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National Law Institute University, Bhopal

INTERNATIONAL TRADE LAW PROJECT

ANTI-DUMPING DUTIES

Submitted to: Mrs. Monica Raje

Submitted By: Ankita Sharma (BA.LL.B. 2010 86) Hirak Mukherjee (BA.LL.B. 2010 76)

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CONTENTS
INTRODUCTION ..................................................................................................................... 3 Rationale behind Dumping..................................................................................................... 3 Meaning of Anti-Dumping ..................................................................................................... 4 Justifications for antidumping duty ........................................................................................ 4 ANTI-DUMPING LAW WITH SPECIFIC REFERENCE TO WTO & GATT ...................... 5 ANTI-DUMPING IN INDIA: INSTITUTIONAL ARRANGEMENT & EXISTING ADMINISTRATIVE MECHANISM ........................................................................................ 8 Legal Framework Of Anti Dumping In India ........................................................................ 8 Anti-Dumping Duties ............................................................................................................. 9 Procedural Formalities For Applying For Anti Dumping Duties ........................................ 10 Regulatory Framework ......................................................................................................... 11 INTERNATIONAL CASES .................................................................................................... 12 1) European Communities Definitive Anti-Dumping Measures On Certain Iron Or Steel Fasteners From China........................................................................................................... 12 2) European Union Anti-Dumping Measures on Certain Footwear from China ............ 13 3) United States Customs Bond Directive for Merchandise Subject to AntiDumping/Countervailing Duties .......................................................................................... 14 INDIAN CASES ...................................................................................................................... 16 1) Designated Authority Anti-Dumping Directorate Ministry Of Commerce Vs. M/s. Haldor Topsoe A/s. .............................................................................................................. 16 2) Chhotu Lal Daga (Prop. of Rohit Enterprises) Vs. Commissioner of Customs (Port) .... 17 3) Rishiroop Polymers Pvt. Ltd. Vs. Designated Authority and Additional Secretary ....... 19 CONCLUSION ........................................................................................................................ 21 BIBLIOGRAPHY .................................................................................................................... 22 WEBLIOGRAPHY.................................................................................................................. 22

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INTRODUCTION
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 exist and where the markets are segmented in a way such that domestic residents cannot easily purchase goods intended for export. Antidumping duties were initiated with the intention of nullifying the effect of the market distortions created due to such unfair trade practices adopted by aggressive exports. They are meant to be remedial and not punitive in nature. As a method of protection to the domestic industries, anti dumping duties are thus levied on the exporting country which has been accused of dumping goods in another country. As the antidumping duty is only meant to provide protection to the domestic firms in the initial stages, as per the international laws, the antidumping legislations may last for a maximum period of five years. Antidumping measures are of two kinds: Antidumping duty: This is imposed at the time of imports, in addition to other customs duties. The purpose of antidumping duty is to raise the price of the commodity when introduced in the market of the importing country. Price undertaking: If the exporter himself undertakes to raise the price of the product then the importing country can consider it and accept it instead of imposing antidumping duty.

Rationale behind Dumping Dumping occurs when firms start using price discrimination as a strategy for profit maximisation. The condition mandatory for dumping to take place is the presence of an imperfect market where price discrimination between markets is possible. Only if the above condition is satisfied is it profitable for the exporting firm to engage in dumping. For any firm, price discrimination in favour of exports is more common because the share of exports is usually lesser than the domestic demand. In the export market, individual firms have lesser monopoly power and hence choose to keep prices lower in foreign markets while charging higher prices for domestic markets. This can also be explained through the price elasticity of demand for goods. In areas where the demand is price inelastic, producers tend to charge a higher price. This is said to be the case in domestic

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markets. In foreign markets, price elasticity of demand is elastic and hence prices are low. Thus, if there is high elasticity on export sales than on domestic sales, firms will dump. Often, dumping is mistaken and simplified to mean cheap or low priced imports. However, it is a misunderstanding of the term. Dumping implies low priced imports only in the relative sense (relative to the normal value1), and not in absolute sense. Import of cheap products through illegal trade channels like smuggling does not fall within the purview of antidumping measures. Meaning of Anti-Dumping Anti-dumping can be seen as a protective device available to the states against problems associated with the free trade. In the recent years a large number countries have become frequent users of anti-dumping. Many of the heaviest anti-dumping users are countries who did not even have an anti- dumping statute a decade ago. Anti- dumping measures are not only legal but they are also flexible in usage. Further, antidumping duties can be presented not as protection but as encounter against unfair competition. Justifications for antidumping duty Anti-Dumping duties were introduced by the developed countries to protect their industries against the low priced imports. Developing countries supported the inclusion of the provision relating to anti-dumping duties under GATT because they wanted to levy of anti-dumping duties to be under international regulation. In free trade, firms are allowed to charge different rates in different markets. The result would be that firms would charge lower prices in foreign leading to material injury to the domestic producers in the foreign market. Had price discrimination taken place by a monopoly firm within one economy, the government would have intervened to stop consumer exploitation by enforcing an Act similar to the MRTP Act, in India. Hence, in the international context, it is the antidumping duty that protects the domestic producers initially and consumers in the long run.

