AGREEMENT ON DUMPING AND ANTI-DUMPING DUTIES - ISSUES OF LAW BY: AMBIKA KUNWAR SISODIYA & SHAREEKA H S
AGREEMENT ON DUMPING AND
ANTI-DUMPING DUTIES – ISSUES OF LAW
AUTHORED
BY: AMBIKA KUNWAR SISODIYA
CO-AUTHOR:
SHAREEKA H S
CONTACT
NUMBER: 1. 8688862001
2. 8056467473
NAME
OF THE INSTITUTION: School of Law, CHRIST Deemed to be University, Bengaluru.
QUALIFICATION:
1. LLM (Corporate Law)
2.LLM
(Corporate Law)
EMAIL
ADDRESS:1. sisodiyaambika9@gmail.com
ABSTRACT
Adam
Smith's counsel, as stipulated in his renowned economic doctrine, advises
against producing at home what costs more to make than to purchase. This
fundamental principle, often referred to as the concept of Comparative Cost
Advantage, underpins the intricate landscape of international trade in the
contemporary world. The regulations governing this international trade are
encapsulated in the General Agreement on Tariffs and Trade (GATT) and the World
Trade Organization (WTO). This discourse delves into a particularly intriguing
aspect of the GATT Treaty Agreement of 1994, specifically Article VI, also
known as the Agreement on Anti-Dumping. Article VI, within the GATT framework,
is the focal point of Anti-Dumping Laws. To fully appreciate the necessity and significance
of this article, it is imperative to first explore the rationale behind this
study. With the evolving dynamics of international trade, it is evident that
developing nations like India are deeming a more prominent role on the global
stage. Consequently, there has been a surge in the use of Anti-Dumping
measures, both by India against foreign companies and vice versa. This
necessitates a comprehensive understanding of the development, applicability,
and scope of Anti-Dumping Laws in today's international trade landscape.
The General Agreement on Tariffs and Trade of 1994 (GATT
1994) enunciates fundamental trade principles among World Trade Organization
(WTO) member countries, most notably the "most favored nation"
principle. It mandates that imported goods should not incur internal taxes or
modifications exceeding those applied to domestic products. Furthermore, it
obliges that imported goods receive treatment no less favorable than
domestically produced items under national laws and regulations. Additionally,
the GATT 1994 establishes regulations pertaining to quantitative limitations,
import-related fees, formalities, and customs valuation. Moreover, WTO members
have concurred on the creation of schedules containing fixed tariff rates. Conversely,
Article VI of GATT 1994 expressly grants the authority to levy specific
anti-dumping duties on imports from specific sources, surpassing the bound
rates, if such imports threaten domestic industries or impede their
establishment.
CONCEPTUAL
FRAMEWORK
The research paper examines the complex landscape of international trade
with a focus on the General Agreement on Tariffs and Trade (GATT) and the World
Trade Organization (WTO), specifically delving into the intriguing aspects of
the GATT Treaty Agreement of 1994, particularly Article VI, known as the
Agreement on Anti-Dumping. The primary objective of this study is to understand
the development, applicability, and scope of Anti-Dumping Laws in the context
of evolving dynamics in international trade.
The conceptual framework is rooted in Adam Smith's concept of Comparative
Cost Advantage, emphasizing the importance of not producing at home what costs
more than purchasing. It explores how Anti-Dumping measures have become more
prominent, particularly in developing nations like India, and how they impact
international trade.
The paper also highlights key legal frameworks governing Anti-Dumping,
emphasizing the role of GATT 1994, the Customs Tariff Act of 1975, and various
rules and regulations. It outlines the principles for determining dumping,
injury, and causation and addresses issues in the current anti-dumping
regulations.
The research paper concludes with suggestions and recommendations for
potential reforms in anti-dumping laws and emphasizes the need to align the
agreement's provisions with its core principles. Overall, the research paper
offers a comprehensive examination of the complex world of Anti-Dumping Laws,
shedding light on their implications and potential areas for improvement in the
realm of international trade.
LEGAL FRAMEWORK
The
foundation underpinning anti-dumping inquiries and the imposition of its
tariffs lies within the framework of international trade regulations.:
·
Based on Article VI of GATT, 1994
·
Customs Tariff Act, 1975- Sec 9A, 9B (as amended in
1995)
·
Customs Tariff (Identification, Assessment and
Collection of Dumped Articles and for Determination of Injury) Rules, 1995
·
Investigations and Recommendations by Designated
Authority, Ministry of Commerce
·
Imposition and Collection by Ministry of Finance
Article VI
of the General Agreement on Tariffs and Trade (GATT) 1994 articulates a set of
fundamental principles that must be adhered to by member nations when
implementing anti-dumping duties, countervailing duties, and safeguard
measures. In consonance with GATT 1994, comprehensive guidelines have been
delineated within specific agreements. These guidelines have been subsequently
integrated into the domestic legislative frameworks of member countries
associated with the World Trade Organization (WTO). India, in alignment with
these international obligations, enacted legislative modifications on January
1, 1995, to ensure compliance with the GATT agreements.
