I. Antidumping – Meaning And Concept
Q. 1. What is anti dumping? What is its purpose
in International Trade?
Ans. Dumping is said to occur when the
goods are exported by a country to another country
at a price lower than its normal value. This is an
unfair trade practice which can have a distortive
effect on international trade. Anti dumping is a
measure to rectify the situation arising out of the
dumping of goods and its trade distortive effect.
Thus, the purpose of anti dumping duty is to rectify
the trade distortive effect of dumping and
re-establish fair trade. The use of anti dumping
measure as an instrument of fair competition is
permitted by the WTO. In fact, anti dumping is an
instrument for ensuring fair trade and is not a
measure of protection per se for the domestic
industry. It provides relief to the domestic
industry against the injury caused by dumping.
Q.2. Does dumping mean cheap or low priced
Ans. Often, dumping is mistaken and
simplified to mean cheap or low priced imports.
However, it is a misunderstanding of the term. On
the other hand, dumping, in its legal sense, means
export of goods by a country to another country at a
price lower than its normal value. Thus, dumping
implies low priced imports only in the relative
sense (relative to the normal value), and not in
Import of cheap products through illegal trade
channels like smuggling do not fall within the
purview of anti-dumping measures.
Q.3. Is anti dumping a measure of protection for
Ans. Anti dumping, in common parlance, is
understood as a measure of protection for domestic
industry. However, anti dumping measures do not
provide protection per se to the domestic industry.
It only serves the purpose of providing remedy to
the domestic industry against the injury caused by
the unfair trade practice of dumping. In fact, anti
dumping is a trade remedial measure to counteract
the trade distortion caused by dumping and the
consequential injury to the domestic industry. Only
in this sense, it can be seen as a protective
measure. It can never be regarded as a protectionist
Q.4. What is the difference between anti dumping
duty and Normal Customs duty? Is the anti dumping
duty over and above the Normal Customs duty
chargeable on the import of an item?
Ans. Although anti dumping duty is levied
and collected by the Customs Authorities, it is
entirely different from the Customs duties not only
in concept and substance, but also in purpose and
operation. The following are the main differences
between the two: -
Conceptually, anti dumping and the like
measures in their essence are linked to the
notion of fair trade. The object of these duties
is to guard against the situation arising out of
unfair trade practices while customs duties are
there as a means of raising revenue and for
overall development of the economy.
Customs duties fall in the realm of trade and
fiscal policies of the Government while anti
dumping and anti subsidy measures are there as
trade remedial measures.
The object of anti dumping and allied duties
is to offset the injurious effect of
international price discrimination while customs
duties have implications for the government
revenue and for overall development of the
Anti dumping duties are not necessarily in the
nature of a tax measure inasmuch as the
Authority is empowered to suspend these duties
in case of an exporter offering a price
undertaking. Thus such measures are not always
in the form of duties/tax.
Anti dumping and anti subsidy duties are
levied against exporter / country inasmuch as
they are country specific and exporter specific
as against the customs duties which are general
and universally applicable to all imports
irrespective of the country of origin and the
Thus, there are basic conceptual and operational
differences between the customs duty and the anti
dumping duty. The anti dumping duty is levied over
and above the normal customs duty chargeable on the
import of goods in question.
Q.5. What are the parameters used to assess
dumping of goods from a country?
Ans. Dumping means export of goods by one
country / territory to the market of another country
/ territory at a price lower than the normal value.
If the export price is lower than the normal value,
it constitutes dumping. Thus, there are two
fundamental parameters used for determination of
dumping, namely, the normal value and the export
price. Both these elements have to be compared at
the same level of trade, generally at ex-factory
level, for assessment of dumping.
Q. 6. How do you define:
- Export price and
- dumping margin
Ans. Normal Value: Normal
value is the comparable price at which the goods
under complaint are sold, in the ordinary course of
trade, in the domestic market of the exporting
If the normal value can not be determined by
means of the domestic sales, the following two
alternative methods may be employed to determine the
normal value: -
Comparable representative export price to an
appropriate third country.
Constructed normal value, i.e. the cost of
production in the country of origin with
reasonable addition for administrative, selling
and general costs and reasonable profits.
Export price: The Export price of
the goods allegedly dumped into India means the
price at which it is exported to India. It is
generally the CIF value minus the adjustments on
account of ocean freight, insurance, commission,
etc. so as to arrive at the value at ex-factory
Dumping Margin: The margin of
dumping is the difference between the Normal value
and the export price of the goods under complaint.