Normal value is the price at which the like articles are sold in the Domestic Market of the exporter.

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Usually, the intentions of charging such low prices to foreign consumers is to be able to wipe out the domestic industries and eventually acquire monopoly power in the foreign market (i.e. using predatory pricing). Thus it is on the ground of protecting the domestic industries that the anti dumping duties have been justified.

ANTI-DUMPING LAW WITH SPECIFIC REFERENCE TO WTO & GATT

The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade, 1994 (hereinafter referred to as the Agreement) governs the application of antidumping measures by Members of the WTO. The provisions of the Agreement were first negotiated during the Kennedy Round (1967) and later substantially revised during the Tokyo Round (1979) of GATT negotiations. WTO rules allow the member countries to opt for antidumping measures with specific stipulations. If a country today has anti-dumping legislations, it must be consistent with the agreement. Anti-dumping measures are unilateral remedies which may be applied by a Member after an investigation and determination by that Member, in accordance with the provisions of the Agreement, if it is felt that an imported product is dumped and that the dumped import is causing material injury to a domestic industry which produces a similar product.2 The Agreement applies to trade in goods only. Trade in services is not covered by this agreement. The agreement contains provisions with respect to the following: 1. The Agreement sets out rules for the conduct of anti-dumping investigations, including initiation of cases, calculation of dumping margins, the application of remedial measures, injury determinations, enforcement, reviews, duration of the measure and dispute settlement. 2. The Agreement provides for the right of contracting parties to apply anti-dumping measures, i.e. measures against imports of a product at an export price below its normal value (usually the price of the product in the domestic market of the exporting country) if such dumped imports cause injury to a domestic industry in the territory of the importing contracting party3.

2 3

Article 1 Article 3.5

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3. The Agreement provides for greater clarity and more detailed rules in relation to the method of determining whether a product is dumped, the criteria to be taken into account in determining whether dumped imports cause injury to a domestic industry, and also the procedures to be followed in initiating and conducting anti-dumping investigations.4 This investigation can initiate only on receiving an application, containing the nature and extent of harm to the domestic industry being caused and the complete description of the dumped products, from the domestic producers of the similar product. If authorities decide to proceed to initiate an investigation, the authorities shall notify the government of the exporting Member concerned.5 4. A new provision requires the immediate termination of an anti-dumping investigation in cases where the authorities determine that the margin of dumping is de-minimis (which is defined as less than 2 per cent, expressed as a percentage of the export price of the product) or that the volume of dumped imports is negligible (generally when the volume of dumped imports from an individual country accounts for less than 3 per cent of the imports of the product in question into the importing country).6 5. It contains provisions relating to implementation and duration of anti-dumping measures7. An anti-dumping duty shall remain in force only as long as and to the extent necessary to counteract dumping which is causing injury.8 The Agreement lays the Sunset Provision under which all anti-dumping measures shall expire five years after the date of imposition (or the most recent review), unless a determination is made by the authorities that, in the event of termination of the measures, dumping and injury would be likely to continue or recur.9 The agreement also provides for a judicial, arbitral or administrative review for the duration such imposition.10 6. From many perspectives, the most significant feature of the WTO anti-dumping framework is its dispute settlement procedure, which greatly strengthens the ability of affected nations to challenge anti-dumping actions by other member nations. The Agreement clarifies the role of dispute settlement panels in disputes relating to antidumping actions taken by domestic authorities. Under the WTO's DSB (Dispute Settlement Body), a case generally has to first proceed through a panel stage, then an
4 5

Article 6 Article 12 6 Article 5.8 7 Article 11 8 Id 7 Para 1 9 Id 7 Para 3 10 Article 13