The Normal Value, as stipulated by the Act,
represents the standard market price for the contested goods within the
exporting country's domestic market. In cases where establishing the Normal
Value through domestic sales is unfeasible, the Act offers two alternative
methods for determination:
·
A comparable export price to a suitable third-country
representative.
·
The cost of production in the country of origin, with
a reasonable allowance for administrative, selling, general expenses, and profit.
The ‘Export Price’ could
either be:
·
The initial cost incurred for the goods by the initial
unaffiliated purchaser.
·
The cost of the imported items being sold to an
unrelated buyer.
·
A price is established using a fair and rational
approach.
The term 'Margin
of Dumping' is typically presented as a percentage of the Export Price. It
signifies the disparity between the Normal Value of a similar item and the
Export Price of the product being evaluated. This calculation is generally
determined based on a specific methodology, which is pivotal in trade and
anti-dumping investigations:
·
Analyze the
weighted average Normal Value by contrasting it with the weighted average of
prices from comparable export transactions.(or)
·
Assess Normal
Values and Export Prices on a transaction-by-transaction basis for a
comprehensive evaluation.[1]
Factors affecting the Normal Value and Export Price
when making a comparison
In order to
achieve a fair assessment of the Export Price in relation to the Normal Value
of goods, it is essential that these assessments are conducted on a consistent
trade basis, usually at the ex-factory level, and with a minimal time deviation
for the most accurate evaluation. This entails taking into account a range of
factors, among which are differences that might impact the comparability of
prices between a domestic sale and an export sale.
These factors encompass, among other
considerations, the following:
·
Physical
characteristics
Levels of trade
·
Quantities
·
Taxation
·
Conditions &
terms of sale
It is imperative to emphasize that the factors
mentioned above serve as mere indicators. The Authority takes into
consideration any aspect that can be substantiated to impact price
comparability. It is essential to underline that anti-dumping measures are
applicable exclusively when an Indian industry manufactures products akin to
the imported goods allegedly subjected to dumping.[2]
In India, a manufactured product must either match
the dumped goods precisely or, if an exact match is unavailable, closely
resemble those goods in terms of their defining attributes.
DETERMINATION
OF DUMPING
The Indian industry is obligated to substantiate
that the influx of dumped imports is either causing or posing a significant
threat to the Indian domestic sector. Furthermore, any substantial hindrance to
the establishment of an enterprise is also recognized as a form of injury. It
is essential to underscore that demonstrating material damage or its potential
cannot rely on unsubstantiated claims, mere statements, or conjecture. Adequate
evidence must be presented to substantiate the assertion of material injury.[3]
Typically, ‘Material
Injury’ is determined by the authorities by examining the following:
·
Import Quantity: Analyzing the substantial volume of
imported goods that have been dumped into our market, evaluating their sheer
quantity and origin.
·
Price Disruption: Investigating how these dumped
imports influence the pricing dynamics of similar domestic products, assessing
any noteworthy price fluctuations and their impact on consumers.
·
Producer Welfare: Scrutinizing the consequent effects
of these imports on domestic producers, including their ability to compete,
maintain quality, and sustain business operations.
A
"Causal Link" represents a crucial element in establishing a
relationship between the detrimental impact on the domestic industry and the
protective measures employed against injury arising from imported goods. It is
imperative to determine the existence of this link between the harm experienced
by the Indian industry and the influx of dumped imports.
To ascertain this connection, the authority
meticulously assesses the quantity of dumped imports, taking into account the
extent of any substantial increase in their volume, both in absolute terms and
concerning production or consumption within India. This thorough examination
serves the purpose of ascertaining whether the injury sustained by the domestic
industry can be attributed to the "Volume Effect" resulting from
these dumped imports. In essence, it is essential to discern the precise
cause-and-effect relationship between import levels and the injury incurred by
the domestic industry to make informed decisions regarding protective measures.[4]
LAWS
OF ANTI-DUMPING IN INDIA
Upon comprehending the overarching structure of the WTO code and the
Anti-Dumping Agreement, it is imperative to delve into the legal framework
governing Anti-Dumping measures in India. The genesis of Indian Anti-Dumping
legislation can be traced back to the year 1985, with the introduction of the
Customs Tariff (Identification, Assessment, and Collection of duty or
Additional duty on Dumped Articles and for Determination of Injury) Rules, 1985.
