Introduction

What is dumping?
Dumping is, in general, 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. Thus, in the simplest of cases, one identifies dumping simply by
comparing prices in two markets. Howeer, the situation is rarely, if eer, that simple, and in most
cases it is necessary to undertake a series of complex analytical steps in order to determine the
appropriate price in the market of the exporting country !known as the "normal alue#$ and the
appropriate price in the market of the importing country !known as the "export price#$ so as to be
able to undertake an appropriate comparison.
Dumping, is a pricing practice where a firm charges a lower price for exporting goods than it does
for the same goods sold domestically. It is said to be the most common form of price
discrimination in international trade. Dumping can only occur at places where imperfect
competition and where the markets are segmented in a way such that domestic residents cannot
easily purchase goods intended for export. It is a subtle measure of protection which comes under
the non%tariff barriers and is product and source specific. &ntidumping duties were initiated with
the intention of nullifying the effect of the market distortions created due to unfair trade practices
adopted by aggressie exports. They are meant to be remedial and not punitie in nature. &
harmful to the domestic producers as their products are unable to compete with the artificially
low prices imposed by the imported goods. &s a method of protection to the domestic industries,
anti dumping duties are thus leied on the exporting country which has been accused of dumping
goods in another country. &s the antidumping duty is only meant to proide protection to the
domestic firms in the initial stages, as per the international laws, the antidumping legislations
may last for a maximum period of fie years.

Dumping as an economic phenomenon
The eolution of the term "dumping#
It has long been customary to speak of one market as a 'dumping ground( for the "surplus#
products of another market when the producers of the latter for any reason sell their commodities
in the former at unusually low prices.) *rom this usage it was a natural outcome to speak of
selling in a distant market at reduced prices as "dumping#, but the word used in this sense
appeared not to hae entered into the literature of economics until the first years of the twentieth
century.+ In ),-. and ),-/, the tariff 0uestion was the dominant political issue in 1reat 2ritain,
and in a huge output of polemical literature which marked the tariff controersy.. The term
became well established, and appeared with or without apologetic 0uotation marks in book after
book./ The term "dumping# has since found its way into the economic terminology of the
*rench, 1erman, Italian and probably other languages.3 Initially, it had a ague and uncertain
meaning, and is still used indiscriminately for such dierse price practices such as seere
competition, customs underaluation, "bargain#, "sacrifice# or "slaughter sales#, local price
cutting and selling in one national market at a lower price than in another.4 In recent years,
howeer, the increased use of the term by academic economists with their creditable tendency
towards the exact establishment of terminology and of the deelopment of legislation dealing
with dumping and allied price practices, which made necessary some measure of precision in the
differentiation 5iner Dumping6 & 7roblem in International Trade !),+.$ Ibid. . Ibid. / Ibid. 3
Ibid. 4 Ibid..+ between arious price practices, hae both contributed to the consistency of the
usage.8 9xtensie ariations in the use of the term both as to gist and implication are neertheless
still present.: &ccording to Dale, , the origin of the word "dump# is uncertain. Its usage by the
early nineteenth century had come to mean the act of throwing down in a lump or mass, as with a
load from a cart, and it was then a natural extension to apply the word to the disposal of refuse
and to describe as a dumping ground, a market for the disposal of surplus stock.)- During this
time, "dumping# was used in 9nglish language trade literature to illustrate loosely a situation in
which goods were sold cheaply in foreign markets. Today, howeer, the term is used intentionally
to signify the practice of price discrimination in international trade. The term was applied
persuasiely to describe almost any situation in which goods were sold abroad at cheap prices,
irrespectie of the cause of the cheapness, the insinuation being that the goods were unwanted in
their country of deriation and were exported only to get rid of them.)) 9conomists hae always
defined dumping as transnational price discrimination where prices ary between national
markets.)+ &lthough economists still ob;ect in principle, they now accept that dumping may also
be defined as transnational sale below costs.).
Deardoff % "definition#
"The definition has broadened oer the years, some now consider dumping to include 'sales
Ibid. : Ibid. , Dale &ntidumping <aw in a Trade and <iberal =rder !),,8$ ). >ee further 2eseler
and Williams, who submit that the word "dumping# has been in use since medieal times. It was
used to describe the act of getting rid of something unwanted 0uickly, usually, rubbish. The term
began to be used in connection with International Trade at the beginning of the twentieth century,
during the intense and often hostile controersies on free trade. >ee 2eseler and Williams &nti
Dumping and &nti >ubsidy <aw6 The 9? !),:4$ /). )) Dale &ntidumping <aw ). )+ 5iner
Dumping ). >ee also 9thier "Dumping# ),:+ The @ of 7olitical 9conomy /:8 3-4, >tiglitA
"Dumping on *ree Trade6 The B.> Import Trade <aws# ),,8 >outhern 9conomic @ /-+ /+/.
Deardoff "9conomic 7erspecties of &ntidumping <aw# in @ackson and 5ermulst !eds$
&ntidumping <aw and 7ractice6 & ?omparatie >tudy !),:,$ +.. ). Carceau &ntidumping and
&ntitrust Issues in *ree Trade &reas !),,/$ ))... below costs(, at least
presumptielyD.this alternatie criteria for dumping has gradually ac0uired eleated status of
an alternatie definition#.)/ Howeer, there is no correlation between price discrimination and
sales below cost. >ales below cost may occur with or without discrimination and yet, on the other
hand discrimination may take place without selling below costs.)3 The term dumping is
employed most often, een in careless business language to signify selling the same commodities
at different prices in different markets.)4 ?ommercially, the term is often uncritically extended to
coer arious types of sales at prices lower than those generally current, een if the prices are
uniform to all purchasers.)8 . + The conentional definition of dumping . + ) Transnational price
discrimination practice 7rice discrimination occurs when different units of the same commodity
are sold at different prices for reasons not associated with differences in costs or when different
units of the same commodity are sold at the same price where costs are different.): Dumping
therefore refers to a situation where prices are lower in the importing market than in the domestic
market of the exporter. &ccording to Carceau),, different prices between markets presuppose
that there are two separate markets+- and one market is less competitie than the other.+) )/
Deardoff in @ackson and 5ermulst !eds$ &ntidumping <aw and 7ractice +.. )3 Carceau
&ntidumping and &ntitrust Issues )). )4 5iner Dumping +. )8 Ibid. ): >ee ?lemens "7rice
Discrimination and the Culti 7roduct *irm# ),3)E+ Feiew of 9conomic >tudies who precisely
defined it as "sales of different units at prices which are not proportional to their marginal
costs#. ?ited by Dale &ntidumping <aw +. ), Carceau &ntidumping and &ntitrust Issues )).
+- &ccording to Carceau , the separation of these markets can be either social, geographical,
legal or cultural. Carceau(s analysis of price discrimination is further supported by some
economists. >ee for example, 2oltuck "&n 9conomic &nalysis of Dumping# ),:8 @ of World
Trade /3 3/G 2ello and Holmer "Feiew H Feocation of &ntidumping H ?ounterailing Duty
=rders# ),:3 International <awyer ).), )..8 and 9hrenhaft "7rotection &gainst International
7rice Discrimination6 Bnited >tates ?ounterailing and &ntidumping Duties# ),3: ?olumbia
<aw Feiew //. Carceau states that "classic# price discrimination denotes that6 " !i$ Carkets are
separable. This means customers purchasing the same product in different ./
2usiness rationales for price discrimination
Carceau sets out seeral reasons why an enterprise may want to maintain two different prices, in
two different markets for a certain period of time. *ollowing are some of the reasons outlined by
Carceau6 !a$ When a firm with market power in the exporting country enters a new market
diided by tariff, transport costs, technical standards or other factors, such a firm may maintain
lower prices in the new and more competitie market at a profitable leel without any desire or
capacity to eliminate competition in the new market. !b$ &s a way of achieing economies of
scale, be it for promotional reasons or as a way of testing a new product, a producer may need to
expand into a more geographical market. If prices are controlled say by a cartel or goernment in
the first market, the reduction of price occasioned by the increased output may take place only in
the second market. !c$ In a period of depression or excess capacity, a producer actie in two
markets may be able to lower its prices in one market only if prices are regulated by a cartel or
goernment in one of the markets.markets cannot trade among themseles, thereby e0ualising the
price through arbitrageG !ii$ The firm has market power in at least some markets. Carket power
means the firm will not lose all sales if it raises its price. Faising the price will hae two effects
on the reenue of such a firm6 it will increase due to the higher unit price, but fall due to smaller
sales olume !iii$The demand cures for different markets hae different elasticities !defined as
the percentage change in 0uantity sold caused by a one percent increase in price$. This means
customers are more responsie to price changes in some markets than in others. The firm will
charge a lower price in the market where customers are more price responsie.# >ee Carceau
ibid. +) The elasticity of demand and supply must differ between the two markets. >ee Carceau
ibid..3 !d$International predation is also another possibility in the sense that a firm without
market power may use price discrimination and cross subsidiAe a low price market with profits
from a high price market in order to eliminate competition in the low price market and eentually
reap monopolist profit there. The first three hypothetical examples outlined by Carceau aboe,
depict a situation where the producer may hae the intention of raising its price rapidly when
production starts. He !the producer$ may not hae the capacity to predate, that is, to eliminate
competition from all sources in order to collect monopolist profits assuming that firms are drien
only by profit maximiAation interests.++ &lthough the formulation of price discrimination
coneys the essential idea of a supplier selling the same product at different prices in different
countries, it neertheless re0uires some elucidation.+. *irstly, price discrimination may not only
describe the sale of the same commodity at two or more pricesG it may also describe the sale of
different commodities at prices which are not proportional to their marginal costs.+/ In this
respect, Dale+3 gies an example of a multi product firm whose machinery and e0uipment can be
freely adapted to the production of different commodities, and whose resources are therefore said
to be internally transferable. 7rice discrimination occurs where the profit margin, defined as the
mark up on marginal cost, aries as between the different commodities produced. It is important
to note that price discrimination does not presuppose any price ariation at the point of sale.+4
&ccording to a B>& goernment commissioned report6 ++ Ibid. +.Ibid. +/ Iessel "7rice
Discrimination in Cedicine# ),3: @ of <aw and 9conomics +. Dale &ntidumping <aw +. +4
Ibid..4 "7rice discrimination in the economic sense occurs wheneer and to the extent that there
are price differences for the same product or serice sold by a single seller and not accounted for
by cost differences or by changes in the leel of demand or when two or more buyers are charged
the same price despite differences in the cost of sering them. In order to know when there is or
not price discrimination, in the economic sense, between two or more buyers, it is necessary to
know not only the price but also the total costs applicable to each class of transaction under
comparison#. This 0ualification has particular releance to price differentials in international
trade, where freight, packaging, insurance and extended credit terms may inole the exporting
manufacturer in substantial selling costs oer and aboe those associated with home market
sales.+: =n the other hand, economies of scale arising from large indiidual orders may tend to
lower the cost of exports relatie to domestic sales.+, *ull allowance must be made for all such
cost differences in order to establish whether or not price discrimination, and therefore dumping,
is taking place..- In international trade, price differentials may also reflect the incidence of duties
and border tax ad;ustments. The importing country may impose tariff duties on a product while
the exporting country may remit customs duties on imported materials used in its manufacture.
>imilarly, the importing country normally applies its own domestic excise taxes to sales of the
product while the exporting country exempts from its local excise taxes all products destined for
export..) Therefore, in order to identify the existence of dumping, import and other charges
imposed by the importing country must be subtracted from the export price, and allowance made
for exemption from domestic duties and excise taxes by adding back the appropriate amounts. In
this way an export price is arried at which is directly comparable to the home market price..+
Time reference must be included in any comprehensie definition of price discrimination, and it
is customary to specify that the sales in 0uestion must be simultaneous or nearly so. In dumping,
howeer, because of the considerable time that +8 Feport of the &ttorney J 1eneral(s Kational
?ommittee to >tudy &ntitrust <aws ),33. +: Dale &ntidumping <aw +. +, Ibid. .- Ibid.