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appeal to the Appellate Body. The Dispute Settlement Body has to accept or reject the Appellate Body report within 30 days and rejection is only possible by consensus. 7. The Agreement strengthens the requirement for the importing country to establish a clear causal relationship between dumped imports and injury to the domestic industry11 by evaluating all relevant economic factors related to the industry concerned. 8. Provisions on the application of provisional measures12 are given. These measures are applied when an investigation as per article 5 has been initiated or a preliminary affirmative determination has been made of dumping and consequent injury to a domestic industry 9. Provisions in respect of the use of price undertakings13 in anti-dumping cases have been strengthened. Here proceedings may be suspended or terminated without the imposition of provisional measures or anti-dumping duties upon receipt of satisfactory voluntary undertakings from any exporter to revise its prices or to cease exports to the area in question at dumped prices so that the authorities are satisfied that the injurious effect of the dumping is eliminated. 10. The agreement provides that the provisional measures and anti-dumping duties shall only be applied to products which enter for consumption after the time when the decision for imposition of these measures enters into force. However, where a final determination of injury is such that the effect of the dumped imports would, in the absence of the provisional measures, have led to an injury to domestic producers, antidumping duties may be levied retroactively for the period for which provisional measures have been applied.14

11

According to article 4 Domestic industry refers to the domestic producers as a whole of the like products or to those of them whose collective output of the products constitutes a major proportion of the total domestic production of those products 12 Article 7 13 Article 8 14 Article 12

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ANTI-DUMPING IN INDIA: INSTITUTIONAL ARRANGEMENT & EXISTING ADMINISTRATIVE MECHANISM

India is a founding member of the GATT and the WTO. Until the 1990s, India was not affected by anti dumping policies as her markets were sufficiently protected by a high tariff rate and quantitative restrictions. However, after Liberalisation in 1991, India has become a major user of Anti dumping policies as those used by developing countries. Indias anti dumping laws are in compliance with their WTO treaty obligations and are hence based on the Agreement on Implementation of Article VI of GATT 199915. India has implemented, rather than challenged, the existing international legal standards which were originally drafted to serve American and European interests. In fact, despite the large numbers of antidumping measures implemented by India, no WTO case has ever been brought against Indias antidumping laws.16 LEGAL FRAMEWORK OF ANTI DUMPING IN INDIA Section 9A of the Customs Tariff Act, 1975 (hereinafter referred to as the Act) 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 (hereinafter referred to as the Rules) framed hereunder, form the legal basis for anti-dumping investigations and for the levy of anti-dumping duties. These are in consonance with the WTO Agreement on anti-dumping measures. These rules form the legislative framework for all matters relating to dumping of products, which include the substantive rules, rules relating to practice, procedure, regulatory mechanism and administration. 1. The principle of imposition of anti-dumping duties was propounded by the Article VI of General Agreement on Tariffs & Trade (GATT) 1994 Uruguay Round 2. Indian legislation in this regard is contained in Section 9A and 9B (as amended in 1995) of the Customs Tariff Act, 1975.

15

Press Information Bureau, Anti-dumping checking unfair trade practices, Available at http://pib.nic.in/focus/fomar99/wto-7.pdf 16 Mark Wu , Antidumping in Asias Emerging Giants, Volume 53, Number 1, Winter 2012, Harvard International Law Journal

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3. Further regulations are contained in the Anti-Dumping Rules [Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995] 4. The Ministry of Commerce, Government of India is the Designated Authority for conducting investigations pertaining to Anti-Dumping issues and forwarding its recommendations. 5. The responsibility for Imposition and Collection of duties as imposed /recommended by the Adjudicating authority is upon the Ministry of Finance, Government of India. ANTI-DUMPING DUTIES 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, which could go up to the dumping margin. Under the WTO arrangement, the national authorities can impose duties up to 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 margin. An anti-dumping duty imposed under the Act unless revoked earlier remains in force for 5 years from the date of imposition. The Designated Authority by the process of mid review is empowered to review the need for the continued imposition of the anti-dumping duty from time to time. Such a review can be done suo-moto or on the basis of request received from an interested party in view of the changed circumstances. 17 The WTO Agreement as well as the Indian law provides that the injured domestic industry is permitted to file for relief under both anti-dumping and countervailing duties. However, no article will be subjected to both countervailing and anti-dumping duties to compensate for the same situation of dumping. ALTERNATIVE REMEDIES: The remedy against dumping is not always in the form of anti-dumping duty. The investigation may be terminated or suspended after the preliminary findings if the exporter concerned furnishes 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.18

