Tp on Dumping by w Raja

8/8/2019 Tp on Dumping by w Raja

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TERM PAPER

OF

Economics

Submitted by:

WASEEM AHMAD

ROLLN0: 04

PROGRAM: M.COM(3402)

REG.NO:11003613

Submitted to:

Prabhajot Kaur

DEPARTMANT OF BUSINESS AND ARTS

SCHOOL OF MANAGEMENT


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CONTENTS

TOPIC PAGE NO.

Introduction3

Concept of dumping4

Types of dumping5

Anti dumping duties6

Anti dumping measures6

Historical perspective of Anti- dumping 9Why do firms dump?10

India and anti-dumping11Implication of dumping.12

Technology Boon or bane

15

Cell phones boon or bane

16

Labour dumping 19


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W.T.O rules against U.S.A20

Regulation of anti-dumping against USA22

Conclusion23

Bibliography 24

INTRODUCTION:

Over the past few years, antidumping duty is being increasingly used as a

tool to rectify the market distortions that have resulted from liberalization of

international trade. Several newly industrialized countries like Japan, Korea,

Taiwan and now China have been accused of dumping their products in the

international market with the main objective of ensuring better market

penetration so that in the long term, they may realize better margins once

their competitors exit the marketplace.

Although India hasnt been too heavily accused of dumping

products in the foreign

market, it has been subject to heavy dumping from other countries and is in

fact the largest user of antidumping measures in the world (between 1995

and 2004) in terms of absolute numbers of definitive measures imposed.

While there can be no clear cut decision on whether antidumping duty on a

product brings overall benefits to the economy as a whole, there can be no

doubt that excessive use of antidumping duty is bound to be harmful to the

economy in the long run.


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So the question that arises is what exactly is excessive use? On one hand, it

has been proven that in some (genuine) cases, antidumping protection is in

fact quite a practical option if domestic industries of the importing country

are to survive. On the other, one may argue that for a developing country

like India, which has adequate natural resources, semiskilled and unskilled

labor, are these protectionary measures required.

Infrastructure is improving rapidly. As such, one would expect that the

manufacturing sector should be able to compete well with industries in other

parts of the world. So why have so many antidumping cases been approved

during last fifteen years.

Concept of Dumping:

Dumping is said to occur when the goods are exported by a country to

another country at a price lower than its normal value (Lesser than domestic

price). This is an unfair trade practice which effects on the international

trade.

Selling goods at less than the normal price, usually as exports in

international trade. It may be done by a producer, a group of producers, or a

nation. Dumping is usually done to drive competitors off the market and

secure a monopoly, or to hinder foreign competition. To counterbalance

international dumping, nations often resort to flexible tariffs. In international

trade, acute competition from foreign producers often leads to charges of

dumping. A policy of dumping depends for its effectiveness on the possibility

of maintaining separate domestic and foreign markets, on monopolistic

influences maintaining a high price in the home market, on export bounties,

or on low import duties in the foreign market. Dumping disturbs those

markets that receive dumped goods, and it may drive local producers out of


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business. Governments may condone, or even sponsor, dumping in other

markets for either political reasons or to achieve a more favorable balance of

payments. In the late 19th cent., dumping became part of the trade policy of

great European cartels, especially German cartels. Britain, France, Japan, and

the United States also have practiced dumping. Antidumping legislation was

first passed (1904) by Canada. In the United States various tariff acts have

been passed to deal with different types of dumping; in particular the 1921

Emergency Tariff Act imposed special duties on goods imported for sale at

less than their fair value or cost of production. It was amended by the

Customs Simplification Act of 1954. The General Agreement on Tariffs and

Trade (GATT) prohibits dumping and provides for increased import duties to

combat the practice

Dumping, is a pricing practice where a firm charges a lower price for

exporting goods than it does for the same goods sold domestically. It is said

to be the most common form of price discrimination in international trade.

Dumping can only occur at places where imperfect competition and where

the markets are segmented in a way such that domestic residents cannot

easily purchase goods intended for export. It is a suitable measure of

protection which comes under the non-tariff barriers and is product andsource specific.

Types of dumping:

Sporadic Dumping: Occasional sale of a commodity at below cost in order

to unload an unforeseen and temporary surplus of the commodity withouthaving to reduce domestic prices.

Predatory Dumping: Temporary sale of a commodity at below cost or a

lower price abroad in order to derive foreign producers out of business, after

which prices are raised to take advantage of the monopoly power abroad.