It is generally expressed as a percentage of the
Illustration: Normal value US$ 110
Export price US$ 100 per kg.
There is dumping in this case as export price is
lower than normal value and dumping margin in this
case is US$ 10 per kg., i.e. 10% of the export
Dumping is a function of two variables, namely
Normal Value and Export Price, which must be
compared at the same level of trade i.e. at the
Q.7. What are the essential requisites for
initiating an anti dumping investigation?
Ans. The following are essential for
initiating an anti dumping investigation: -
- Sufficient evidence to the effect that ;
there is dumping
there is injury to the domestic industry; and
there is a causal link between the dumping and
the injury, that is to say, that the dumped
imports have caused the alleged injury.
- The domestic producers expressly supporting
the anti dumping application must account for
not less than 25% of the total production of the
like article by the domestic industry.
The application is deemed to have been made by or
on behalf of the domestic industry, if it is
supported by those domestic producers whose
collective output constitute more than 50% of the
total production of the like article produced by
that portion of the domestic industry expressing
either support for or opposition as the case may be,
to the application.
Note: This is to further clarify that a domestic
industry, which seeks relief, should give sufficient
evidence with respect to the above parameters.
Unless the above parameters are satisfied, it will
not be possible for the Authority to initiate an
Q. 8. What are the parameters of injury to the
Ans. Broadly, injury may be analysed in
terms of the volume effect and price effect of the
dumped imports. The parameters by which injury to
the domestic industry is to be assessed in the anti
dumping proceedings are such economic indicators
having a bearing upon the state of industry as the
magnitude of dumping, and the decline in sales,
selling price, profits, market share, production,
utilisation of capacity etc.
Q.9. What is the Non-injurious Price and injury
margin? How these are worked out?
Ans. Non-Injurious Price (NIP) is that
level of price, which the industry is, expected to
have charged under normal circumstances in the
Indian market during the Period defined. This price
would have enabled reasonable recovery of cost of
production and profit after nullifying adverse
impact of those factors of production which could
have adversely effected the company and for which
dumped imports can’t be held responsible.
Besides the calculation of the margin of dumping,
the Designated Authority also calculates the Injury
Margin for the Domestic Industry. The Injury Margin
is the difference between the Non-Injurious Price
due to the Domestic Industry and the Landed Value of
the dumped imports.
Landed Value for this purpose is taken as the
assessable value under the Customs Act and the
applicable basic Customs duties except CVD, SAD and
For calculating Non-Injurious Price, the
Authority calls for costing information from the
domestic industry in the prescribed proforma for the
period of investigations and for three previous
years. Accounting records maintained on the basis of
Generally Acceptable Accounting Principle (GAAP)
form the basis for estimating Non-Injurious Price.
In the estimation of Non-Injurious Price for the
Domestic Industry, the Authority makes appropriate
analysis of all relevant factors like usage of raw
material, usage of utilities, captive consumption
etc. and the actual expanses during the Period of
Investigation including the investments, the
capacity utilisation etc. The Non-Injurious Price
for Domestic Industry is determined considering the
reasonable return on the capital employed
Q.10. How is causal link established between
dumping and injury to the domestic industry?
Ans. In the anti dumping proceedings, it
is imperative to prove that the dumping has caused
injury to the domestic industry. No anti dumping
duty shall be recommended without a finding of this
causal relationship. That is to say,
Dumping should lead to Injury
The causal link is to be established generally in
terms of the following effects of dumped imports on
domestic industry: -
- volume effect
- price effect
The volume effect of dumping relates to the
market share of the domestic industry vis-à-vis the
dumped imports from the subject country/ies while
with regard to the price effect, the Designated
Authority shall consider whether there has been a
significant price under cutting by the dumped
imports as compared with the price of the like
product in India, or whether the effect of such
imports is otherwise to depress prices to a
significant degree or prevent price increase which
otherwise would have occurred to a significant
Q.11. In case anti dumping duty is warranted
after the investigation, what is the extent of such
duty to be recommended/imposed?