17 18

Rule 23(1) of the Anti Dumping Rules Rule 15 of the Anti Dumping Rules

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INTERIM REMEDIES: An interim relief in the form of a provisional anti-dumping duty, pending the finalization of investigation proceedings, can also be provided to the affected domestic industry. The provisional duty can be imposed only after the expiry of 60 days from the date of initiation of investigation and will remain in force only for a period not exceeding 6 months, extendable to 9 months under certain circumstances.19 If the final duty levied is less than the provisional duty which has already been levied and collected, the differential amount already collected as provisional duty shall be refunded. If the final duty imposed is more than the provisional duty already imposed and collected, the difference shall not be collected.20 RETROSPECTIVE ANTI DUMPING DUTIES: Anti-dumping duty can also be levied on a retrospective basis in cases where injury is caused due to massive dumping of an article imported in a relatively short time, which in the light of the timing and the volume of imported article dumped and other circumstances, is likely to seriously undermine the remedial effect of the antidumping duty liable to be levied. However, the anti-dumping duty cannot be levied retrospectively beyond 90 days from the date of issue of notification imposing duty.21 PROCEDURAL FORMALITIES FOR APPLYING FOR ANTI DUMPING DUTIES Applications for anti- dumping protection can be made by or on behalf of the concerned domestic industry to the Designated Authority (officer of level of Additional Secretary to the Government of India who heads the DGAD) in the Dept. of Commerce for an investigation into alleged dumping of a product into India. As per the regulations set by the DGAD, an application for protection can be made either by an individual petitioner (domestic producer) commanding 25% of the production capacity of the entire market or by a group of producers who collectively hold 50% of the total market capacity. Any industry is subject to protection if and only if there is sufficient evidence furnished by the petitioner/s regarding; i. ii.
19 20

Dumping of goods in question; Injury to the domestic industry; and

Rule 13 of the Anti Dumping Rules Rule 21 of the Anti Dumping Rules 21 Section 9A (3) of the Customs Tariff Act, 1975

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iii.

A causal link between the dumped imports and alleged injury to the domestic

industry. Broadly, injury may be analysed in terms of the volume effect and price effect of the dumped imports. 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 are some of the parameters by which injury to the domestic industry is to be assessed. Existence of dumping can be estimated by calculating the dumping margin which is the difference between the Normal Value of the like article and the export Price of the product under consideration. Dumping margin= Normal value- Export price The 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 country or territory while the export price of goods imported into India is the price paid or payable for the goods by the first independent buyer. REGULATORY FRAMEWORK Anti-dumping, anti-subsidies & countervailing measures in India are administered by the Directorate General of Anti-dumping and Allied Duties (DGAD) functioning in the Department of Commerce in the Ministry of Commerce and Industry and the same is headed by the Designated Authority. The Central Government may, by notification in the Official Gazette, appoint a person not below the rank of a Joint Secretary to the Government of India or such other person as that Government may think fit as the Designated Authority.22 The Designated Authority is a quasi-judicial authority notified under the Customs Act, 1962 which is designated to initiate necessary action for investigations and subsequent imposition of anti-dumping duties.23 A senior level Joint Secretary and Director, four investigating officers and four costing officers assist the DGAD. Besides, there is a section under the DGAD headed by the Section-Officer to deal with the monitoring and coordination of the functioning of the DGAD.
22 23

Rule 3 (1) Though the WTO Agreement does not require the authorities for dumping and injury determination to be distinct and separate, national practices in this respect van`. Generally, while the developing countries have single authority to deal with both dumping and injury, developed countries like the US, Canada and the EU have elaborate anti-dumping machinery

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The Designated Authoritys function, however, is only to conduct anti-dumping/anti subsidy & countervailing duty investigation and make recommendation to the Government for imposition of anti-dumping or anti subsidy measures. Such duty is finally levied by a Notification of the Ministry of Finance. The law provides that an order of determination of existence, degree and effect of dumping is appealable before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), formerly the (Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT)) a judicial tribunal, within 90 days. It reviews final measures and is independent of administrative authorities. This is consistent with the WTO provision of independent tribunals for appeal against final determination and reviews. However, many petitions are also filed before the High court (under Article 226 of the Constitution) and also the Supreme Court of India. Due to large pendency in both these courts, it causes disruptions in trade during the interim period. Thus there have been demands for a specially designated bench in the Supreme Court for this purpose.24