.) Ibid. .+ 7igou 9conomics of Welfare !),+-$ +/: J +/,..8 may elapse in international trade
between entering into contractual relations and final deliery, it is important to note that the
releant point in time for the purpose of price comparisons is the date of the contract and not the
date of shipment... The definition of dumping as price discrimination between national markets
embraces discrimination between two or more foreign markets as well as between home and
foreign markets. Cuch focus will howeer, be on the second type of discrimination, since it is this
practice which has prooked the industrialised world into introducing antidumping legislation as
noted in the preious chapter. 7rice discrimination is therefore possible when a seller is able to
identify separate markets for its product and charge a higher price in the market that attaches a
greater utility to the product../ The seller must possess sufficient market power to hae some
autonomy in its pricing decisions, and there must be some barrier between the markets so that the
lower priced goods are not resold in the higher priced market by an arbitrageur..3 7rice to price
discrimination occurs because the dumping industry en;oys some degree of market dominance in
its own domestic market which enables it to maintain a higher price in the home market than
export markets..4 This may arise out of protection of the home market from import
competition..8 Thus, price discrimination makes a lot of commercial sense een if no profits are
made on export sales..: Dumping therefore becomes, in this respect, a mechanism through which
countries may achiee full utilisation of their plants. It enables producers to maximise utilisation
rates by .. Fobinson 9conomics of lmperfect ?ompetition !),..$ +-,. 7igou reaches a similar
conclusion. ?f 7igou ibid. &lso see Cachlup "?haracteristics and Types of 7rice
Discrimination# in 2usiness ?oncentration and 7rice 7olicy !),33$ .,8G 9dwards "The &nalysis
of =utput under Discrimination# ),3- 9conometrica 2altimore )4.)8+ and >cherer Industrial
7ricing6 Theory and 9idence !),8-$ ?hapter 4. ./ @ackson et al <egal 7roblems of
International 9conomic Felations6 ?ases, Caterials and Text !),,3$ 48.. .3 Ibid. .4 Ibid.
.8 This can be achieed through restrictions on market entry or through natural or man
made factors. .: @ackson et al <egal 7roblems of International 9conomic Felations 48...:
increasing output without causing domestic prices to fall since the surpluses are disposed of
outside the domestic market.., . .
Transnational sale below costs
In recent years, it has become accepted internationally that antidumping laws apply when an
exporter exports goods at prices that do not coer the cost of their production./- &ccordingly, the
practice of dumping is not only limited to price discrimination, but also encompasses sales below
cost of production. &t first sight, it may strike one as unfair to sell goods at a price that is below
what it costs to produce them. =n reflection, howeer, it is more useful to consider the
appropriateness of such actiity in light of its duration and motiation./) >ince a company would
fail if it priced its product below cost in the long run, below cost sales are likely to be temporary.
The moties for such sales ary. They could be made by the predatory competitor in order to
destroy its competition./+ &ccording to @ackson et al it is more likely that below cost
>ales occur because
!a$ The seller wishes to gain market shareG or
!b$ The seller beliees it is more profitable !in the sense of aoiding een greater
losses$ to sell goods at a loss in the short run than it is not to sell any goods at all. & desire to gain
market share may be motiated by the existence of unused capacity or by a belief that producers,
not haing a certain minimum market share will not be able to surie. Whateer the reason, the
displacement of a competitor by another is not cause for concern, assuming the behaiour of the
winner is not predatory./. 2elow cost dumping can occur because the industry which is dumping
possesses a structural characteristic which enables it to export its products below the cost of
production for a ., Ibid. /- Ibid. /) Ibid. /+ Ibid. /. Ibid. ., sustained period without going out
of business. >uch characteristics ary widely but may include the existence of some form of
goernmental support, the ability to cross subsidiAe losses in one product area with profits made
in other areas, or simply because of the aailability of enormous resources which make it possible
to sell at a loss for an extended period of time.
Fationales for below cost sales
In Western economics, the first ob;ectie of firms is to maximiAe profits in the long term.// In
accounting terms, howeer, producing an extra good should yield at least the extra costs of
producing that extra good the so called marginal costs of production. &s long as marginal costs
are coered, producing at a price where at least some of the fixed costs are recouped can therefore
be considered rational and sound business. &ccording to Carceau it is therefore reasonable for a
firm to continue producing without recouping its full costs when for instance6
!a$ the testing and promotion of new products may ;ustify sales below total aerage costs and
een below marginal costs, for a certain period of timeG
!b$ the market depresses or there is excess capacity due to an erroneous decision,then an
enterprise with high fixed costs may keep on selling below aerage total costs of production in
order to minimise its lossesG
!c$ an enterprise is competing to enter a new market. >uch an enterprise will be willing to
relin0uish profits, therefore selling below total ariable costs for a while in order to make itself
known to consumers with the assumption that it will soon sell at prices that coer full costsG
!d$ an enterprise wants to maximiAe sales instead of profits without any intention of eliminating
competitors. This is ob;ectionable from the point of iew of // Ibid. /3 Carceau &ntidumping
and &ntitrust Issues. /4 Ibid./- competitors because excess output will depress prices but
consumers will gain, proided the situation does not turn into predationG
!e$ the uncertainty about new markets leads producers to make decisions on price in contracts
before export costs are fully known. 7rices may therefore end up not coering marginal or een
ariable costs. This situation howeer, represents a wrongful ealuation of the costs rather than a
decision not to coer marginal costs.
?lassification of dumping
9conomists hae debated whether, and if so, under what circumstances dumping takes place./:
5iner identifies three types of dumping situations6 sporadic or temporary dumping, short run or
intermittent dumping and long term or continuous dumping./, >poradic dumping is "dumping
which is occasional and casual, which occurs only in scattered instances and irregular interals
and which is not the manifestation of a definitely established price policy on the part of the
dumping concern.#3- There is a general agreement that under certain rather limited
circumstances, there is a clear case for the profitability of dumping to the dumping concern.3) In
the case of sporadic dumping the motiation is to dispose of goods in the short run to get rid of
surplus stock.3+ When a producer, because of an oer estimate of prospectie demand is left with
an oerstock which it cannot immediately dispose of in the domestic market /8 >ee Williamson
"7redatory 7ricing6 & >trategic and Welfare &nalysis# ),,8 Lale <aw @ +:/ ./-. /: Irishna
"&ntidumping in <aw and in 7ractice# ),,8 7olicy Fesearch Working 7aper ):+.. /, 5iner
Dumping +.. &ll the forms of dumping described by 5iner are generally forms of price
discrimination. Technically, they all re0uire that the market of origin and the destination market
be isolated from one another sufficiently to preent re export and thus price e0ualiAation. They
also re0uire that the market of origin has a lower price of elasticity of demand than the destination
market, the implication being that, the former is not perfectly competitie. &ssuming that the
goernment of the importing country cannot control the competitieness of the originating market
or the degree of isolation of the two markets, all it can do in response to dumping is to apply
boarder measures. >ee also &K=K "Trade Femedies in Kew Meland . 3- Dale &ntidumping
<aw +. 3) 5iner Dumping ))-. 3+ Irishna see fn /: 8./) without making a substantial
reduction in its prices, it may be sound policy for the producer to make no change in its domestic
prices and to dispose of surplus stock at reduced prices in foreign markets.3. In the case of
dumping to dispose of casual oerstock, the dumped commodities were already in stock or in
process, and were not deliberately produced to be dumped. >hort run dumping refers to a practice
that lasts for a limited period of time. 9xporters, in order to control or compete in foreign markets
from time to time, sell goods at a price less than its cost of production. If competitors hae been
eliminated, the exporters then increase the price as monopolies and gain the highest profits.3/
This type of dumping differs from sporadic dumping. In this case, the aim of the exporters is to
control and dominate foreign markets. It is a practice that is predatory in nature. It progresses
systematically and conse0uently harms the industry of the importing country. When a company
possesses monopoly power at home but faces competition oerseas, it may also participate in
long run dumping. <ack of domestic competition allows the company 3. 5iner Dumping ))-.
>ee further 5iner "Dumping &s & Cethod of ?ompetition in International Trade II# ),+. The
Bniersity @ of 2usiness ):+ ),-. 5iner embarks on a close analysis of instances where during a
particular season, a producer finds that sales at the established prices are not running high enough
to clear the stocks on hand or in process. He further identifies alternatie routes aailable to the
producer faced with this kind of predicament. The producer can either !i$ hold oer the surplus
stock to another seasonG !ii$ reduce prices in its standard markets in order to increase salesG or !iii$
dispose of its surplus stocks in some distant or unimportant market at the best prices obtainable,
een if these are lower than the prices current in its standard markets. It is highly probable that
the producer may be reluctant to hold its surplus stock oer to another season, because of the
carrying and storage charges, difficulty in financing an oer large inentory, or the danger of
deterioration or of change in style in which its products may be sub;ect. ?arrying oer the surplus
stock to another season may be detrimental to the producer in the sense that the surplus products
in 0uestion !depending on the nature of the product$ may lose their noelty and authenticity. &
producer may also be aerse to reduce its prices in its standard market. Feducing prices on any
portion of its sales in this market without making the reduction general to all purchasers, so that
any reduction in domestic price will apply to its entire output may not be practicable. In any case,
the demand for the producer(s product in its standard market may be inelastic, so that a reduction
in price whether partial or general, will not hae a substantial effect on sales. &lso where a
producer reduces its prices, it may later on be faced with a dilemma of re establishing the original
price. Fe establishing the original price in this instance may be difficult or een impossible. *or
any or all of these reasons, a producer may opt to unpack its surplus stock at reduced prices in a
minor or hitherto uncultiated market. 3/ >mitetal 9conomics6 & >outhern &frican 7erspectie
!),,4$ /../+ to sell its product at a high price at home.33 =nce the product enters the
international market, it faces competition from producers in both the host country and other
countries. In order to sell the product and earn profit, the producer must lower the price. This
form of dumping is generally associated with establishing or maintaining a long run position in a
foreign market. In rare instances, the ob;ectie may be to eliminate a competitor in that market.34
Where that is the ob;ectie, prices will be reduced temporarily and raised after the competitor is
eliminated. Core often, howeer, the motiation is not predatory. &s a matter of policy, firms can
engage in persistent dumping in order to deelop secondary markets where they can sell a portion
of their production on a regular basis at prices aboe prime cost, while maintaining higher prices
in their protected home market.38 >uch dumping is, howeer, not necessarily disruptie.
The economic effects of dumping
Dumping has been recogniAed as an economic issue for some time. &n early and useful example
is proided by 5iner. He sought to understand the origins and impacts of dumping by considering
the motie of the dumping firm, the duration of the dumping and the ability of the domestic
industry to ad;ust to the dumped goods. Dumping is to be distinguished from price discrimination
within national boundaries for two reasons. The first reason is that international trade creates
special opportunities for discriminatory pricingG and secondly, the welfare implications of
dumping are somewhat different in that it is customary to regard each nation state, rather than the
world as a whole, as a single welfare unit. 33 Foss "The Kegatie 9ffects of Trade 2arriers on
the Bnites >tates 9conomy#. 34 Ibid. 38 Ibid. 3: Dale &ntidumping <aw +8./.