Ans. Under the WTO arrangement, the
National Authorities can impose duties upto the
margin of dumping i.e. the difference between the
normal value and the export price. The Indian law
also provides that the anti dumping duty to be
recommended/levied shall not exceed the dumping
Q.12. What is the minimum level of imports (de-minimis
margins) from a country and from an individual
exporter below which such exporter or country is to
be excluded from the scope of Anti Dumping
Ans. Individual exporter:
Any exporter whose margin of dumping is less than 2%
of the export price shall be excluded from the
purview of anti-dumping duties even if the existence
of dumping, injury as well as the causal link is
Country: Further, investigation
against any country is required to be terminated if
the volume of the dumped imports, actual or
potential, from a particular country accounts for
less than 3% of the total imports of the like
However, in such a case, the cumulative imports
of the like product from all these countries who
individually account for less than 3%, should not
exceed 7% of the import of the like product.
Q.13. What is the relief/remedy to the Domestic
Industry under the Anti Dumping mechanism. Is it
always in the form of Anti-dumping duty?
Ans. The relief to the domestic industry
against dumping of goods from a particular country
is in the form of anti dumping duty imposed against
that country/ies, which could go upto the dumping
margin. Such duties are exporter specific and
However, the remedy against dumping is not always
in the form of anti dumping duty. The Authority may
terminate or suspend investigation after the
preliminary findings if the exporter concerned
furnished an undertaking to revise his price to
remove the dumping or the injurious effect of
dumping as the case may be. No anti dumping duty is
recommended on such exporters from whom price
undertaking has been accepted.
Q.14 What are other remedial measures against
unfair trade practices in addition to Anti Dumping?
How do they come into operation?
Ans. Apart from dumping, some of the
countries also resort to subsidisation of their
exports to other countries. Export subsidies, under
the WTO agreement, are treated as unfair trade
practice and such subsidies are actionable by way of
levy of anti-subsidy countervailing duty.
There is one more trade remedial measure called
"safeguards" which are applied as an
emergency measure in response to surge in imports of
a particular item.
- Anti subsidy countervailing measure is in the
form of countervailing duty which is to be
imposed only after the determination that:
the subsidy is a
relates to export performance;
relates to the use of domestic goods over
imported goods in the export article; or
the subsidy has
been conferred on a limited number of persons
engaged in manufacturing, producing or exporting
What is subsidy for this purpose?
A subsidy is said to exist;
- if there is a financial contribution by the
Government or any public body within the
territory of the exporting country, i.e. where-
there is a direct transfer of funds (including
grants, loans and equity) by the Government;
government revenue i.e. otherwise due is
foregone and not collected (including fiscal
incentives, I.T. exemption
a government provides goods or services other
than general infrastructure;
What is not a subsidy?
government grants or maintains any form of
income or price support which operates directly
or indirectly to increase export of any article
from its territory.
What it Safeguards?
However the subsidy which is for research
activities conducted by the persons engaged in
manufacture or export or the subsidy which is
for assistance to disadvantaged regions with the
territory of the exporting country is not
actionable. Thus, no countervailing duty is to
be levied on such subsidies.
In anti subsidy countervailing investigation,
the Government of the exporting country/ies is a
party to the investigation in addition to the
exporters from these countries. The
countervailing duty imposed on the subsidised
exports from a country shall not exceed the
amount of such subsidy/ies.
In India the Designated Authority for anti
dumping is also the Authority for administering
anti subsidy countervailing measures.
- Safeguards, on the other hand, are applied
there is a surge
in imports of a particular product irrespective
of a particular country/ies and,
it causes serious
injury to the domestic industry.
- Safeguard measures are applied to all imports
of the product in question irrespective of the
countries in which it originates or from which
it is exported. This aspect distinguishes
Safeguards from anti dumping and anti subsidy
measures which are always country specific and
- Safeguards are applied in the form of either
safeguard duty or in the form of safeguard QRs
(import licenses). These measures are
administered in India by an Authority called
Director General (Safeguards) who functions in
the jurisdiction of the Department of Revenue,
Ministry of Finance.
What is the legal framework for Anti Dumping, Anti
Subsidy and safeguard measures?
Sections 9, 9 A, 9 B and 9 C of the Customs
Tariff Act, 1975 as amended in 1995 and the Customs
Tariff (Identification, Assessment and Collection of
Anti-dumping Duty on Dumped Articles and for
Determination of Injury) Rules, 1995 and Customs
Tariff (Identification, Assessment and Collection of
Countervailing Duty on Subsidised Articles and for
Determination of Injury) Rules, 1995 framed there
under form the legal basis for anti-dumping and anti
subsidy investigations and for the levy of
anti-dumping and countervailing duties. These laws
are in consonance with the WTO Agreements on Anti
Dumping and Anti Subsidy countervailing measures.