INTERNATIONAL CASES
1) European Communities Definitive Anti-Dumping Measures On Certain Iron Or Steel Fasteners From China25 On December 4, 2008, within the European Union, 15 members were in favor and 12 votes were against the adoption of imposing a five-year average of 80 percent anti-dumping duties on the screw and nut products from China. In 2009, the EU decided to impose anti-dumping duties of up to 87 percent for the next five years on fasteners imported from China and required Chinese exporters to prove that they meet with the single duty requirements when they responded to anti-dumping cases, bringing a heavy burden and unfair treatment to Chinese companies. On January 28, 2009, the Ministry of Commerce spokesman Yao Jian made a speech on the EU's final decision regarding anti-dumping measures on China's export of fasteners. Yao said the Chinese government and industries had expressed strong dissatisfaction and that there
24

Raju, K. D., World trade Organization Agreement on Anti-dumping, Wolter Kluwer Law & Business Series, Aspen Publishers, Inc., p. 233 25 DISPUTE DS397

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were many discrepancies in the European Union's case filing, investigation and adjudication process with regard to WTO rules. He added that the EU anti-dumping practice, lacking fairness and transparency, leaned towards trade protection, which greatly hurt the legitimate rights of Chinese fastener enterprises. China resorted to the WTO to resolve the issue. FINDINGS OF THE PANEL The WTO set up an expert panel on Oct 23, 2009 after China initiated the WTO case on July 31, 2009. On July 15, 2011, the WTO issued a final ruling on the case concluding that the section 5, Article 9 of the EU Anti-dumping Law against China was in violation of WTO rules; the anti-dumping measures taken against Chinese fastener by the European Union in January 2009 were contrary to the provisions of the WTO Anti-Dumping Agreement, and that the EU should withdraw the anti-dumping order. The WTO ruled the EU's single duty requirements and practices are discriminatory and violated WTO rules.

2) European Union Anti-Dumping Measures on Certain Footwear from China26 The shoe dumping case was the second brought by China against the EU at the WTO. China launched the shoe case in February 2010 after the EU decided to extend the duties on shoes from China and Vietnam, after shoemakers in Spain and Italy complained they could not compete against the cheap imports. The duties also faced opposition within Europe, since they forced consumers to pay more for their shoes. The Federation of the European Sporting Goods Industry, whose members include companies such as Adidas, Puma and Nike, launched a legal case against the European Union complaining they had suffered losses as a result of the duties on shoes from China and Vietnam. FINDINGS OF THE PANEL The WTO dispute panel largely backed the complaint by China that anti-dumping duties imposed by the European Union (EU) on certain leather footwear imports breached global rules and held that the anti-dumping duties were inconsistent with the EU's obligations under the WTO and that some aspects of the original investigation and expiry review were out of step with the anti-dumping agreement.

26

DISPUTE DS405

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The WTO panel also upheld China's challenge to the EU's method for calculating the antidumping duties, saying the EU's approach systematically produced a result which punished normal pricing behaviour. It also concluded that the EU calculated and imposed the antidumping duties in a way which impermissibly discriminated against the vast majority of Chinese suppliers solely because they were Chinese, thus violating the cornerstone nondiscrimination provision of the WTO Agreement.

3) United States Customs Bond Directive for Merchandise Subject to AntiDumping/Countervailing Duties27 The US Southern Shrimp Alliance (SSA) an alliance of eight southern coastal States representing the harvesters, processors and distributors of US wild caught shrimp, filed a petition in 2003 in the US Department of Commerce (DOC) and the US International Trade Commission (ITC). The petitioners alleged that the exporters from Thailand, China, Vietnam, India, Brazil and Ecuador were selling shrimp at lower prices than in their home markets and were materially injuring the domestic industry in the US. This they justified by showing the sudden drop in the harvest by more than half from $1.25bn in 2000 to $560mn in 2002. In short, they alleged that these countries are dumping their shrimps in the US market. Under a 1991 Customs Bond Directive, the US required importers subject to antidumping action to post a custom bond equivalent to the greater of US$50,000 or 10 percent of the duties paid during the preceding year. As per a 2004 US Customs and Border Protection enactment, (the Enhanced Bond Requirement, or EBR) exporters were additionally required to post a minimum bond equivalent to the anti-dumping duty margin, multiplied by the value of imports of shrimp in the preceding year as well as pay cash deposit equal to the amount of anti-dumping duty per entry. India also claimed that in order to post these bonds, the shrimp exporters had to put up a surety equivalent to the bond amount to the banks that financed the bonds. Apart from causing excessive financial burden on exporters paying the anti-dumping duties, this enhanced bond requirement was claimed to be illegal since WTO rules do not allow an importer to counter dumping with specific measures besides antidumping duties. In January 2005, ITC confirmed the US DOCs determination and slapped anti-dumping duties equal to dumping margins (i.e. by how much the normal value price exceeds the export
27