Subsequently, the anti-dumping laws in India have evolved to encompass a
comprehensive set of regulations and procedures that define the nation's stance
on addressing unfair trade practices:
·
In accordance with Article VI of GATT 1994, commonly
referred to as the Agreement on Anti-Dumping, anti-dumping measures are
established.
·
The legal foundation for anti-dumping in India is the
Customs Tariff Act of 1975, specifically Section 9A and 9B, as amended in 1995.
·
Detailed procedures and guidelines for anti-dumping
are laid out in the Anti-Dumping Rules, specifically the Customs Tariff
(Identification, Assessment, and Collection of Anti-Dumping Duty on Dumped
Articles and for Determination of Injury) Rules of 1995.
·
Investigations and recommendations pertinent to
anti-dumping matters are conducted by the Designated Authority under the
Ministry of Commerce.
·
The imposition and collection of anti-dumping duties
are carried out by the Ministry of Finance, as stipulated by established
regulations.
Are the measures designed to address unfair competitive advantages
resulting from government policies that distort the market in achieving their
intended objectives effectively? Or are they often falling short of their
goals? A significant disparity exists between the practical application of
anti-dumping regulations and their intended purpose. The fundamental aim of
anti-dumping rules is to establish trade barriers in response to market
distortions. Nevertheless, they struggle to differentiate adequately between
market distortions and legitimate, healthy competition. Consequently, foreign
competitors often find themselves penalized for engaging in accepted trade
practices. This disconnect between the fundamental principles and objectives of
the anti-dumping agreement and its implementation is striking. As negotiations
progress, it is anticipated that many nations will prioritize reforms in the
realm of anti-dumping measures.[5]
The ongoing anti-dumping negotiations hold significant importance for the
overall outcome of the round. One fundamental issue lies in the inadequacy of
anti-dumping regulations to confine the use of anti-dumping measures strictly
to cases that fall within the established definition of unfair trade. This
discrepancy underscores a disparity between the fundamental tenets, principles,
and aims of anti-dumping agreements and the prevailing operational practices.
Thus, the primary objective of the WTO negotiations should be the rectification
of this disparity by amending the agreement's provisions, aligning them with
its core principles.[6]
Substantial resistance to reforming the anti-dumping agreement within the
World Trade Organization (WTO) primarily emanates from political leadership and
administrative bodies, each motivated by vested interests. The opposition is
prominently voiced by governments of countries that habitually employ
anti-dumping measures, with notable stalwarts including the United States, the
European Union, Canada, and Australia. Notably, some new entrants into this
group, such as India, Argentina, Indonesia, Brazil, and South Africa, have also
emerged as opposing voices against the proposed reforms.[7]
The Doha declaration grants authorization for negotiations aimed at
amending the current Anti-dumping Agreement, with a crucial emphasis on
retaining the Agreement's fundamental concepts, principles, and efficacy. To
maintain adherence to the prescribed scope of these negotiations, the involved
parties must establish a clear understanding of the underlying concepts,
principles, and objectives from the outset.[8]
The imperative overhaul of the existing anti-dumping legislation
necessitates an examination of its core issues. In this regard, the current
anti-dumping investigations carried out by importing countries' authorities
exhibit significant deficiencies. These deficiencies have created a notable
disconnect between the stated objectives of anti-dumping policies and their
practical outcomes.[9]
In the initial phase, it is imperative to elucidate the fundamental
concepts, principles, and objectives integral to the anti-dumping agreement.