Importing country iewpoint
The practice of dumping has proed to be a matter of controersy among economists. The
conentional economic iew of dumping is that it benefits the importing country when
continuous or permanent, but is potentially in;urious when discontinuous or of relatiely short
duration.3, Dumping has the potential of affecting the interests of consumers in the importing
country only as it affects the prices preailing there. 4- The significance of dumping to the
importing country may likewise be considered from the diergent points of iew of consumers
and producers.4) Bsers and consumers are likely to en;oy short term benefits from dumped
imports through low prices, but the condition may be less faourable in the long run.4+ In
instances where domestic producers are forced to lower production or cease it altogether,
competition is reduced and this type of situation is not likely to sere consumer interests in the
long run. It is often said that the problem of dumping for the importing country reoles around
the conflict of interest between domestic producers and consumers, the conflict being 3, Dale
&ntidumping <aw :. 4- &ccording to 5iner, it must be borne in mind that dumping does not
necessarily, and probably does not usually inole selling in the foreign market at prices lower
than those prealent there. The dumper often resorts to dumping only in order to bring his export
prices down to the leel preailing in his export markets. 9en in instances where the dumper
does not accept lower prices than those demanded by his competitors in the market dumped on,
his added competition in supplying the demand of that market will tend to force down the prices
of his competitors and to necessitate a still further reduction of his own prices. &lso in instances
where the dumping is intended to introduce a new product to the consumers of a foreign country,
or to establish new trade connections, it will necessarily inole the preliminary establishment of
a price leel lower than would hae been current in the absence of dumping. 5iner Dumping ).+.
4) Ibid. 4+ @ackson et al <egal 7roblems of International 9conomic Felations 4:-. *rom this
analysis submitted by @acksonetal, one can safely come to a conclusion that the total cessation of
the production of a particular product, gies the dumper a total adantage in as far as the
determination of prices is concerned. The dumper is at liberty to price the products in any manner
it considers fit. This is because total cessation of the production of a particular product
conse0uently reduces competition. The dumper can increase the price of that particular product
and because there is no other producer competing with the dumper, the consumer is forced to
adhere to the dumper(s new price. In effect what this means is that the dumped products will only
remain cheaper in as far as the domestic industry continues to produce the same product. =nce
production ceases, prices are likely to go up, a situation that will not sere consumer interests at
all. // engendered by the redistributie effects of low priced imports.4/ Dale submits that in a
triial sense, this is true in so far as any imports, dumped or undumped, may reduce the output
andEor profitability of local manufacturers. & rather more refined ersion of this argument has
been adanced by 5iner as an instance of what he refers to as "intermittent dumping.# In his
illustration, he 0uotes a passage from William >mart6 "&t any moment, a manufacturer may be
put on short time, because a good line is snatched from his fingers by a foreign firm which wishes
to get rid of its surplus. 2ut as the dumping is intermittent, employers do not sacrifice their fixed
capital and change their trade. They hang on, hoping that it will stop. They go on short time J
which means waste of fixed capital, waste of organiAation, waste of labour. >imilarly, workers do
not change into other trades. They put up with short time, hoping that it will be short. &nd short
time is wasted timeD. They may hae done that men can doG kept profits and prices low. It does
not seem healthy that, for no fault of theirs they should now and then be thrown idle#.43 5iner(s
purpose in citing >mart is to demonstrate that the benefit of periodically cheap imports to the
consumer is outweighed by the detriment to the producer and his employees of periodically
enforced idling.44 If the domestic producer is forced to idle his plant this might mean that his
short run marginal cost is aboe the price of the dumped imports. =n the other hand, if we assume
that the foreign exporter is a profit maximiAer or loss minimiAer, then one would expect his export
price to be at or aboe his own marginal cost.48 &ccordingly, the domestic producer(s short run
operating costs are aboe those of his foreign competitor, and so long as there is excess capacity
in the industry, the foreign exporter must, according to Dale,4: be regarded as the more efficient
of the two. In instances where the foreign exporter is not maximiAing or minimiAing losses, but
has priced his exports or products below short run marginal costs, then his behaiour may be
iewed as predatory. The introduction of predatory 4/ Dale &ntidumping <aw +:. >ee further
2eseler and Williams who contend that the existing controersy amongst economists is
presumably due to the fact that the monopoly power, which is a necessary condition for the
existence of dumping, interferes with the competitie model on which conentional economic
theory is based, irrespectie of the acknowledged fact that dumping can bring about benefits to
the consumer. 2eseler and Williams &nti Dumping and &nti >ubsidy <aw /3. 43 >mart Feturn to
7rotection !),-/$ )/, )3). 44 Dale &ntidumping <aw +: +,. 48 Ibid. 4: Ibid./3 behaiour
leads to the more general 0uestion of how dumping may affect competition in the importing
country. Dale4, emphasises that the pro competitie role of price discrimination within national
boundaries applies e0ually to dumping in the international context. This role may be particularly
important where there are collusie arrangements in the importing country(s domestic market, or
in instances where a situation of natural monopoly preails there.8- The practice of dumping has
a tendency of promoting a igorous domestic industry where local price discrimination may
conse0uently endanger it. 8) Thus where discriminatory pricing within a national market may
artificially distort the costs purchasers, when these are intermediate producers rather than
consumers, thereby threatening in;ury to secondary line competition, dumping of raw materials or
intermediate goods must necessarily benefit producers in the importing country at the expense of
their competitors in the exporting country and elsewhere.8+ This beneficial
&spect of dumping is clearly illustrated by
!i$ The rapid expansion of the 2ritish sugar using industries in the second half of the nineteenth
century based largely on dumped 9uropean beet sugarG8.
!ii$ the prosperity of the Dutch shipbuilding, machinery and nail industries prior to the *irst
World War attributable partly to dumping of 1erman steel and wireG8/ and
!iii$ the competitie adantages conferred on the Welsh tin plate industry at the turn of the
century by the dumping of steel by the Bnited >tates >teel ?orporation. Ibid. 8- >ee Fodgers
"The Illusionary ?onflict 2etween &ntidumping and &ntitrust6 & ?omment# ),8/ &ntitrust
2ulletin Kew Lork. ?ited by Dale &ntidumping <aw +,. 8) Dale &ntidumping <aw .-. 8+
Ibid. 8. 5iner Dumping 38. 8/ 5iner Dumping ).3. 83 >mart Feturn to 7rotection )3+. ?ited
by Dale &ntidumping <aw .-. The important conclusion /4 If the dumped commodity is not
produced in the importing country and is a commodity that is of great alue to the consumer, the
dumping is, once again, an undisputable gain to the importing country, proided only that it does
not eentually result in the establishment of a monopoly able to extract monopoly prices, or that it
does not preent the introduction of a new industry to which the importing country would be well
adapted under normal conditions of international competition.84 There is a proposition that if the
dumped commodity competes with a domestic product of theimporting country, the in;ury to the
domestic producers should be offset against the benefit to the consumers.88 & benefit to the
consumer is by so much a gain to the country as a whole and that cheap imports are an adantage
to the importing country proided that the in;ury to the domestic industry is not as great as the
benefit to the consumer.8: & typical example is where the dumped imports do not necessarily
in;ure or hinder the establishment of an industry. The chief menace of dumping from the point of
iew of the importing country arises out of intermittent or short run dumping. This is the type of
dumping which is continued steadily and systematically for seeral months or years and is
terminated either when its drawn by Dale in this regard is that one of the main arguments
adanced in support to laws designed to control domestic price discrimination is actually reersed
in the case of dumping, where differentially low prices in the importing country hae an
unambiguously beneficial impaction the competitie status of domestic producers. 84 5iner
Dumping ).8. In light of 5iner(s submission, it is sound to conclude that the importing country
will be at an adantage in instances where the product being dumped by the exporter is not
domestically produced. This seres as an adantage to the importing country in the sense that a
new product would hae been introduced into the domestic market conse0uently placing the
consumers in a beneficial position. Howeer, this situation will only remain positie in so far as
the introduction of the new product does not act as a hindrance to the establishment of such an
industry. 5iner Dumping ).:. Where the dumping is certain to continue indefinitely or at least
for a ery long period, the adantage of the dumping to the consumer in the importing country
must be accepted as in the long run more important than the in;ury to the domestic producer. If
the domestic industry cannot compete with the dumped imports, it will be in the national interest
that it shift its capital and labour to the production of other commodities despite the fact that this
shift in 0uestion, may be expensie. Ibid./8 ob;ecties hae been attained or hae failed. >hort
run dumping, whateer its ob;ectie, may result in serious in;ury to or een the total elimination
of the domestic industry. The gain to the consumer from a short period of abnormally low prices
may not be nearly great enough to offset the damage to the domestic industry, including the
capital inested therein, the labour which it employs and the managerial ability which directs it.
The dumping will be especially likely to result in a net loss to the importing country if it seres to
bring about later, the establishment of abnormally high prices, either because it has facilitated the
ac0uisition of monopoly control by the dumper or because the losses incurred by the domestic
industry during the continuance of the dumping or the check to its expansion of productie
facilities hae lessened its willingness to engage in actie price competition within its own ranks
or with its foreign rials. The disadantages of intermittent dumping to the importing country
hae been well stated by >mart in a passage which merits 0uotation in full6 "If we knew that, for
all time some kind of foreigner would send us pig iron and steel sheets 3- percent under our
price, we should know what to expect, and no one in this country would make pig iron or steel.
2ut what we know is, that this dumped supply will be intermittent and that it will remain cheap so
long as we continue making the same goods. Its uncertainty is its eil. When other countries are
prosperous, little comes in and our makers get a decent priceG when these countries are depressed,
in come the dumped goods, and wipe out the profits. I can scarcely beliee that this intermittent
underselling is a good thing for us. It is not a spur to inention and economy. I hesitate indeed to
call it "unfair competition.# 2ut it is not competition that can be counted on and prepared for. Ko
watching and economy of costs will meet it. &t any moment, a manufacturer may be put on short
time, because a good line is snatched from his finger...#
5iner Dumping
& 7roblem in International Trade )/-. :- Ibid. :) Ibid. :+ Ibid. :. >mart Feturn to 7rotection
)/, )3). ?omplaints of in;ury from the importation of foreign prices at dumped prices hae been
fre0uent in most of the countries which hae important manufacturing industries. ?ountries such
as 1reat 2ritain, the B>& ?anada, >witAerland and Italy. >ome of the examples of such
complaints are as follows6
!i$ The distress of 2ritish sugar refiners as a result of 9uropean bounties.
!ii$ The distress suffered by Italian and >wiss >teel industries as a result of 1erman dumping.
!iii$ The distress of &merican alcohol distillers as a result of 1erman official bounties.