DISPUTE DS345

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price) on non-canned shrimp that the DOC calculated to range from 2.35 percent to 67.8 percent for Brazil, Ecuador, India and Thailand; up to 25.76 percent for Vietnam; and up to 112.81 percent for China. Although the above tariffs were not as high as the Alliance had requested (up to 200 percent), they hailed this decision. On 6 June 2006 India requested separate consultations with the US on the amended bond directive and the EBR imposed by the US on imports of frozen warm water shrimp from India. In its request, India claimed that the measures under the amended directive were in violation of the WTO ADM as well as the GATT. However this consultation also failed to resolve the dispute and subsequently the DSB established another separate panel allowing Brazil, China, European Communities, Japan and Thailand to act as third parties. The main issues in these disputes were that the imposition of EBR and application of the practice known as zeroing by the US on importers of shrimp products from India were inconsistent with WTO agreements. In the absence of an agreement between the parties, the WTO Director- General composed a three member Panel. The Panel issued the Interim Report to the parties on 9 October 2007 and the Final Report to the parties on 13 November 2007. FINDINGS OF THE PANEL In its findings, the three member panel held that the applications of EBR on Indian shrimp exports were inconsistent with the rules of the WTO Anti-dumping Agreement as well as the GATT and due to this bond, the Indian shrimp exporters had to incur prohibitive costs on their exports. Further on, it held that the US violated both the Anti-dumping and the Subsidies and Countervailing Measures (SCM) Agreement because it failed to notify the amended Custom Bond Directive to the Anti-dumping and SCM Committees. Also, it was concluded that the use of zeroing by the US breached US obligations under the Anti-dumping Agreement for the reason that the US did not calculate dumping margins on the basis of the product as a whole. Consequently, the panels conclusion and recommendation was that the US had to bring its measures into conformity with its obligations under the WTO Anti-dumping Agreement and the GATT 1994.

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INDIAN CASES
1) Designated Authority Anti-Dumping Directorate Ministry Of Commerce Vs. M/s. Haldor Topsoe A/s.28 FACTS Catalysts were imported from Denmark. A complaint of dumping was lodged with the designated authority. The designated authority undertook to cause investigation. However, the exporter did not furnish information about the export price of the catalyst to the other third countries when no domestic sales were made in them. The exporter insisted that normal price be determined on cost of production basis. The authority rejected this. The designated authority, instead, proceeded to rely upon the price of like catalyst sold by a German manufacturer. On this basis, the designated authority gave its finding and recommended imposition of anti-dumping duty. It recommended two rates, depending upon the end-use of the catalysts in India. The exporter challenged the finding in appeal to the tribunal. It was argued that the antidumping duty is country-specific and exporter-specific and therefore, the price of the German exporter cannot be relied upon. The tribunal accepted the argument of the appellant. The tribunal concluded that the action of the designated authority is clearly in violation of the specific provisions contained in section 9A of the Act. Even though the appellant did not co-operate to provide the information, the tribunal refused to be persuaded to recognize the price of another exporter for like article. According to the tribunal, it was wrong for the Central Government to extend the time of one year for completing the investigation, without providing an opportunity to the appellant. Yet another question was agitated in appeal. Was it legal to recommend two rates of antidumping duty for the same product? The tribunal answered the question in the negative, saying, We are not able to up hold the action of the designated authority. The designated authority decided to contest the order of the tribunal in the Supreme Court.

28

AIR2000SC2556

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JUDGEMENT The judgment of the apex court set aside the order of the tribunal on more than one count. On the basic question whether reliance upon the price of the other exporter falls within the domain of correctness, the Supreme Court reversed the finding of the tribunal. The court rejected the theory of exporter-specific or country-specific argument. The court observed: By holding anti dumping duty to be exporter-specific, the tribunal could not have restricted the scope of the investigation only to materials to be produced by a party against whom an investigation is being conducted. Such an interpretation of the statute is wholly contrary to the very scheme of the statute. It felt that the legal provisions did not call for any doubt or confusion. On a careful reading of section 9A of the Tariff Act and Rule 6 of the rules, it is clear that the statute has no where put such a restriction on the investigating authority. On the contrary, the perusal of the said provisions clearly shows that the normal value will have to be determined with reference to comparable price, the word comparable price in the context can only be with reference to the price of similar articles sold under similar circumstances irrespective of the manufacturer. The apex court rejected the tribunal's finding on the question of two different rates of antidumping duty. The Supreme Court observed that the tribunal did not give any specific reason why the two different margins cannot be made applicable based on different import duties applicable to the concerned catalyst.

