Anti-Dumping under

WTO Regime
 Historical Background
• Anti-dumping law was first introduced by Canada in 1903

• United States took initiative to introduce the anti-dumping duties in the Havana Charter as an exception to
tariff bindings

• In Kennedy Round (1967) – “Anti-dumping Code” came into existence. This was officially entitled
“Agreement on Implementation of Article VI of the GATT”

• This agreement has been further elaborated in Tokyo Round Code (1974) and Uruguay Round Code
(1986)

• Uruguay Round Code (1986) – Anti-dumping Agreement came into existence.

• Structure of Anti-dumping Agreement – 18 articles with two annexes

 Anti Dumping Duties

• Article VI of GATT defines dumping as a practice “by which products of one country are
introduced into the commerce of another country at less than the normal value of the
products”.

• To check such issue – anti-dumping duties are imposed for protection of domestic industries.

• Conditions:
condition 1 # Dumping
condition 2 # Material injury or threatens to cause material injury
condition 3 # Causal link between dumping and material injury.

• Article VI of GATT and Anti-dumping Agreement are the part of the same treaty – WTO
Agreement.

• Anti-dumping Agreement – essential for the interpretation of Article VI of GATT

Determination of Dumping

# Condition 1

 Essential components for determining dumping:

- export price is less than normal value
- in the ordinary course of trade: trade between independent buyer and seller – transaction
is at arms length
- for the like product when destined for consumption in the exporting country.
 Article 2 of Agreement

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 Normal Value

• Article VI of GATT and Article 2 of Anti-dumping Agreement – three grounds for establishing
Normal value

• A. VI says “a product is to be considered as being introduced into the commerce of an

importing country at less than its normal value, if the price of product exported from one
country to another:
- price of like product sold in domestic market of exporting country; or
- price of like product, at which sold to any third country; or
- Constructed normal value: cost of production plus reasonable cost, profits

In general practice countries prefer first and third ground for determining Normal value.
 Export Price

Refers to free on board (f.o.b) export price in the country of export.

Article 2, Anti-dumping Agreement – constructive export price
• If concerned authorities find export price unreliable, because of association between importer and
exporter, then
• Export price may be constructed on price at which imported products are first resold to an independent
buyer
Dumping margin
Normal value – Export Price = Dumping margin
 Determination of Injury

# Condition 2

• Injury can be of three types:

- material injury to domestic industry

- threat to material injury to domestic industry
- material retardation in the establishment of domestic industry: this test is applied where industry is yet to
be established

• Article 3 of anti-dumping agreement + paragraph 6 of Article VI

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• Article 3.4 of agreement – enumerates factors determining material injury:
- actual and potential decline in sale
- profits, market share, output
- productivity,
- return on investments, or utilization of capacity….

• Article 3.7 lists out the factors to determine threat to injury:

- significant increase in dumping,
- sufficient increase in the production of exporting country,
- imports entering at prices have a significant depressing effect on domestic prices,
- inventories of domestic industry
# Condition 3
Causal link between dumping and injury shall be examined by authorities on the basis of
relevant evidences
Article 3.5 enumerates the list of factors that expresses causal link between dumping and injury:
- Contraction in demand
- Trade restrictive practices
- Development of technology of domestic industry
- export performance and productivity of the domestic industry.
 Investigation

Article 5 of Agreement
• Written application made by or on behalf of domestic industry
• Authorities examines accuracy and adequacy of evidence
• Period of investigation: one year not more than 18 months
• investigation terminated: dumping margin determined as de minimis:
- if the margin of dumping is less than 2% of the export price
- volume of dumped imports less than 3% of the total imports of the like article
- volume of dumped imports collectively from all such countries is less than 7% of the total
imports
Investigation process in India

• Anti dumping measures in India are administered by the Directorate General of Anti dumping
and Allied Duties (DGAD) functioning in the Dept. of Commerce in the Ministry of Commerce
and Industry and the same is headed by the "Designated Authority".
• Designated Authority - investigation and make recommendation to the Government
• Department of Commerce recommends the Anti-dumping duty, it is the Ministry of Finance,
which levies such duty.
• Section 9A, Customs Tariff Act, 1975
• Imposition of anti-dumping duty = 5years
• Application received by the Designated Authority is dealt with in the following manner:
A. Preliminary Screening: application scrutinized – sufficient evidence
B. Initiation: accuracy and adequacy of evidence
C. Access to Information: access to non-confidential evidence presented to interested parties
D. Preliminary Findings: within 60-70 days
E. Provisional Duty: not exceeding dumping margin – remain in force = upto 6 months
extendable to 9 months
F. Disclosure of information: Designated Authority will inform all interested parties of the
essential facts
G. Final Determination
H. Time-limit for Investigation Process: one year from the date of initiation - extended by the
Central Government by 6 months.
 EC – BED LINEN
• Complainant: India
• Respondent: European Communities
• Measure at issue: Definitive anti-dumping duties imposed by the European Communities,
including the European Communities' zeroing method used in calculating the dumping
margin.
• Product at issue: Cotton-type bed linen imports from India.
• Appellate Body finding
that the practice of “zeroing”, as applied by the European Communities in this case in
establishing “the existence of margins of dumping”, was inconsistent with Art. 2.4.2. By “zeroing”
the “negative dumping margins”, the European Communities had failed to take fully into account
the entirety of the prices of some export transactions.
Byrd Amendment (Continued Dumping and Subsidy Offset Act of 2000)

• The amount collected from anti-dumping would be distributed to producers – U.S.

• But this could create inducement of producers – complainants (Australia, Brazil, Chile,
European Communities, India...)

• Appellate body findings:

that the requirement of Arts. 5.4 and 11.4 were fulfilled when a sufficient number (quantity) of
domestic producers have expressed support for the application and, contrary to the Panel's
analysis, the investigation authority is not required to examine the motives (quality) of domestic
producers that elect to support the investigation.
 Anti-dumping measures
A. Provisional undertaking: voluntary undertaking from exporters – to revise its prices or
cease exports to area in the question – so that authorities are satisfied that the injurious
effect of the dumping is eliminated. A. 8 of Agreement

B. Provisional measures: interim measures to prevent injury being caused during the
investigation. This can take form of – provisional duty, security by cash deposit, etc. – A. 7
of Agreement.

C. Anti-dumping Duty: imposed not beyond dumping margin (A.9)

Injury > dumping margin = anti-dumping duty equal to dumping margin
Injury < dumping margin = anti-dumping duty equal to injury margin
 GUATEMALA – CEMENT II
• Complainant - Mexico
• Respondent - Guatemala
• Measure at issue: Guatemala's anti-dumping investigation on certain imports.
• Product at issue: Grey Portland cement from Mexico.
• Panel findings:
- that Guatemala violated A. 5.3 (initiation of investigation – application) – that does not have
sufficient evidence of dumping, threat of injury and causal link (A. 5.8: initiation of investigation –
insufficient evidence)
- Regarding the confidential treatment given to the petitioner's submissions, the Panel found
an Art. 6.5 violation because there was no record of “good cause” shown by the petitioner and
the petitioner did not seem to have requested confidential treatment for the information.
 Dispute Settlement

A. Review of Anti-dumping measures taken by members: Committee on Anti-Dumping Practices

(A. 16)
B. Consultations and the settlement of disputes under this Agreement: the Dispute Settlement
Understanding is applicable (A. 17)
C. Dispute Settlement:
Article 17.4, if the member that requested consultations has failed to achieve a mutually
agreed solution – the matter could be referred to Dispute Settlement Body