There is according to 5iner, sufficient reason to beliee that in many cases there was indeed
ade0uate ground for complaint. >ee 5iner Dumping6 & 7roblem in International Trade )/). The
impact of dumping on the importing country as a whole is the reerse of the impact on the
exporting country. There may be an immediate adantage through cheap imports but account has
to be taken of the total costs of dumping to the domestic economy, that is, lost capacities, lost
inestments, loss of technology especially in promising or strategic sectors, a shrinking industrial
base, the social costs of unemployment and the contraction or elimination of the industries
producing the dumped product. It is eident that a domestic country faced with dumped imports
is without a doubt, in an intricate position. The normal reaction to the low prices would be to sell
on the exporting producer(s home market at e0ually low prices, but because of access barriers this
means of reaction is not always possible. Instead, it has to reduce its domestic prices to the leel
of the dumped imports or lose market share. The position of the importing country becomes een
more difficult if the dumper is able to sustain losses on its export business for long periods
because of its "guaranteed# home market profits. The resulting cost increases and losses may also
affect the industry(s position in third markets. &s a result, its oerall productiity and inestment
strength is weakened. Dumping further creates uncertainty for inestment. &ccurate inestment
planning may be frustrated by less efficient competition, with the result that resources in the
importing country are wasted. In conclusion, it is submitted that there is indeed a sound economic
case against dumping from the point of iew of the importing country. This economic case is,
howeer, compelling only in instances where it is rational to suppose that the practice of dumping
will result in greater in;ury to the domestic industry than the gain to the consumers. :3
@acksonetal <egal 7roblems of International 9conomic Felations 4:-. :4 Ibid. :8 Ibid. ::
Ibid. :, Ibid. ,- Ibid. ,) Ibid./,
9xporting country iewpoint
It must be presumed that a producer who dumps benefits from doing so, although in the case of
promotional and predatory dumping, there is an element of risk in that the ultimate benefits on
which the loss making export sales are premised, may not materialise. 7roided its home market
is shielded against arbitrage or retaliation, and conse0uent price drop !which would neutralise the
discrimination$, dumping can hae clear adantages for the indiidual exporter. & profitable home
market proides a platform which may be used to operate in export markets at prices much lower
than could hae been possible without market segregation. The low export prices generate further
sales which in turn lower the cost of production, an adantage which benefits both export and
home sales. Dumping can still hae beneficial effects on the dumper een in situations where
home market sales are made at a loss. &s long as the dumper coers fixed costs, export sales can
be priced as low as ariable cost, a strategy which permits production and employment to be
maintained in a recession or enables the dumper to obtain considerable adantages when going
for economies of scale. 1ien the adantages of dumping to the exporter, it is essential to
examine the effect of dumping on the consumer. This examination should focus on whether the
home market price will be higher or lower in the absence of dumping. If the alternatie to
dumping is not to trade at all, it is true that the home market price will be lower in the absence of
dumping where the producer(s marginal cost is rising and it will be higher in the absence. Dale
&ntidumping <aw .8. @ackson et al <egal 7roblems of International 9conomic Felations 48,.
,/ Ibid. Bnder such conditions dumping becomes an economic behaiour of great efficiency,
the benefits of which do not necessarily reflect a genuine competitie adantage. Ibid. ,4 Ibid.
>ee also Ihan et al 9? &ntidumping <aw & ?ommentary on Fegulation .:/E,4 !),,:$ +.. They
submit that dumping can be "profitable# to exporters een in situations where their domestic sales
are made at a loss6 the increase in turnoer generated by the dumped exports helps to reduce the
per unit cost of production. The price adantage thus obtained by exporters oer domestic
producers in the importing market does not howeer reflect a real comparatie adantage !at least
in the initial phase when the exporter has ;ust begun to penetrate that market later on, the
additional turnoer generated through dumping may result in economics of scale$. Bnder these
conditions, dumping can lead to elimination of competitors which are more cost efficient than the
dumper and thus result in a loss of economic resources. @ackson et al <egal 7roblems of
International 9conomic Felations 48,. Dale &ntidumping <aw .8.3- of dumping where the
producer(s marginal cost is falling. ?ocks and @ohnson)-- contend that een where dumping
leads to a higher home market price, due to rising marginal cost, the benefits to the producing
industry, including factor rents, will exceed the losses to consumers. In so far as the economy of
the exporting country is concerned, the benefits of dumping in this respect are that domestic
industries deelop capacities which far exceed the national market. This allows high economic
growth and high production leels, een in periods of domestic or worldwide recession. Dumping
can also hae an effect on the exporting country by harming users of the dumped product located
in that country. This harm can occur only if the dumped product is an intermediate product, that
is, a component of the final product. In such cases, if users of the dumped product compete with
users in the exporting country, those users will hae a cost adantage because of their access to
the lower priced dumped product and they may be able to sell final products incorporating the
dumped components more cheaply, thereby gaining an adantage oer competing producers in
the exporting country. The significance of this adantage would depend on the importance of the
dumped component in the cost of the final product and the extent of the competition between
producers in the two countries. The main ob;ection to dumping from the iew of the exporting
country is that it originates in and therefore signifies the existence of monopoly power in the
home market.)-4 ?onsumers may take exception to the fact that they are being charged ,,
Lntema "The Influence of Dumping on Conopoly 7rice# ),+: @ of 7olitical 9conomy 4:4 4,:.
)-- ?ocks and @ohnson "& Kote on Dumping and >ocial Welfare# ),8+ ?anadian @ of
9conomics ).8 )/-. &ccording to Dale, the aboe conclusions apply to situations where goods
hae been deliberately dumpedG that is, goods that are specifically produced for the purposes of
being dumped rather than goods that are sold as surplus stock. In the latter case dumping must
always result in a higher home market price than would preail if there was no trade. >ee Dale
&ntidumping <aw .8. @ackson et al <egal 7roblems of International 9conomic Felations 4:-.
)-. Ibid. )-/ Ibid. )-3 Ibid. )-4 Dale &ntidumping <aw .:.3) monopolistic prices, which
are by their nature higher, in comparison with buyers in foreign markets, and it was with this
consideration in mind that the Bnited >tates Industrial Trade ?ommission proposed at the
beginning of the twentieth century that import duties should be remitted on goods of a kind
exported by &merican producers at dumped prices.)-8 In light of the aboe discussion, it is
interesting to note how the definition of dumping has broadened oer the years. Thus, the
traditional definition !transnational price discrimination between national markets$ has been
extended to include sales below cost. It goes without saying that the practice of dumping has
proed to be a matter of controersy within the international trade framework as it distorts
competition. *rom the importing country(s iewpoint, dumping can hae beneficial effects to the
consumers as they are likely to en;oy short term benefits from dumped imports through low
prices. The situation may, howeer, hae a negatie impact on the ordinary consumer in the long
run. Thus, where domestic producers are forced to either lower or cease production altogether,
competition is reduced and conse0uently the consumer will not be in a faourable position. In
such instances the dumper can increase its prices, and such an increase is not likely to sere the
interests of the consumer.
<91&< *F&C9W=FI
>ections ,&, ,2 and ,? of the ?ustoms Tariff &ct, ),83 as amended in ),,3 and the ?ustoms
Tariff !Identification, &ssessment and ?ollection of &nti%dumping Duty on Dumped &rticles and
for Determination of In;ury$ Fules, ),,3 framed thereunder form the legal basis for anti%dumping
inestigations and for the ley of anti%dumping duties. These laws are based on the &greement on
&nti%Dumping which is in pursuance of
&rticle 5I of 1&TT ),,/
TH9 &77<I?&TI=K 7F=?9DBF9 )+ ). specific authoriAation of the party proiding the
information, if the Designated &uthority is satisfied about its confidentiality. Interested parties
supplying information on a confidential basis are re0uired to furnish non%confidential summaries
thereof or a statement of reasons as to why such summariAation is not possible. If the Designated
&uthority is not satisfied that the confidentiality is warranted or the proider of information is not
willing to disclose it in a generaliAed form, then such information may be disregarded.
The &pplicaion 7rocedure
&pplications can be made by or on behalf of the concerned domestic industry to the Designated
&uthority in the Cinistry of ?ommerce for an inestigation of any alleged dumping. The
designated &uthority may initiate an inestigation when there is sufficient eidence that dumped
imports are causing or are threatening to cause material in;ury to the Indian industry producing
like articles or are materially retarding the establishment of an industry. ?opies of the prescribed
application proforma is aailable from the Cinistry of ?ommerce.
Information Fe0uired
&pplications should be submitted to the Designated &uthority in the Cinistry of ?ommerce in the
prescribed form. 1uidelines on how to complete a 0uestionnaire are a part of the prescribed
application proforma. The proforma also adises the applicant of the type of eidence re0uired in
appropriate areas.
7eriod of Inestigation
Keither the 1&TT &greement on anti%dumping nor the Indian laws proide for any specific
guidelines regarding the period of inestigation. Howeer, there are indications that the period
should not be, in any case, less than six months. It is, howeer, important that the period taken
into consideration for detailed inestigation should be representatie and as recent as possible.
Inestigation process
&n application receied by the Designated &uthority is dealt with as follows 6
). 7reliminary >creening6
The application is scrutiniAed to ensure that it is ade0uately documented and proides sufficient
eidence for initiation. If the eidence is not ade0uate, then a deficiency letter is issued normally
within +- days of the receipt of the application.
+. Initiation6
When the Designated &uthority is satisfied that there is sufficient eidence in the application with
regard to dumping, material in;ury and causal link, a 7ublic Kotice is issued initiating an
inestigation to determine the existence and effect of the alleged dumping.
The Designated &uthority notifies the diplomatic representatie of the 1oernment of the
exporting country before proceeding to initiate the inestigation. The initiation notice will be
issued normally within /3 days of the date of receipt of a properly documented application.
.. &ccess to Information6
The &uthority proides access to the non%confidential eidence presented to it by arious
interested parties in the form of a public file, which is aailable for inspection after receipt of the
responses.
/. 7reliminary *indings6
The Designated &uthority will proceed expeditiously with the conduct of the inestigation and
shall, in appropriate cases, make a preliminary finding containing the detailed information on the
main reasons behind IK59>TI1&TI=K 7F=?9>>)/ )3 the determination. The preliminary
finding will normally be made within )3- days of the date of initiation.
3. 7roisional Duty6
& proisional duty not exceeding the margin of dumping may be imposed by the ?entral
1oernment on the basis of the preliminary finding recorded by the Designated &uthority. The
proisional duty can be imposed only after the expiry of 4- days from the date of initiation of
inestigation. The proisional duty will remain in force only for a period not exceeding 4 months,
extendable to , months under certain circumstances.
4. =ral 9idence 6
Interested parties who participate in the inestigations can re0uest the Designated &uthority for
an opportunity to present the releant information orally. Howeer, such oral information shall be
taken into consideration only when it is subse0uently reproduced in writing. The &uthority may
grant oral hearing anytime during the course of the inestigations.
8. *inal Determination6
The final determination is normally made within )3- days of the date of preliminary
determination.
:. Disclosure of Information6
The Designated &uthority will inform all interested parties of the essential facts which form the
basis for its decision before the final finding is made.
,. Time%limit for Inestigation 7rocedure6
The normal time allowed by the statute for submission of final findings is one year finestigation.
The aboe period may 1oernment by 4 months.
)-. Termination6
The Designated &uthority may suspend of the following cases 6
i$ if there is a re0uest in writing from the instance the inestigation was initiated
ii$ when there is no sufficient eidence
iii$ if the margin of dumping is less than +
i$ the olume of dumped imports from a total imports of the like article into imports collectiely
from all such coun imports.
$ in;ury is negligible.
Time%limit for Inestigation 7rocess
The normal time allowed by the statute for conclusion of inestigation and submission of final
findings is one year from the date of initiation of the inestigation. The aboe period may be
extended by the ?entral 1oernment by 4 months.
=ther 7roisions
Fetrospectie Ceaures
The &ct proides for ley of anti%dumping duty retrospectiely, where %
i$ there is a history of dumping which caused the in;ury or that the importer was, or, should hae
been aware that the exporter practices dumping and that such dumping would cause in;ury, and
ii$ the in;ury is caused by massie dumping, in a relatiely short time, so as to seriously
undermine the remedial effect of anti%dumping duty. >uch retrospectie application will not go
beyond ,- days of the date of imposition of proisional duty. *urther, no retrospectie application
prior to the date of initiation of inestigation is possible.
Feiew
&n anti%dumping duty imposed under the &ct shall hae the effect for 3 years from the date of
imposition, unless reoked earlier. The Designated &uthority shall also reiew the need for the
continued imposition of the anti%dumping duty, from time to time. >uch a reiew can be done suo
motu or on the basis of re0uest receied from an interested party in iew of the changed
circumstances. & reiew shall also follow the same procedures prescribed for an inestigation to
the extent they are applicable. The Designated &uthority is also re0uired to carry out a reiew for
determining margins of dumping for any new exporter or producer from a country that is sub;ect
to anti%dumping, proided that these exporters or producers are new and are not related to any of
the exporters or producers who are sub;ect to anti%dumping duty on the product. &779&<
&n appeal against the order of the Designated &uthority may be filed with the ?ustoms, 9xcise
and 1old !?ontrol$ &ppellate Tribunal within ,- days of the date of the order.