2) Chhotu Lal Daga (Prop. of Rohit Enterprises) Vs. Commissioner of Customs (Port)29 FACTS Central Government imposed anti-dumping duty on Compact Fluorescent Lamps (CFL) originating in or exported from China under Notification No. 128/2001-Cus. dated 21.12.2001. Imposition of anti-dumping duty was made on a provisional basis pending final determination and such provisional duty was effective up to and inclusive of 20.06.2002. The Notification provided for separate anti-dumping duty on CFL without choke and with choke.
29

2008(120)ECC277

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The same Notification also imposed anti-dumping duty on CFL without choke originating in or exported from Hong Kong. Subsequently, definitive anti-dumping duty was imposed by Notification No. 138/2002-Cus. dated 10.12.2002. The anti-dumping duty on CFL with choke originating in or exported from Hong Kong was imposed for the first time under Notification No. 138/2002. The appellant imported the impugned CFL with choke of Chinese origin from a supplier in Hong Kong. The bill of entry was noted on prior entry basis on 02.12.02 and the vessel carrying the said goods was granted Entry Inwards on 09.12.2002. The main issue in dispute in this case is whether the anti-dumping duty is payable on such imports made during the interregnum, i.e., between 21.06.2002 and 09.12.2002, after the provisional duty lapsed but before the definitive duty was notified. JUDGEMENT The Supreme Court noted that ...the erstwhile GATT and its successor WTO, through multilateral negotiations, have been bringing down tariff barriers and liberalising international trade. However, to prevent unfair trade under liberalised trading systems, WTO has mandated trade remedy measures such as anti-dumping duty against dumped imports, countervailing duty against subsidized imports and safeguard measures against surge in imports. Such measures are necessary to prevent unfair trade by foreign suppliers to the detriment of domestic industry in the absence of a protective import tariff wall. That antidumping duty is not so much of a revenue measure, is evident from the fact that some of the WTO member-countries have made provisions for making payments from the collected antidumping duty to the injured domestic industry. The appellant contended that since the import has taken place from a supplier in Hong Kong, in terms of paragraph 2 of the Notification No. 138/2002, the anti-dumping duty for CFL with choke exported from Hong Kong, should be charged only with effect from the date of the Notification i.e. 10.12.02. The Supreme Court rejected this contention. In the case of the appellant, the goods were of Chinese origin and hence, these satisfy the condition of 'originating in, or exported from China', notwithstanding the fact that they were re-exported from Hong Kong. Since the anti-dumping duty in respect of CFL with choke originating in, or exported from China was levied from 21.12.2001, thus impugned import made by the appellant had to pay the anti-dumping duty notified under Notification No. 138/2002. The Appellant also pleaded that the quantum of anti-dumping duty was very high and he was not in a position to pay the same. Rejecting his contention, the court held that ...one of the

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purposes of levying anti-dumping duty on a provisional basis for a period of six months on preliminary determination is to make aware all exporters and importers concerned regarding the initiation and continuance of anti-dumping investigation against dumped imports from specific countries/exporters... In any case, the purpose of anti-dumping duty is to remove the injury caused by dumped imports...the plea that the anti-dumping duty is excessive and that the same cannot be borne by the importer, cannot be a basis for not demanding it from the subject imports. 3) Rishiroop Polymers Pvt. Ltd. Vs. Designated Authority and Additional Secretary 30 FACTS The Appellant was the sole agent of Acrylonitrile Butadiene Rubber [for short "NBR"] as manufactured by Korea Kumho Petrochemicals Limited [for short "KKPC"]. The subject goods were being imported into India for near about a decade. The subject antidumping duty proceedings were related to NBR31 which was a synthetic rubber mainly used in the manufacture of other rubber articles such as oil seals, hoses, automobile product, rice dehusking rolls etc. Gujarat Apar Polymers Ltd. (GAPL), hereinafter referred to Respondent No. 3, were the manufacturers of some grades of NBR. Respondent No. 3 by means of complaint dated 3.11.1995 addressed to the Additional Secretary being the designated authority under Section 9 of the Tariff Act in the Ministry of Commerce, stated that the import of bales of the said consignment from Germany was causing injury to its productions. Proceedings were initiated by the Public Notice dated 1.3.1995 against export of NBR from Germany and Korea. The period of investigation was 1.10.1994 to 31.3.1995. The designated authority after considering the entire data of facts came to the conclusion that 1) NBR originating in or exported from Germany and Korea had been exported to India below its normal value; 2) Consequently, the domestic industry had suffered material injury;

30 31

(2006) 4 SCC 303 : MANU/SC/1451/2006 NBR is a generic term and has various grades and physical forms.