Regrettably, previous negotiations within the framework of the GATT/WTO have
predominantly overlooked the necessity to establish a consensus regarding the
rationale behind national anti-dumping laws and their intended purposes. This
oversight could potentially lead to an impasse that jeopardizes the entirety of
trade discussions. In contrast, in numerous other sectors, such as agriculture
and services, negotiating parties have made substantial headway by reaching agreements
on core principles. However, the anti-dumping agreement conspicuously remains
silent on these essential aspects. While it does set out standards governing
the conduct of anti-dumping investigations and the application of remedies, it
notably omits any discussion on the underlying problem it aims to
address—namely, the issue of dumping itself. The agreement adeptly defines the
solution but fails to articulate the problem it ostensibly seeks to resolve.[10]
Initiating WTO antidumping negotiations should commence with an essential
step, namely, the definition of fundamental concepts, principles, and
objectives as outlined in the Agreement. Remarkably, prior WTO and GATT
negotiations have overlooked this critical task. This omission, perhaps, stems
from antidumping's historical precedence over the multilateral trading system,
with anti-dumping laws taking root in the early 20th century. Consequently,
addressing this historical oversight becomes imperative to ensure the efficacy
of contemporary trade negotiations.[11]
SUGGESTIONS
AND RECOMMENDATIONS
Listed below are several recommendations to address
concerns related to Anti-Dumping Laws:
·
Require evidence of market distortions
·
Eliminate the cost test
·
Revise criteria for the use of constructed value
·
Eliminate the use of third-country sales in
calculating normal value
·
Prohibit zeroing
·
Eliminate asymmetric treatment of indirect selling
expenses
·
Revise the arm's-length test
·
Special consideration for off-quality or secondary
merchandise
·
Tighten standards on the causation of injury
·
Change criteria of negligibility
·
Need for stringent initiation standards
CONCLUSION
Under the
provisions outlined in the General Agreement on Tariffs and Trade (GATT),
national authorities are prohibited from imposing duties that exceed the Margin
of Dumping. However, it is advisable for the relevant government authorities to
consider imposing a duty that is lower but sufficient to alleviate the harm
inflicted on the domestic industry. In accordance with Indian laws, the
government is mandated to confine the anti-dumping duty to the lower of the two
factors, namely, the dumping margin and the injury margin.
The 'Injury Margin' is defined as the disparity
between the fair selling price and the landed cost of the product under
evaluation. The calculation of the landed cost for determining the Injury
Margin takes into account the assessable value under the Customs Act and the
basic customs duties. It is essential to note that, apart from the computation
of the Margin of Dumping, the Designated Authority also computes the Injury
Margin in the aforementioned manner.
Additionally, it is crucial to emphasize that any
exporter with a Margin of Dumping less than 2% of the Export Price will be
exempt from anti-dumping duties, even if the presence of dumping, injury, and
the causal link is firmly established. This measure aims to strike a balance
between protecting domestic industries and fostering international trade.[12]
Further, it is essential to understand the
significance of the DE Minims margin, as it plays a crucial role in determining
the termination of investigations against any nation in specific situations:
·
In cases where an
exporter's Margin of Dumping is minimal, specifically less than 2% of the
Export Price, even when dumping, injury, and the Causal Link are unequivocally
established, certain exceptions may apply.
·
Additionally, if
the quantity of dumped imports from a specific source falls below 3% of the
total imports, it can lead to an exception as long as the cumulative imports
from all countries with individual shares of less than 3% collectively
constitute more than 7% of the total.
·
These exemptions
aim to balance trade remedy measures with considerations of minimal impact and
proportionality, aligning with the principles of fairness and economic
efficiency.
By applying these exceptions judiciously, trade
regulators can ensure that anti-dumping measures are used prudently,
safeguarding both domestic industries and international trade relationships.
REFERENCES
·
DOHA WTO Ministerial declaration:
WT/MIN(01)/DEC/1 (2001) available on
www.wto.org/English/thewto_e/minist_e/min01_e/mindecl_e.htm
·
Harmonized Commodity Description and
Coding System, developed by the World Customs Organization in Brussels.
·
In order to calculate the dumping margin,
most countries divide the dumping amount by the CIF export price because any
anti-dumping duties imposed will be levied at the CIF level.
·
Jorge Miranda, Should antidumping laws
be dumped? 28 LAW AND POLICY IN
INTERNATIONAL BUSINESS 56 (1956).
·
Michael O. Moore, “Antidumping reform in the WTO: A pessimistic appraisal”, vol 12
(3) Pacific Economic Review, page 357 (2007).
·
Oxford Analytica, June 17, 1993.
·
Panel Report, European Communities –
Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R,
adopted 12 March 2001, as modified by the Appellate Body Report, WT/DS141/AB/R,
para. 6.167.”
·
Panel Report, Guatemala – Definitive
Anti-Dumping Measures on Grey Portland Cement from Mexico, WT/DS156/R, adopted
17 November 2000, Panel, para. 8.183.
·
Panel Report, Thailand – Anti-Dumping
Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel and H-Beams
from Poland, WT/DS122/R, adopted 5 April 2001, as modified by the Appellate
Body Report, WT/DS122/AB/R.l, para. 7.35.
·
Panel Report, United States – Anti-Dumping
and Countervailing Measures on Steel Plate from India, WT/DS206/R and Corr.1,
adopted 29 July 2002, paras 6.93-6.94.
·
Poly Vinyl Chloride Resin from Argentina,
Brazil, Mexico, Republic of Korea and USA. Ministry of Commerce Notification,
July 30, 1993. The Gazette of India: Extraordinary Part I - Sec 1.”