Fefund of Duty
If the anti%dumping duty imposed on the basis of final findings is higherthan the proisional duty
already imposed and collected, the difference shall not be collected. If the final anti%dumping duty
is less than the proisional duty already imposed and collected, the difference shall be refunded.
If the proisional duty is withdrawn based on a negatie final finding, then the proisional duty
already collected shall be refunded.
&rticle 5I of 1&TT and the &nti%Dumping &greement
The 1&TT ),,/ sets forth a number of basic principles applicable in trade between Cembers of
the WT=, including the "most faoured nation# principle. It also re0uires that imported products
not be sub;ect to internal taxes or other changes in excess of those imposed on domestic goods,
and that imported goods in other respects be accorded treatment no less faourable than domestic
goods under domestic laws and regulations, and establishes rules regarding 0uantitatie
restrictions, fees and formalities related to importation, and customs aluation. Cembers of the
WT= also agreed to the establishment of schedules of bound tariff rates. &rticle 5I of 1&TT
),,/, on the other hand, explicitly authoriAes 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 in;ury to a domestic industry, or materially retards the establishment of a domestic
industry.
The &greement on Implementation of &rticle 5I of 1&TT ),,/, commonly known as the &nti%
Dumping &greement, proides further elaboration on the basic principles set forth in &rticle 5I
itself, to goern the inestigation, determination, and application, of anti%dumping duties.
7reious &greements
&s tariff rates were lowered oer time following the original 1&TT agreement, anti%dumping
duties were increasingly imposed, and the inade0uacy of &rticle 5I to goern their imposition
became eer more apparent. *or instance, &rticle 5I re0uires a determination of material in;ury,
but does not contain any guidance as to criteria for determining whether such in;ury exists, and
addresses the methodology for establishing the existence of dumping in only the most general
fashion. ?onse0uently, contracting parties to 1&TT negotiated more detailed ?odes relating to
anti%dumping. The first such ?ode, the &greement on &nti%Dumping 7ractices, entered into force
in ),48 as a result of the Iennedy Found. Howeer, the Bnited >tates neer signed the Iennedy
Found ?ode, and as a result the ?ode had little practical significance.
The Tokyo Found ?ode, which entered into force in ),:-, represented a 0uantum leap forward.
>ubstantiely, it proided enormously more guidance about the determination of dumping and of
in;ury than did &rticle 5I. 90ually important, it set out in substantial detail certain procedural and
due process re0uirements that must be fulfilled in the conduct of inestigations. Keertheless, the
?ode still represented no more than a general framework for countries to follow in conducting
inestigations and imposing duties. It was also marked by ambiguities on numerous controersial
points, and was limited by the fact that only the +8 7arties to the ?ode were bound by its
re0uirements.
The BF &greement
2asic principles
Dumping is defined in the &greement on Implementation of &rticle 5I of the 1&TT ),,/ !The
&nti%Dumping &greement$ as the introduction of a product into the commerce of another country
at less than its normal alue. Bnder &rticle 5I of 1&TT ),,/, and the &nti%Dumping &greement,
WT= Cembers can impose anti%dumping measures, if, after inestigation in accordance with the
&greement, 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 in;ury, and !c$ that there
is a causal link between the two. In addition to substantie rules goerning the determination of
dumping, in;ury, and causal link, the &greement sets forth detailed procedural rules for the
initiation and conduct of inestigations, the imposition of measures, and the duration and reiew
of measures.
?ommittee on &nti%Dumping 7ractices
The ?ommittee, which meets at least twice a year, proides Cembers of the WT= the
opportunity to discuss any matters relating to the &nti%Dumping &greement !&rticle )4$. The
?ommittee has undertaken the reiew of national legislations notified to the WT=. This offers the
opportunity to raise 0uestions concerning the operation of national anti%dumping laws and
regulations, and also 0uestions concerning the consistency of national practice with the &nti%
Dumping &greement. The ?ommittee also reiews notifications of anti%dumping actions taken by
Cembers, proiding the opportunity to discuss issues raised regarding particular cases.
The ?ommittee has created a separate body, the &d Hoc 1roup on Implementation, which is open
to all Cembers of the WT=, and which is expected to focus on technical issues of
implementation6 that is, the "how to# 0uestions that fre0uently arise in the administration of anti%
dumping laws.
Dispute settlement
Disputes in the anti%dumping area are sub;ect to binding dispute settlement before the Dispute
>ettlement 2ody of the WT=, in accordance with the proisions of the Dispute >ettlement
Bnderstanding !"D>B#$ !&rticle )8$. Cembers may challenge the imposition of anti%dumping
measures, in some cases may challenge the imposition of preliminary anti%dumping measures,
and can raise all issues of compliance with the re0uirements of the &greement, before a panel
established under the D>B. In disputes under the &nti%Dumping &greement, a special standard of
reiew is applicable to a panelNs reiew of the determination of the national authorities imposing
the measure. The standard proides for a certain amount of deference to national authorities in
their establishment of facts and interpretation of law, and is intended to preent dispute settlement
panels from making decisions based purely on their own iews. The standard of reiew is only
for anti%dumping disputes, and a Cinisterial Decision proides that it shall be reiewed after three
years to determine whether it is capable of general application.
Kotifications
&ll WT= Cembers are re0uired to bring their anti%dumping legislation into conformity with the
&nti%Dumping &greement, and to notify that legislation to the ?ommittee on &nti%Dumping
7ractices. While the ?ommittee does not "approe# or "disapproe# any CembersN legislation,
the legislations are reiewed in the ?ommittee, with 0uestions posed by Cembers, and
discussions about the consistency of a particular CemberNs implementation in national legislation
of the re0uirements of the &greement.
In addition, Cembers are re0uired to notify the ?ommittee twice a year about all anti%dumping
inestigations, measures, and actions taken. The ?ommittee has adopted a standard format for
these notifications, which are sub;ect to reiew in the ?ommittee.
*inally, Cembers are re0uired to promptly notify the ?ommittee of preliminary and final anti%
dumping actions taken, including in their notification certain minimum information re0uired by
1uidelines agreed to by the ?ommittee. These notifications are also sub;ect to reiew in the
?ommittee.
Determination of dumping
Determination of Kormal alue
1eneral rule
The normal alue is generally the price of the product at issue, in the ordinary course of trade,
when destined for consumption in the exporting country market. In certain circumstances, for
example when there are no sales in the domestic market, it may not be possible to determine
normal alue on this basis. The &greement proides alternatie methods for the determination of
normal alue in such cases.
>ales in the ordinary course of trade
=ne of the most complicated 0uestions in anti%dumping inestigations is the determination
whether sales in the exporting country market are made in the "ordinary course of trade# or not.
=ne of the bases on which countries may determine that sales are not made in the ordinary course
of trade is if sales in the domestic market of the exporter are made below cost. The &greement
defines the specific circumstances in which home market sales at prices below the cost of
production may be considered as not made in theordinary course of tradeO, and thus may be
disregarded in the determination of normal alue !&rticle +$. Those sales must be made at prices
that are below per unit fixed and ariable costs plus administratie, selling and general costs, they
must be made within an extended period of time !normally one year, but in no case less than six
months$, and they must be made in substantial 0uantities. >ales are made in substantial 0uantities
when !a$ the weighted aerage selling price is below the weighted aerage costG of !b$ +-P of
the sales by olume were below cost. *inally, sales made below costs may only be disregarded in
the determination of normal alue where they do not allow for recoery of costs within a
reasonable period of time. If sales are below cost when made but are aboe the weighted aerage
cost oer the period of the inestigation, the &greement proides that they allow for recoery of
costs within a reasonable period of time.
Insufficient olume of sales
If there are sales below cost that meet the criteria set out in the &greement, they can simply be
ignored in the calculation of normal alue, and normal alue will be determined based on the
remaining sales. Howeer, exclusion of these below%cost sales may result in a leel of sales
insufficient to determine normal alue based on home market prices. It is obious that, in the case
where there are no sales in the exporting country of the product under inestigation, it is not
possible to base normal alue on such sales, and the &greement recogniAes this. Howeer, it is
also possible that, while there are some sales in the exporting countryNs market, the leel of such
sales is so low that its significance is 0uestionable. Thus, the &greement recogniAes that in some
cases sales in the home market may be so low in olume that they do not permit a proper
comparison of home market and export prices. It proides that the leel of home market sales is
sufficient if home market sales constitute 3 per cent or more of the export sales in the country
conducting the inestigation, proided that a lower ratio "should# be accepted if the olume of
domestic sales neertheless is "of sufficient magnitude# to proide for a fair comparison.
&lternatie bases for calculating normal alue
Two alternaties are proided for the determination of normal alue if sales in the exporting
country market are not an appropriate basis. These are !a$ the price at which the product is sold to
a third countryG and
!b$ the "constructed alue# of the product, which is calculated on the basis of the cost of
production, plus selling, general, and administratie expenses, and profits. The &greement
contains detailed and specific rules for the determination of a constructed alue, goerning the
information to be used in determining the amounts for costs, expenses, and profits, the allocation
of these elements of constructed alue to the specific product in 0uestion, and ad;ustments for
particular situations such as start%up costs and non%recurring cost items.
?onstructed normal alue
The determination of normal alue based on cost of production, selling, general and
administratie expenses, and profits is referred to as the "constructed normal alue# The rules for
determining whether sales are made below cost also apply to performing a constructed normal
alue calculation. The principal difference is the inclusion of a "reasonable amount for profits# in
the constructed alue.
The other alternatie method for determining normal alue is to look at the comparable price of
the like product when exported to an appropriate third country, proided that price is
representatie. The &greement does not specify any criteria for determining what third country is
appropriate.
Indirect exports
In the situation where products are not imported directly from the country of manufacture, but are
exported from an intermediate country, the &greement proides that the normal alue shall be
determined on the basis of sales in the market of the exporting country. Howeer, the &greement
recogniAes that this may result in an inappropriate or impossible comparison, for instance if the
product is not produced in the exporting country, there is no comparable price for the product in
the exporting country, or the product is merely transshipped through the exporting country. In
such cases, the normal alue may be determined on the basis of the price of the product in the
country of origin, and not the price in the exporting country.
Kon%market economies
In the particular situation of economies where the goernment has a complete or substantially
complete monopoly of its trade and where all domestic prices are fixed by the >tate, 1&TT ),,/
and the &greement recogniAe that a strict comparison with home market prices may not be
appropriate. Importing countries hae thus exercised significant discretion in the calculation of
normal alue of products exported from non%market economies.
Determination of export price
1eneral rule
The export price will normally be based on the transaction price at which the foreign producer
sells the product to an importer in the importing country. Howeer, as is the case with normal
alue, the &greement recogniAes that this transaction price may not be appropriate for purposes of
comparison.
9xceptions
There may be no export price for a gien product, for instance, if the export transaction is an
internal transfer, or if the product is exchanged in a barter transaction. In addition, the transaction
price at which the exporter sells the product to the importing country may be unreliable because
of an association or a compensatory arrangement between the exporter and the importer or a third
party. In such a case, the transaction price may not be an arms%length market price, but may be
manipulated, for instance for tax purposes. The &greement recogniAes that, in such cases, an
alternatie method of determining an appropriate export price for comparison is needed.
&lternatie method of calculation
The &greement proides that in circumstances where there is no export price, or where the export
price is unreliable due to an association or compensatory arrangement between the exporter and
the importer or a third party, an alternatie method may be used to determine the export price. this
results in a "constructed export price#, and is calculated on the basis of the price at which the
imported products are first resold in an independent buyer. If the imported product is not resold to
an independent buyer, or is not resold as imported, the authorities may determine a reasonable
basis on which to calculate the export price.