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Thus, anti dumping provisions were imposed and the designated authority confirmed its preliminary finding dated 3012.1996. In 2001, the designated authority received requests for Mid-term review of the dumping provisions carried out under Rule 23 of the Rules. The Authority concluded that the domestic industry, during the review period of investigation, had faced injury due to continued dumping by the plaintiff despite anti dumping measures. Thus, the authority recognized the need for continuation of imposition of definitive anti dumping duty on all imports of SB. Additionally, the authority also turned down the appellants request for a Sunset review on the same grounds that the dumping of the subject goods is continuing from the subject countries and thus domestic industry was suffering material injury; Further, the authority also observed that the material injury to the domestic industry would intensify if antidumping duty is removed. The designated authoritys decision was challenged by the appellant that all the 14 parameters given in Para (iv) of Annexure-II relating to principles of determination of injury were required to be determined but had not been taken into account and that only some of the parameters were considered. JUDGEMENT The Supreme Court, while rejecting the appellants contention, held that the review enquiry should be limited to see as to whether the conditions which existed at the time of imposition of anti-dumping duty have altered to such an extent that there is no longer justification for continued imposition of the duty. The Supreme Court held that the enquiry was limited to the change in the various parameters like the normal value, export price, dumping margin, fixation of non-injurious price and injury to domestic industry. The said enquiry had to be limited to the information received with respect to change in various parameters. It was said that the entire purpose of the review enquiry is not to see whether there is a need for imposition of antidumping duty but to see whether in the absence of such continuance dumping would increase and the domestic industry suffer. It was also held that final findings recorded by the designated authority at the time of initial imposition of anti-dumping duty on the existence of injury to the domestic industry must be considered to continue to remain valid, unless it is proved to be otherwise, either by the designated authority in suo moto review or by the applicant seeking the review.

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The Supreme Court further observed that in the absence of new material, the designated authority was not required to apply afresh parameters or criteria enumerated in paragraph (iv) of Annexure II, which had already been done at the initial stage of imposition of antidumping duty. In the current case, the Designated Authority in its findings in the Mid Term Review proceedings and also the Sunset review proceedings had categorically stated that all the factors have been taken into consideration while determining continuance of the antidumping duty. Thus it was held that the argument of the appellant that all relevant factors have not been considered had no factual foundation.

CONCLUSION
Today large numbers of countries have become frequent users of anti-dumping measures. Anti-dumping has unique combination of political and economic manipulability. During the last fourteen years of WTO, the use of anti- dumping has become rampant that it is criticized as threatening to limit the market access achieved under GATT/WTO trade negotiations over the last fifty years or so. On the one hand, there is fear that anti dumping measures are used for protectionist purpose. On the other hand, many support it because it can be used as encounter against unfair trade practices. It has been seen that Anti dumping policies are being initiated mostly by major players in the business. These dominants producers lobby and litigate antidumping cases. In the process, they incur huge expenditure sacrificing economic efficiency. Thus, antidumping policies that are designed to ensure fair competition and improve economic efficiency may in fact reduce them. To minimise the manipulation of the law for protectionist purpose and to limit discretionary powers of the authorities, more explicit rules should be developed and definitions of different concepts used in the process should be given clearly and the procedure of determining dumping should be made more transparent.

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BIBLIOGRAPHY
1. Aggarwal, Aradhna., The anti-dumping agreement and developing countries, Oxford

University Press, (New Delhi : | New York ) 2. Raju, K. D., World trade Organization Agreement on Anti-dumping, Wolter Kluwer Law & Business Series, Aspen Publishers, Inc.

WEBLIOGRAPHY

1. Mark Wu , Antidumping in Asias Emerging Giants, Volume 53, Number 1, Winter 2012, Harvard International Law Journal, Available at www.harvardilj.org/2012/01/issue_531_wu/ 2. www.cci.gov.in/