·
Rajendra K Gupta, WTO and implications
for India Economy – A Review (2005) available on
http://www.indianmba.com/Faculty_Column/FC218/fc218.html
·
Robert W. McGee, “Some thoughts on anti-dumping laws: utilitarianism, human rights and
the case for repeal”, vol. 96 (5), European Business Review, page 27
(1996).
·
Saneep Chauhan, GATT TO WTO (2001).
·
WTO, GATT Activities 1994-1995, at 77-78
(Geneva, April 1996).”
LITERATURE
REVIEW:
This extensively covers various facets of International Trade
Law, focusing on critical elements such as GATT and its associated agreements,
both contentious and non-controversial, as well as the WTO. It provides clear
and concise insights into the incorporation, function, and structure of UNCTAD,
a United Nations organ. Additionally, the book elucidates the Bretton Woods
system, the genesis of IMF and IBRD, pivotal in international liquidity and
capital. Furthermore, it delves into UNCITRAL, established by the United
Nations, for the purpose of unifying and codifying trade law.
This collection of essays serves as a tribute to Francis
Reynolds, commemorating his illustrious legal career upon his retirement. These
essays are a testament to his invaluable contributions to the realm of law,
particularly in the domains of English commercial and maritime law on a global
scale. The topics explored encompass contract law, the law of agency, the
carriage of goods by sea, international sale of goods, bankers' commercial
credits, and the intricate field of conflict of laws.
This article presents a comprehensive commentary on the WTO
Anti-Dumping Agreement, serving as a vital reference for government officials,
practitioners, and academics involved in anti-dumping issues. The commentary
provides a clear analysis of the relevant rules and their interpretations based
on WTO case law. Authored by experienced practitioners actively engaged in
numerous WTO disputes, it offers valuable insights into anti-dumping
investigations and challenges before both the WTO and national courts, making
it an authoritative resource for a profound understanding of this critical international
trade agreement.
Anti-dumping procedures in international trade have garnered
increasing attention, leading to tensions between countries. This handbook
comprehensively covers the core aspects of anti-dumping investigations as
outlined in WTO provisions. It offers a well-researched, clear, and practical
guide, starting with the steps in an anti-dumping investigation and moving on
to essential elements like calculating dumping margins and assessing injury and
causation. The handbook is a valuable resource for investigators conducting
these proceedings, government officials in international trade policy, affected
businesses, and legal practitioners, consultants, and academic scholars
involved in international trade matters.
[1] Panel Report, Thailand –
Anti-Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy Steel
and H-Beams from Poland, WT/DS122/R, adopted 5 April 2001, as modified by the
Appellate Body Report, WT/DS122/AB/R.l, para. 7.35.
[2] Panel Report, United States –
Anti-Dumping and Countervailing Measures on Steel Plate from India, WT/DS206/R
and Corr.1, adopted 29 July 2002, paras 6.93-6.94.
[3] 3 In order to calculate the
dumping margin, most countries divide the dumping amount by the CIF export
price because any anti-dumping duties imposed will be levied at the CIF level.
[4] Oxford Analytica, June 17, 1993.
[6] Jorge
Miranda, Should antidumping laws be dumped? 28 LAW AND POLICY IN INTERNATIONAL BUSINESS
56 (1956).
[7] Michael
O. Moore, “Antidumping reform in the
WTO: A pessimistic appraisal”, vol 12 (3) Pacific Economic Review, page
357 (2007).
[9] Saneep
Chauhan, GATT TO WTO (2001).
[10] Robert
W. McGee, “Some thoughts on
anti-dumping laws: utilitarianism, human rights and the case for repeal”, vol.
96 (5), European Business Review, page 27 (1996).
[11] Rajendra
K Gupta, WTO and implications for India Economy – A Review (2005)
available on http://www.indianmba.com/Faculty_Column/FC218/fc218.html
[12] “ Panel Report, European Communities –
Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India, WT/DS141/R,
adopted 12 March 2001, as modified by the Appellate Body Report, WT/DS141/AB/R,
para. 6.167.”
[13] Ishita Chatterjee, International
Trade Law (Central Law Publications 2016).
[14] Orsolya Toth, The Lex Mercatoria
in Theory and Practice (Oxford University Press 2017).
[15] Philippe De Baere, Annemieke van
Damme, & Clotilde du Parc, The WTO Anti-Dumping Agreement: A Detailed
Commentary (Cambridge University Press 2021).
[16] Judith Czako, A Handbook on
Anti-Dumping Investigations (Cambridge University Press 2012).