*air ?omparison of normal alue and export price
2asic re0uirements
The &greement re0uires that a fair comparison of the export price and the normal alue be made.
The basic re0uirements for a fair comparison are that the prices being compared are those of sales
made at the same leel of trade, normally the ex%factory leel, and of sales made at as nearly as
possible the same time.
&s part of the &greementNs re0uirements regarding transparency and participation, the
inestigating authorities are re0uired to inform parties of the information needed to ensure a fair
comparison, for instance, information regarding ad;ustments, allowances, and currency
conersion, and may not impose an "unreasonable burden of proof# on parties.
&llowance
To ensure that prices are comparable, the &greement re0uires that ad;ustments be made to either
the normal alue, or the export price, or both, to account for differences in the product, or in the
circumstances of sale, in the importing and exporting markets. These allowances must be made
for differences in conditions and terms of sale, taxation, 0uantities, physical characteristics, and
other differences demonstrated to affect price comparability.
&d;ustments in case of constructed export price
The &greement also proides specific rules on the ad;ustment to be made if the comparison of
normal alue is to a constructed export price. In those circumstances, allowance must be made for
costs, including duties and taxes, incurred between the importation of the product and the resale
to the first independent purchaser, as well as for profits accruing. If price comparability has been
affected, the &greement re0uires either that the normal alue be established at a leel of trade
e0uialent to that of the constructed export price, which is likely to re0uire an ad;ustment, or
allowance must be made for differences in conditions and terms of sale, taxation, 0uantities,
physical characteristics, and other matters demonstrated to affect price comparability.
?onersion of currency
Where the comparison of normal alue and export price re0uires conersion of currency, the
&greement proides specific rules goerning that conersion !&rticle +./.)$. Thus, the exchange
rate used should be that in effect on the date of sale !date of contract, inoice, purchase order or
order confirmation, whicheer establishes material terms of sale$. If a forward currency sale is
directly linked to export sale, the exchange rate of forward currency sale must be used. Coreoer,
the &greement re0uires that exchange rate fluctuations be ignored, and that exporters be allowed
at least 4- days to ad;ust export prices for sustained exchange rate moements.
The &greement contains rules goerning the calculation of dumping margins. In the usual case,
the &greement re0uires either the comparison of the weighted aerage normal alue to the
weighted aerage of all comparable export prices, or a transaction%to%transaction comparison of
normal alue and export price !&rticle +./.+$. & different basis of comparison can be used if there
is "targeted dumping#6 that is, if a pattern exists of export prices differing significantly among
different purchasers, regions or time periods. In this situation, if the inestigating authorities
proide an explanation as to why such differences cannot be taken into account in weighted
aerage%to%weighted aerage or transaction%to%transaction comparisons, the weighted aerage
normal alue can be compared to the export prices on indiidual transactions.
?alculation of dumping margins and duty assessment
Fefund or reimbursement
The &greement re0uires Cembers to collect duties on a non%discriminatory basis on
imports from all sources found to be dumped and causing in;ury, except with respect to
sources from which a price undertaking has been accepted. Coreoer, the amount of the
duty collected may not exceed the dumping margin, although it may be a lesser amount.
The &greement specifies two mechanisms to ensure that excessie duties are not
collected. The choice of mechanism depends on the nature of the duty collection process.
If a Cember allows importation and collects an estimated anti%dumping duty, and only
later calculates the specific amount of anti%dumping duty to be paid, the &greement
re0uires that the final determination of the amount must take place as soon as possible,
upon re0uest for a final assessment. In both cases, the &greement proides that the final
decision of the authorities must normally be made within )+ months of a re0uest for
refund or final assessment, and that any refund should be made within ,- days.
Indiidual exporter dumping margins
The &greement re0uires that, when anti%dumping duties are imposed, a dumping margin
be calculated for each exporter. Howeer, it is recogniAed that this may not be possible in
all cases, and thus the &greement allows inestigating authorities to limit the number of
exporters, importers, or products indiidually considered, and impose an anti%dumping
duty on uninestigated sources on the basis of the weighted aerage dumping margin
actually established for the exporters or producers actually examined. The inestigating
authorities are precluded from including in the calculation of that weighted aerage
dumping margin any dumping margins that are de minimis, Aero, or based on the facts
aailable rather than a full inestigation, and must calculate an indiidual margin for any
exporter or producer who proides the necessary information during the course of the
inestigation.
Kew shippers
The &greement makes proision for the assessment of anti%dumping duties on exports
from producers or exporters who were not sources of imports considered during the
period of inestigation. In this circumstance, the inestigating authorities are re0uired to
conduct an expedited reiew to determine a specific margin of dumping attributable to
the exports of such a "new shipper#. While that reiew is in progress, the authorities may
re0uest guarantees or withhold appraisement on imports, but may not actually collect
anti%dumping duties on those imports.
Determination of in;ury and casual link
<ike 7roduct
Definition !&rticle +.4$
&n important decision must be made early in each inestigation to determine the domestic "like
product#. <ike product is defined in the &greement as "a product which is identical, i.e. alike in
all respects to the product under consideration or, in the absence of such a product, another
product which, although not alike in all respects, has characteristics closely resembling those of
the product under consideration#. The determination inoles first examining the imported
product or products that are alleged to be dumped, and then establishing what domestically
produced product or products are the appropriate "like product#. The decision regarding the like
product is important because it is the basis of determining which companies constitute the
domestic industry, and that determination in turn goerns the scope of the inestigation and
determination of in;ury and causal link.
Domestic Industry
Definition !&rticle /$
The &greement defines the term "domestic industry# to mean "the domestic producers as a whole
of the like products or those of them whose collectie output of the products constitutes a ma;or
proportion of the total domestic production of those products#.
Felated domestic producers
The &greement recogniAes that in certain circumstances, it may not be appropriate to include all
producers of the like product in the domestic industry. Thus, Cembers are permitted to exclude
from the domestic industry producers related to the exporters or importers under inestigation,
and producers who are themseles importers of the allegedly dumped product. The &greement
proides that a producer can be deemed "related# to an exporter or importer of the allegedly
dumped product if there is a relationship of control between them, and if there is reason to beliee
that the relationship causes the domestic producer to behae differently from non%related
producers.
Fegional domestic industry
The &greement contains special rules that allow in exceptional circumstances, consideration of
in;ury to producers comprising a "regional industry#. & regional industry may be found to exist in
a separate competitie market if producers within that market sell all or almost all of their
production of the like product in that market, and demand for the like product in that market is
not to any substantial degree supplied by producers of the like product located outside that
market. If this is the case, inestigating authorities may find that in;ury exists, een if a ma;or
proportion of the entire domestic industry, including producers outside the region, is not
materially in;ured. Howeer, a finding of in;ury to the regional industry is only allowed if !)$
there is a concentration of dumped imports into the market sered by the regional industry, and
!+$ dumped imports are causing in;ury to the producers of all or almost all of the production
within that market.
Imposition of duties in regional industry cases
If an affirmatie determination is based on in;ury to a regional industry, the &greement re0uires
inestigating authorities to limit the duties to products consigned for final consumption in the
region in 0uestion, if constitutionally possible. If the ?onstitutional law of a Cember precludes
the collection of duties on imports to the region, the inestigating authorities may ley duties on
all imports of the product, without limitation, if anti%dumping duties cannot be limited to the
imports from specific producers supplying the region. Howeer, before imposing those duties, the
inestigating authorities must offer exporters an opportunity to cease dumping in the region or
enter a price undertaking.
In;ury
TL79> =* IK@BFL
The &greement proides that, in order to impose anti%dumping measures, the inestigating
authorities of the importing Cember must make a determination of in;ury. The &greement defines
the term "in;ury# to mean either !i$ material in;ury to a domestic industry, !ii$ threat of material
in;ury to a domestic industry, or !iii$ material retardation of the establishment of a domestic
industry, but is silent on the ealuation of material retardation of the establishment of a domestic
industry.
2asic re0uirements for determination of material in;ury
The &greement does not define the notion of "material#. Howeer, it does
re0uire that a determination of in;ury must be based on positie eidence and inole an
ob;ectie examination of !i$ the olume of dumped imports and the effect of the dumped imports
on prices in the domestic market for like products, and !ii$ the conse0uent impact of the dumped
imports on domestic producers of the like product. &rticle . contains some specific additional
factors to be considered in the ealuation of these two basic elements, but does not proide
detailed guidance on how these factors are to be ealuated or weighed, or on how the
determination of causal link is to be made.
The &greement sets forth factors to be considered in the ealuation of threat of material in;ury.
These include the rate of increase of dumped imports, the capacity of the exporter!s$, the likely
effects of prices of dumped imports, and inentories. There is no further elaboration on these
factors, or on how they are to be ealuated. The &greement does, howeer, specify that a
determination of threat of material in;ury shall be based on facts, and not merely on allegation,
con;ecture, or remote possibility, and moreoer, that the change in circumstances which would
create a situation where dumped imports caused material in;ury must be clearly foreseen and
imminent.
2asic re0uirements for determination of threat of material in;ury
The &greement sets forth factors to be considered in the ealuation of threat of material in;ury.
These include the rate of increase of dumped imports, the capacity of the exporter!s$, the likely
effects of prices of dumped imports, and inentories. There is no further elaboration on these
factors, or on how they are to be ealuated. The &greement does, howeer, specify that a
determination of threat of material in;ury shall be based on facts, and not merely on allegation,
con;ecture, or remote possibility, and moreoer, that the change in circumstances which would
create a situation where dumped imports caused material in;ury must be clearly foreseen and
imminent.
9lements of &nalysis
?onsideration of olume effects of dumped imports
The &greement re0uires inestigating authorities to consider whether there has been a significant
increase in the dumped imports, either in absolute terms or relatie to production or consumption
in the domestic industry. ?onsideration of price effects of dumped imports
?onsideration of price effects of dumped imports
In addition, the &greement re0uires inestigating authorities to consider whether there has been
significant price undercutting by the dumped imports as compared with the price of a like product
of the importing Cember. Inestigating authorities are also re0uired to consider whether the
effect of dumped imports is "otherwise# to depress prices to a significant degree, or to preent
price increases, which otherwise would hae occurred, to a significant degree.
9aluation of olume and price effects of dumped imports
The &greement proides that no one or seeral of these factors can necessarily gie decisie
guidance. It does not specify how the inestigating authorities are to ealuate the olume and
price effects of dumped imports6 merely that consideration of these effects is re0uired. Thus,
inestigating authorities hae to deelop analytical methods for undertaking the consideration of
these factors. Coreoer, since no single factor or combination of factors will necessarily result in
either an affirmatie or negatie determination, in each case inestigating authorities hae to
ealuate which factors are releant, and which are important, in light of the circumstances of the
particular case at issue.
9xamination of impact of dumped imports on the domestic industry
The &greement proides that, in examining the impact of dumped imports on the domestic
industry, the authorities are to ealuate all releant economic factors bearing upon the state of the
domestic industry. The &greement lists a number of factors which must be considered, including
actual or potential declines in sales, profits, output, market share, productiity, return on
inestments, utiliAation of capacity, actual or potential effects on cash flow, inentories,
employment, wages, growth, ability to raise capital or inestments, and the magnitude of the
margin of dumping. Howeer, the list is not exhaustie, and other factors may be deemed
releant. In addition, the &greement again specifies that no single factor or combination of factors
will necessarily lead to either an affirmatie or negatie determination.
Demonstration of causal link
The &greement re0uires a demonstration that there is a causal relationship between the dumped
imports and the in;ury to the domestic industry. This demonstration must be based on an
examination of all releant eidence. The &greement does not specify particular factors or gie
guidance in how releant eidence is to be ealuated. &rticle ..3 does re0uire, howeer, that
known factors other than dumped imports which may be causing in;ury must be examined, gies
examples of factors !such as changes in the pattern of demand, and deelopments in technology$
which may be releant, and specifies that in;ury caused by such "other factors# must not be
attributed to dumped imports. Thus, the inestigating authorities must deelop analytical methods
for determining what eidence is or may be releant in a particular case, and for ealuating that
eidence, taking account of other factors which may be causing in;ury.