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Persistent Dumping: Continuous tendency of a domestic monopolist to

maximize total profits by selling the commodity at a higher price in the

domestic market than internationally (to meet the competition of foreign

rivals). For international price discrimination to take place, conditions must

be met:

Domestic and foreign markets must be separated.

Demand elasticity of the product must be different in two markets. The

good can be sold with a lower price where the demand elasticity is

high; and with a higher price where demand elasticity is low.

ANTI DUMPING DUTIES:

Antidumping duties were initiated with the intention of nullifying the effect of

the market distortions created due to unfair trade practices adopted by

aggressive exports. They are meant to be remedial and not punitive in

nature. Although dumping does benefit the consumers of the importing

country in the short run, it is harmful to the domestic producers as their

products are unable to compete with the artificially low prices imposed by

the imported goods. 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


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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:

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.

If a company exports a product at a price lower than the price itnormally charges in its own home market, it is said to be dumping the

product, according to WTO. Particularly in times of recession, dumping can

wreak havoc on local economies. The gigantic size of Indias market can

make it a tempting dumping target. However, care has to be ensured that

anti-dumping complaints are investigated and found to be genuine, rather

than used as a cover-up for protectionist trade policies.

India has adequate anti-dumping investigation mechanisms in place, like the

Directorate General of Anti-dumping and Allied Duties (DGAD), which

carefully determine the normal value of imports and the extent of anti

dumping measure to be levied upon the imported goods. The DGAD initiates,

investigates, and makes recommendations for imposition and collection of


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antidumping and countervailing duty by the Department of Revenue, Ministry

of Finance.

In India, the national legislation on anti-dumping was enacted in 1985 and

the first case of anti-dumping was initiated only in 1992. Since then,

Designated Authority (DA) in the Department of Commerce has been

handling anti-dumping cases. The DGAD came into existence in April 1998 in

the Department of Commerce, Ministry of Commerce & Industry.

The world economy is going through a financial and economic turmoil for

more than a year now. This period has seen many countries including

America adopting protectionist measures (Buy American) to protect their

domestic industries. Such protectionist measures help countries only in the

short run, by creating jobs and business opportunities. But in the long run it

causes more harm than good to the international trade. In the recent times

we have seen a spurt in the number of anti dumping cases, with India being

the chart topper along with other developing nations.

China took the world by storm with its low-cost manufactured products.

Foreign markets flooded with Chinese goods are a testimony to that. Chinatherefore becomes the obvious target for countries initiating anti-dumping

measures. Most of the anti-dumping measures have only been initiated but a

final verdict is yet to be out as all these cases have to go through WTOs

Dispute Settlement Body to come into effect. So it would be premature to

say whether most of the cases are under protectionist measures. But at the

same time there is a high probability of such a situation to occur.

Increasing imports from China have been a rising cause of concern for the

Indian domestic markets. In the wake of the global downturn, demand from

Chinas biggest export contributor, the United States, has slackened. As a

consequence of this, the Chinese economy is trying to sustain itself by


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thrusting its manufacturing produce into fast growing developing economies

like India.

China has been increasingly resorting to measures such as dumping it sells

its products in the Indian market at very cheap prices. The result is that

China has the potential to cause injury to the domestic producers. Indias

infrastructure does not permit it as yet to observe huge economies of scale

like those of China. Having this competitive advantage, the Chinese industry

is bolstering itself by diverting its products to India. But in the process, it is

causing irreparable damage to the Indian domestic market and producers.

Chinas increasing dumping activities into India are evident from a look at

sectors such as rubber, steel, auto parts, and aluminum, which have been

bombarded by Chinese goods and where China has taken the domestic

market with a storm.

Chinese tyres sold in India are 30% cheaper than the cost of tyres produced

in India. About 80-85% of the demand for tyres is met with Chinese imports.

As such, the share of domestic producers in the market is a meager 15% to

20%. Moreover, even those producers are not able to fully utilize theircapacity of production due to the rising share of China in the market.

For instance, imports of auto parts in the third quarter of 2008 were recorded

to be 61.8% of the total demand as compared to a mere 21.8% in the first

and second quarters of the same year. The share of crankshaft in Chinese

imports increased from 2.3% in the first half of 2008 to 15.75% in the

following quarter of 2008. We have to take significant note that the sudden

increase in Chinese auto parts exports to India is in sync with the deepening

of the financial crisis and slackening demand across other parts of the globe.

Stainless steel products imported from China similarly have witnessed a

consistent annual increase by 20-30% since the year 2006. Moreover, the


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imports of aluminium and chemical products from China have expanded

nearly three times, to cover a share of 15%, in the April to December period

of 2008.

