposition of a
specific anti-dumping duty on imports from a particular source, in excess of bound
rates, in cases where dumping causes or threatens injury to a domestic industry, or
materially retards the establishment of a domestic industry.
The Agreement on Implementation of Article VI of GATT 1994, commonly known as the
Anti-Dumping Agreement, provides further elaboration on the basic principles set forth
in Article VI itself, to govern the investigation, determination, and application, of anti-
dumping duties.
Under Article VI of GATT 1994, and the Anti-Dumping Agreement, the members can
impose anti-dumping measures, if, after investigation in accordance with the
Agreement, a determination is made –
a) that dumping is occurring,
b) that the domestic industry producing the like product in the importing country is
suffering material injury, and
c) that there is a causal link between the two.
In addition to substantive rules governing the determination of dumping, injury, and
causal link, the Agreement sets forth detailed procedural rules for the initiation and
conduct of investigations, the imposition of measures, and the duration and review of
measures.
The Anti-Dumping Agreement
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The Anti-Dumping Agreement of the World Trade Organization (WTO), commonly
known as the AD Agreement, governs the application of anti-dumping measures by
WTO member countries.
All members of the WTO are parties to this Agreement, whose full name is the
“Agreement on Implementation of Article VI of the General Agreement on Tariffs and
Trade 1994”. It went into effect on January 1, 1995.
Any company involved in international trade can benefit from clear and predictable
rules for the application of anti-dumping measures.
The AD Agreement ensures that WTO members will not apply anti-dumping measures
arbitrarily. It provides detailed substantive requirements for determining whether
dumping and injury are, in fact, taking place, and sets forth elaborate procedures that
governments must follow when they conduct anti-dumping investigations and impose
anti-dumping duties. The Agreement ensures that all proceedings will be transparent
and that all interested parties have a full opportunity to defend their interests.
a) Substantive Requirements
Since a determination of dumping requires a comparison between the export price of a
product and its normal value in the exporting country, the AD Agreement sets forth
rules for the calculation of export price and normal value. It then explains how a “fair
comparison” is made between the two. The government conducting an anti-dumping
investigation uses this fair comparison as the basis for determining the “margin of
dumping”.
The government authorities must establish injury to the domestic industry and that the
dumped imports are a cause of that injury. The AD Agreement provides for “cumulative
assessments” of the effects of imports on a domestic industry when imports of a product
from more than one country are simultaneously subject to anti-dumping investigations.
b) Investigations
A government normally initiates an anti-dumping investigation on the basis of a written
application by a domestic industry, although in special circumstances the government
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itself can initiate the investigation on the industry’s behalf. The application must
provide evidence of dumping, injury and a causal link between the two. It must include
a complete description of the allegedly dumped product, information on the like
product produced by the applicant, evidence regarding export price and normal value,
an assessment of the impact of the imports on the domestic industry and information
concerning industry support for the application.
An application will be rejected, according to the Agreement, and an investigation
promptly terminated if the government authorities conclude that there is insufficient
evidence of either dumping or injury. The Agreement provides that unless there are
special circumstances, investigations will be concluded within one year and will
continue in no case more than 18 months after their initiation.
c) Price Undertakings
The Agreement provides that government authorities can suspend or terminate an anti-
dumping proceeding if they receive voluntary undertakings from an exporter that it will
revise its prices or cease exporting to the area in question at dumped prices.
d) Imposition of Anti-dumping Duties
Under the Agreement, it is up to the government of the importing country to decide
whether or not to impose anti-dumping duties. (The Agreement provides an option of
not imposing duties in cases where all requirements for imposing such duties have been
fulfilled, but not all authorities allow such an option.) The amount of the duty set by the
government cannot exceed the margin of dumping, but the Agreement permits it to be
lower if it is adequate to remove the injury to the domestic industry.
Normally anti-dumping duties are applied to all imports of the subject merchandise
made on or after the date on which there is a preliminary determination of dumping,
injury and causality.
The Agreement states that an anti-dumping duty shall remain in force as long as
necessary to counteract dumping that is causing injury. It contains a “sunset” provision
that provides that the duty will be terminated five years from the date of its imposition
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unless the government authorities determine in a review that termination of the duty
would lead to continuation or recurrence of dumping and injury.
e) The Committee and Notifications
The Agreement established a Committee on Anti-dumping Practices, composed of
representatives of each WTO member country. This Committee meets not less than
twice a year and affords members the opportunity to consult on any matters relating to
the operation of the Agreement. Member countries are required to notify this
Committee of their anti-dumping legislation and/or regulations, their anti-dumping
actions and the names, addresses and contact numbers of officials responsible for anti-
dumping matters.
India and Anti - Dumping Laws
The Department of Commerce recommends the anti-dumping duty, provisional or final.
The Department of Revenue in Finance Ministry acts upon the recommendation within
three months and imposes such duties.
To protect local manufacturers from low-cost imports from China, India has levied anti-
dumping duties on Chinese products (5 products), such as certain aluminium goods and
other chemicals, for a period of five years.
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