?umulatie analysis
?umulatie analysis refers to the consideration of dumped imports from more than one country
on a combined basis in assessing whether dumped imports cause in;ury to the domestic industry.
=biously, since such analysis will increase the olume of imports whose impact is being
considered, there is a greater possibility of an affirmatie determination in a case inoling
cumulatie analysis. The practice of cumulatie analysis was the sub;ect of much controersy
under the Tokyo Found ?ode, and in the negotiations for the &greement. &rticle ... of the
&greement establishes the conditions in which a cumulatie ealuation of the effects of dumped
imports from more than one country may be undertaken. The authorities must determine that the
margin of dumping from each country is not de minimis, that the olume of imports from each
country is not negligible, and that a cumulatie assessment is appropriate in light of the
conditions of competition among the imports and between the imports and the domestic like
product. De minimis dumping margins and negligible import olumes are defined in the
&greement.
7rocedural Fe0uirements
Inestigation
Initiation
&greement &rticle 3 of the &greement establishes the re0uirements for the initiation of
inestigations. The &greement specifies that inestigations should generally be initiated on the
basis of written re0uest submitted "by or on behalf of# a domestic industry. This "standing#
re0uirement includes numerical limits for determining whether there is sufficient support by
domestic producers to conclude that the re0uest is made by or on behalf of the domestic industry,
and thereby warrants initiation. The &greement establishes re0uirements for eidence of
dumping, in;ury, and causality, as well as other information regarding the product, industry,
importers, exporters, and other matters, in written applications for anti%dumping relief, and
specifies that, in special circumstances when authorities initiate without a written application
from a domestic industry, they shall proceed only if they hae sufficient eidence of dumping,
in;ury, and causality. In order to ensure that inestigations without merit are not continued,
potentially disrupting legitimate trade, &rticle 3.: proides for immediate termination of
inestigations in the eent the olume of imports is negligible or the margin of dumping is de
minimis, and establishes numeric thresholds for these determinations. In order to minimiAe the
trade%disruptie effect of inestigations, &rticle 3.)- specifies that inestigations should be
completed within one year, and in no case more than ): months, after initiation.
?onduct
&rticle 4 of the &greement sets forth detailed rules on the process of inestigation, including the
collection of eidence and the use of sampling techni0ues. It re0uires authorities to guarantee the
confidentiality of sensitie information and erify the information on which determinations are
based. In addition, to ensure the transparency of proceedings, authorities are re0uired to disclose
the information on which determinations are to be based to interested parties and proide them
with ade0uate opportunity to comment. The &greement establishes the rights of parties to
participate in the inestigation, including the right to meet with parties with aderse interests, for
instance in a public hearing. *urther guidance on the conduct of inestigations is contained in two
&nnexes to the &greement, which set forth rules for the on%the%spot inestigations to erify
information obtained from foreign parties, as well as rules for the use of best information
aailable in the eent a party refuses access to, or does not proide, re0uested information, or
significantly impedes the inestigation.
7roisional measures and price undertakings
Imposition of proisional measures
&rticle 8 of the &greement proides rules relating to the imposition of proisional measures.
These include the re0uirement that authorities make a preliminary affirmatie determination of
dumping, in;ury, and causality before applying proisional measures, and the re0uirement that no
proisional measures may be applied sooner than 4- days after initiation of an inestigation.
7roisional measures may take the form of a proisional duty or, preferably, a security by cash
deposit or bond e0ual to the amount of the preliminarily determined margin of dumping. The
&greement also contains time limits for the imposition of proisional measuresQ generally four
months, with a possible extension to six months at the re0uest of exporters. If a Cember, in its
administration of anti%dumping duties, imposes duties lower than the margin of dumping when
these are sufficient to remoe in;ury, the period of proisional measures is generally six months,
with a possible extension to nine months at the re0uest of exporters.
7rice undertakings
&rticle : of the &greement contains rules on the offering and acceptance of price undertakings, in
lieu of the imposition of anti%dumping duties. It establishes the principle that undertakings
between any exporter and the importing Cember, to reise prices, or cease exports at dumped
prices, may be entered into to settle an inestigation, but only after a preliminary affirmatie
determination of dumping, in;ury and causality has been made. It also establishes that
undertakings are oluntary on the part of both exporters and inestigating authorities. In addition,
an exporter may re0uest that the inestigation be continued after an undertaking has been
accepted, and if a final determination of no dumping, no in;ury, or no causality results, the
undertaking shall automatically lapse.
?ollection of duties
Imposition and collection of duties
&rticle , of the &greement establishes the general principle that imposition of anti%dumping
duties is optional, een if all the re0uirements for imposition hae been met. It also states the
desirability of application of a "lesser duty# rule. Bnder a lesser duty rule, authorities impose
duties at a leel lower than the margin of dumping if this leel is ade0uate to remoe in;ury. In
addition, the &greement contains rules intended to ensure that duties in excess of the dumping
margin are not collected, and rules for applying duties to new shippers.
Fetroactie application of duties
The &greement sets forth the general principle that both proisional and final anti%dumping duties
may be applied only as of the date on which the determinations of dumping, in;ury and causality
hae been made. Howeer, recogniAing that in;ury may hae occurred during the period of
inestigation, or that exporters may hae taken actions to aoid the imposition of an anti%dumping
duty, &rticle )- contains rules for the retroactie imposition of dumping duties in specified
circumstances. If the imposition of anti%dumping duties is based on a finding of material in;ury, as
opposed to threat of material in;ury or material retardation of the establishment of a domestic
industry, anti%dumping duties may be collected as of the date proisional measures were imposed.
If proisional duties were collected in an amount greater than the amount of the final duty, or if
the imposition of duties is based on a finding of threat of material in;ury or material retardation, a
refund of proisional duties is re0uired. &rticle )-.4 proides for retroactie application of final
duties to a date not more than ,- days prior to the application of proisional measures in certain
exceptional circumstances inoling a history of dumping, massie dumped imports, and
potential undermining of the remedial effects of the final duty.
Feiew and public notice
Duration, termination, and reiew of anti%dumping measures
&rticle )) of the &greement establishes rules for the duration of anti%dumping duties, and
re0uirements for periodic reiew of the continuing need, if any, for the imposition of anti%
dumping duties or price undertakings. These re0uirements respond to the concern raised by the
practice of some countries of leaing anti%dumping duties in place indefinitely. The "sunset#
re0uirement establishes that dumping duties shall normally terminate no later than fie years after
first being applied, unless a reiew inestigation prior to that date establishes that expiry of the
duty would be likely to lead to continuation or recurrence of dumping and in;ury. This fie year
"sunset# proision also applies to price undertakings. The &greement re0uires authorities to
reiew the need for the continued imposition of a duty upon re0uest of an interested party.
7ublic notice
&rticle )+ sets forth detailed re0uirements for public notice by inestigating authorities of the
initiation of inestigations, preliminary and final determinations, and undertakings. The public
notice must disclose non%confidential information concerning the parties, the product, the margins
of dumping, the facts reealed during the inestigation, and the reasons for the determinations
made by the authorities, including the reasons for accepting and re;ecting releant arguments or
claims made by exporters or importers. These public notice re0uirements are intended to increase
the transparency of determinations, with the hope that this will increase the extent to which
determinations are based on fact and solid reasoning.
*ie percent rule
&ccording to *ootnote + &nti%Dumping &greement, domestic sales of the like product are
sufficient to base normal alue on if they account for 3 per cent or more of the sales of the
product under consideration to the importing country market. This is often called the%fie%per%
cent or home%market%iability test. This test is applied globally by comparing 0uantity sold of like
product on the domestic market with 0uantity sold to importing market.
Kormal alue cannot be based on the price in the exporter(s domestic market when there are no
domestic sales. *or example, if the products are only sold on the foreign market, the normal alue
will hae to be determined on another basis. &dditionally, some products may be sold on both
markets but the 0uantity sold on the domestic market may be small compared to 0uantity sold on
foreign market. This situation happens often in countries with small domestic markets like Hong
Iong and >ingapore, though similar circumstances may also happen in larger markets. This is
because of differences in factors like consumer taste and maintenance.
?alculating the extent of dumping on a product is not enough. &nti%dumping measures can only
be applied if the act of dumping is hurting the industry in the importing country. Therefore, a
detailed inestigation must first be conducted according to specified rules. The inestigation must
ealuate all releant economic factors that hae a bearing on the state of the industry in 0uestionG
if it is reealed that dumping is taking place and hurting domestic industry, the exporting
company can raise its price to an agreed leel in order to aoid anti%dumping import
dutiesRcitation neededS.
&ctions in the Bnited >tates
In the Bnited >tates, domestic firms can file an antidumping petition under the regulations
determined by the Bnited >tates Department of ?ommerce, which determines Oless than fair
alueO and the International Trade ?ommission, which determines Oin;uryO. These proceedings
operate on a timetable goerned by B.>. law. The Department of ?ommerce has regularly found
that products hae been sold at less than fair alue in B.>. markets. If the domestic industry is
able to establish that it is being in;ured by the dumping, then antidumping duties are imposed on
goods imported from the dumpersN country at a percentage rate calculated to counteract the
dumping margin.
Felated to antidumping duties are Ocounterailing dutiesO. The difference is that counterailing
duties seek to offset in;urious subsidiAation while antidumping duties offset in;urious dumping.
>ome commentators hae noted that domestic protectionism, and lack of knowledge regarding
foreign cost of production, lead to the unpredictable institutional process surrounding
inestigation. Cembers of the WT= can file complaints against anti%dumping measures.
2ecause of the ),,8 &sian financial crisis, =ctober +8, ),,8 mini%crash, and ),,: Fussian
financial crisis, the Bnited >tates steel producers was seerely harmed by a record surge of more
than /-,---,--- tons of cheap steel imports, resulting in the loss of more than )-,--- steel
production ;obs in ),,:, and was the imminent cause of three bankruptcies by medium%siAed steel
companies !&cme >teel, <aclede >teel, and 1enea >teel$, reduced olume, lower prices, and
affecting the willingness of priate banks and inestment institutions to make loans to the Bnited
>tates steel producers. &s a result, ?ongress passed the 9mergency >teel <oan 1uarantee and
9mergency =il and 1as 1uaranteed <oan &ct of ),,,, also known as the 9mergency >teel <oan
1uarantee &ct of ),,,.
&ctions in the 9uropean Bnion
9uropean Bnion anti%dumping is under the puriew of the 9uropean ?ouncil. It is goerned by
9uropean ?ouncil regulation .:/E,4. Howeer, implementation of anti%dumping actions !trade
defence actions$ is taken after oting by arious committees with member state representation.
The bureaucratic entity responsible for adising member states on anti%dumping actions is the
Directorate 1eneral Trade !D1 Trade$, based in 2russels. ?ommunity industry can apply to hae
an anti%dumping inestigation begin. D1 Trade first inestigates the standing of the
complainants. If they are found to represent at least +3P of community industry, the inestigation
will probably begin. The process is guided by 0uite specific guidance in the regulations. The D1
Trade will make a recommendation to a committee known as the &nti%Dumping &disory
?ommittee, on which each member state has one ote. Cember states abstaining will be treated
as if they oted in faour of industrial protection, a oting system which has come under
considerable criticism.
&s is implied by the criterion for beginning an inestigation, 9B anti%dumping actions are
primarily considered part of a Otrade defenceO portfolio. ?onsumer interests and non%industry
related interests !Ocommunity interestsO$ are not emphasiAed during an inestigation. &n
inestigation typically looks for damage caused by dumping to community producers, and the
leel of tariff set is based on the damage done to community producers by dumping.
If consensus is not found, the decision goes to the 9uropean ?ouncil.
If imposed, duties last for fie years theoretically. In practice they last at least a year longer,
because expiry reiews are usually initiated at the end of the fie years, and during the reiew
process the status%0uo is maintained.
?hinese economic situation
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The dumping inestigation essentially compares domestic prices of the accused dumping nation
with prices of the imported product on the 9uropean market. Howeer, seeral rules are applied
to the data before the dumping margin is calculated. Cost contentious is the concept of Oanalogue
marketO. >ome exporting nations are not granted Omarket economy statusO by the 9B6 ?hina is a
prime example because its market status is considered Ostate%sponsored capitalismO. In such
cases, the D1 Trade is preented from using domestic prices as the fair measure of the domestic
price. & particular exporting industry may also lose market status if the D1 Trade concludes that
this industry receies goernment assistance. =ther tests applied include the application of
international accounting standards and bankruptcy laws.
The conse0uences of not being granted market economy status hae a big impact on the
inestigation. *or example, if ?hina is accused of dumping widgets, the basic approach is to
consider the price of widgets in ?hina against the price of ?hinese widgets in 9urope. 2ut ?hina
does not hae market economy status, so ?hinese domestic prices can not be used as the
reference. Instead, the D1 Trade must decide upon an analogue market6 a market which does
hae market economy status, and which is similar enough to ?hina. 2raAil and Cexico hae been
used, but the B>& is a popular analogue market. In this case, the price of widgets in the B>& is
regarded as the substitute for the price of widgets in ?hina. This process of choosing an analogue
market is sub;ect to the influence of the complainant, which has led to some criticism that it is an
inherent bias in the process.
Howeer, ?hina is one of the countries that has the cheapest labourforce. ?riticisms hae argued
that it is 0uite unreasonable to compare ?hinaNs goods price to the B>&Ns as analogue. ?hina is
now deeloping to a more free and open market, unlike its planned%economy in the early 4-s, the
market in ?hina is more willing to embrace the global competition. It is thus re0uired to improe
its market regulations and con0uer the free trade barriers to improe the situation and produce a
properly ;udged pricing leel to assess the OdumpingO behaiour.
&gricultural support
9uropean Bnion and ?ommon
&gricultural 7olicyThe ?ommon &gricultural 7olicy of the 9uropean Bnion has often been
accused of dumping though significant reforms were made as part of the &greement on
&griculture at the Bruguay round of 1&TT negotiations in ),,+ and in subse0uent incremental
reforms, notably the <uxembourg &greement in +--.. Initially the ?&7 sought to increase
9uropean agricultural production and proide support to 9uropean farmers through a process of
market interention whereby a special fund % the 9uropean &gricultural 1uidance and 1uarantee
*und !9&11*$ % would buy up surplus agricultural produce if the price fell below a certain
centrally determined leel !the interention leel$. Through this measure 9uropean farmers were
gien a NguaranteedN price for their produce when sold in the 9uropean community. In addition to
this internal measure a system of export reimbursements ensured that 9uropean products sold
outside of the 9uropean community would sell at or below world prices at no detriment to the
9uropean producer. This policy was heaily criticised as distorting world trade and since ),,+ the
policy has moed away from market interention and towards direct payments to farmers
regardless of production !a process of OdecouplingO$. *urthermore the payments are generally
dependent on the farmer fulfilling certain enironmental or animal welfare re0uirements so as to
encourage responsible, sustainable farming in what is termed NmultifunctionalN agricultural
subsidies % that is, the social, enironmental and other benefits from subsidies that do not include
a simple increase in production.
?auses of Dumping
Dumping usually occurs because of the following reasons6
!)$ 7roducers in one country are trying to stay competitie with producers in another country,
!+$ 7roducers in one country are trying to eliminate the producers in another country and gain a
larger share of the world market,
!.$ 7roducers are trying to get rid of excess stuff that they canNt sell in their own country,
!/$ 7roducers can make more profit by diiding sales into domestic and foreign markets, then
&nti%Dumping in India6 <egal *ramework
&nti%Dumping in India% <egal framework
). The principle of imposition of anti%dumping duties was propounded by the &rticle 5I of
1eneral &greement on Tariffs H Trade !1&TT$ ),,/ J Bruguay Found
+. Indian legislation in this regard is contained in >ection ,& and ,2 !as amended in ),,3$ of the
?ustoms Tariff &ct, ),83
.. *urther regulations are contained in the &nti%Dumping Fules R?ustoms Tariff !Identification,
&ssessment and ?ollection of &nti%Dumping Duty on Dumped &rticles and for Determination of
In;ury$ Fules, ),,3S
/. The Designated &uthority for conducting inestigations pertaining to &nti%Dumping issues and
on basis thereof, for forwarding its recommendations is the Cinistry of ?ommerce, 1oernment
of India.
3. The responsibility for Imposition and ?ollection of duties as imposed Erecommended by the
&d;udicating authority is imposed upon the Cinistry of *inance, 1oernment of India. >ection
,& of the ?ustoms Tariff &ct, ),83 !hereinafter referred to as Tthe &ct)
Determination of dumping under WT= rules and procedures
Imposition of anti%dumping measures against an exporting country inoles
two steps6
). Dumping, as defined by WT= must be shown to hae occurred. That is,the export price must
be shown to be less than the "normal# price in thehome market. & dumping "margin,# which is
the extent by which theexport price falls short of the normal price, must be determined.
+. In;ury must be shown to hae occurred or be threatened in the releantactiity in the country
bringing the anti%dumping complaint. If these conditions are met, then anti%dumping measures
may be applied up to the amount of the dumping margin. In this section we will briefly examine
some of the details inoled in bringing an anti%dumping suit. This examination will show that
the WT= criteria for meeting both of these points are biased in the direction of finding dumping,
een where dumping is in doubt. *urthermore, a finding of WT= dumping does not imply that
economic dumping has occurred. Indeed, WT= dumping can be found among firms practicing
normal economic and business behaior.
?omparisons of normal alue and export price
There are three ways that the normal alue of an export item can be determined. The method
preferred by the WT= defines the normal alue as the price of the export item in the domestic
market "in the normal course of trade.# Thus, where an export item is also domestically sold and
consumed, there exists some domestic price to use as a reference point. Howeer, many items are
produced specifically for export and no domestic e0uialent is aailable. &lso, many export items
are traded within firms, or among closely related firms, at prices that are not determined "in the
normal course of trade.# Then, there are two alternaties. The first is the export alue method,
which uses as the normal alue the highest comparable price for a like product exported to a third
country. The second, used in the eent that there are no comparable sales inthird markets, is a
constructed alue method. The constructed alue method estimates production costs and adds
selling and administratie costs, as well as "normal profit,# to arrie at what is "normal.# This
method uses many inputs which are arbitrary. &ctual production cost information is unknown.
Kot only is this information normally proprietary, but also an anti%dumping proceeding is
adersarial, and the exporting firm is not likely to reeal such information. &lso, the margins that
may be added !or subtracted$ by the country bringing the suit are likely to be arbitrary relatie to
such margins actually experienced by the exporter. To make them comparable with normal alue,
export prices must be ad;usted so that both are compared at the same leel in the sales process.
Two problems arise in determining which is the export price that will be compared to the normal
alue in order to calculate the dumping margin. *irst, there are often many export sales of the
item in 0uestion to the country bringing the anti%dumping suit. =nly one or a few sales would not
normally een be noticeable and not attract anti%dumping attention. Which sales to use or how to
aggregate a number of sales comes into 0uestion. In aeraging export prices, the country bringing
the suit may ignore sales that occur at below%normal alue leels. The calculation may also ignore
sales that occur at prices aboe the aerage price and may ignore extraordinarily low "sale# prices
in the domestic market !Hidley, ),,/$. These allowances almost guarantee that dumping will be
found. 1rumwade(s example !),,46))+$ illustrates these biases well. >uppose the normal alue
of an item is determined to be )--. >uppose that there hae been +- export sales, )- at ))- and )-
at ,-. In calculating the export price, the ten sales at ))- may be ignored and only the ten at ,-
used. Thus, dumping will be shown where none exists on aerage. >econd, many items are sold
through sales companies, and the price of the export item in the country bringing the anti%
dumping suit must be ad;usted for sales%related costs so that comparisons can be made with the
"normal alue.# Indeed, deductions may be made for oerheads, adertising costs of sales
companies, and other costs that are applied asymmetrically. These costs may be deducted from
export prices without also being deducted from "normal alue# !Hidley, ),,/$. In constructing
the export price, deductions for selling costs may include all costs, direct and indirect. When
constructing "normal alue,# only direct selling costs are deducted. Thus, the procedure for
backing out the selling cost reduces the export price by more than the normal alue , thereby
creating a bias toward finding a dumping margin.
?onclusion
Traditionally, economists hae concluded that only predatory pricing is in;urious to the importing
and exporting countries.)-: &ccording to them, non predatory cross subsidisation and threats of
dependence on foreign imports should not be the concern of any national administration.The
aboe discussion has demonstrated that predation may not be the only concern of nation. The
weakening of an efficient )-8 Ibid. >ee for example, 1old "Canaging Dumping in 1lobal
9conomy# ),,8 ),,: 1eo Wash @ of Int(l <aw and 9conomics 3-. 3.:G <aAar
">tructuralE>trategic Dumping6 & ?omment on Fichard 2oltuck(s '&n 9conomic &nalysis of
Dumping(# ),:: @ of World Trade ,) and Hay "The 9conomics of 7redatory 7ricing# ),:)
&ntitrust <aw @ .4). Carceau &ntidumping and &ntitrust Issues. 3+ competitor or the preention
of the establishment of a strategic industry or in;urious disturbance of the structure of a market
may also be important considerations. It is therefore reasonable for states to worry about practices
other than predation. Dumping may be eidence of all sorts of anticompetitie actiities. It is
therefore, what is behind international price discrimination and transnational sales below their full
cost of production, which should be a concern. Dumping can be in;urious to the importing
country because it may succeed in creating or increasing the ability of foreign suppliers to
exercise monopoly power oer domestic consumers by permanently destroying the productie
capability of alternatie sources of supply. &s has been highlighted aboe, the early gains to
consumers from the low prices can be more than offset by the latter losses to the same consumers,
when the predators, substantially eleate prices in exercising their increase in market power. The
immediate adantage to cheap imports may be lost when the exporter decides to increase the
prices after haing "drien out# substantially all the producers of the "like product#. Fightfully
so, domestic competition systems recognise that restrictie business practices and arious abuses
of market power other than predation are ob;ectionable. This reasoning can be extended to
international setting, thus, international predation is not the only reasonable threat for an
importing country. Ibid. Willig "9conomic 9ffects of &ntidumping 7olicy# in <awrence !ed$
2rookings Trade 7olicy *orum !),,:$ 38.
Feferences
@ump up U 5an den 2ossche, 7eter !+--3$. The <aw and 7olicy of the World Trade =rganiAation.
?ambridge, BI6 ?ambridge Bniersity 7ress. p. /+. I>2K ,8:%-%3))%)+.,+%/. ODumping, i.e.
bringing a product onto the market of another country at a price less than the normal alue of that
product is condemned but not prohibited in WT= law.O
@ump up U ?hernow, Fon. Titan6 the life of @ohn D. Fockefeller, >r. Fetrieed +--,%-,%+/.
@ump up U 9mergency >teel <oan 1uarantee and 9mergency =il and 1as 1uaranteed <oan &ct of
),,,, )). >tat. +3+, V )-)
@ump up U 9ggert, @. O=bserations of the 9B &nti%Dumping Fegulation *T& 7osition for the
9xpert CeetingO. Fetrieed +--8%-8%+..
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