It is therefore evident from the facts that if the current situation continues

Indian industry would cease to exist. The current situation is that China is

selling its products in Indian markets at such low prices that domestic

products keep losing their market share. Being unable to operate at such a

large scale as China, India is left with no other option but to restrict the

imports of China through suitable measures, in compliance with the norms of

the World Trade Organization.

Historical perspective of Anti- dumping

It is commonly perceived that anti dumping legislations have been enforced

only in the past twenty years, after it was internationally discussed in the

Doha ministerial conference. However, research reveals that the first anti-

dumping statutory provisions in any jurisdiction was received by the RoyalAssent in Canada on the 10th of August 19043, with the provisions coming

into force retroactively on the 8th of June 1904. The measures implemented

in 1904 formed part of the amendments to the Customs Tariff Act of 1897.

The second case then followed consecutively with New Zealand filing its first

anti dumping case in 1905 followed by Australia in 1906. The items for which

the anti dumping legislation was applied ranged from false teeth to

machinery and equipment intended for exclusive use in alluvial gold mining.

The application of the duty was limited to goods which were produced in

Canada. and provisions were made for the exemption of goods from the

special duty if the domestic supply conditions were found to be inadequate.

Further, no injury test was conducted to determine the dumping margin.

Instead, special duty was set at the difference between the selling price in


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Canada and the "fair market value", where the latter was identified with the

value of the goods for purpose of application of the advalorem tariff.

The difference however, between pre- and post-1980

antidumping policy was that in

the past, most antidumping complaints did not result in the imposition of

import duties. Today's antidumping cases are much more likely to be

successful. This change has been brought largely because of the formation

and widespread acceptance of the WTO in the proceedings of international

trade.

Why do firms dump? The economics behind it

Dumping occurs when firms start using price discrimination as a

strategy for profit

maximization. The conditions mandatory for dumping to take place

are

Presence of an imperfect market where price discrimination between

markets is

possible. (Because in imperfect market firms are price setters not price

takers).

Segmented markets where there is no arbitrage easily possible

between markets.

Only if the above two conditions are satisfied is it profitable for the exporting

firm to

engage in dumping. For any firm, price discrimination in favour of exports is

more


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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 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.

Anti Dumping Duty Need and Relevance

Trade is increasingly being seen as a means of achieving economic

development.

Ricardos theory of comparative advantages clearly predicts that only trade

Liberalization will ensure more efficient use of all recourses which would help

underdeveloped and developing countries free themselves from the shackles

of

poverty. Genuine Trade Liberalization is possible only if more and more

economies participate in free trade rather than keep protecting their

markets. But free trade also implies distortion and exploitation. Free trade,

which is unfair could undermine and distort competitive and well-functioning

markets, leading to inefficiencies. Putting in place a system by which

countries can punish such activity with duties to counteract these unfair


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trade practices, (similar to allowing countervailing duties on export subsidies)

seems reasonable.

India and Anti dumping

Which are the acts and laws that govern dumping?

The first Indian Anti-dumping legislation came into existence in 1985 when

theCustoms Tariff (Identification, Assessment and Collection of duty or

Additional duty on

Dumped Articles and for Determination of Injury) Rules, 1985 were notified.

Section 9

of the Customs Tariff Act, 1975 empowers the central government to impose

antidumping

duty. The manner and procedure of antidumping investigations and the

appointment of designated authority, are governed by the anti-dumping

rules. These rules contain the operational provisions and confirm to the WTO

agreement on antidumping.

The Directorate General of Anti-Dumping & Allied Duties (DGAD) was

constituted in

April 1998. It is located in New Delhi. Since then, all anti dumping cases in

India have

been handled by DGAD. Today, the DGAD is headed by the Designated

Authority of the

level of Additional Secretary to the Government of India who is assisted by a

Joint


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Secretary and a Director. Besides, there are eleven Investigating and Costing

Officers

to conduct investigations. The Directorate is serviced by one Section headed

by a Section Officer.

Organizational Set-up of the Directorate General of

Antidumping

& Allied Duties (DGAD)

ADDITIONAL SECRETARY & DESIGNATED AUTHORITY

JOINT SECRETARY

INVESTIGATING OFFICERS (6) COSTING OFFICERS (5)

4 Directors 2 Joint Directors Director Joint Deputy Assistant

Director Director Director

SECTION OFFICER

STAFF MEMBERS-7


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Critical Implications of the Anti Dumping

The number of anti dumping cases in India has increased significantly and

that chemical, petro- chemical and pharmaceutical industries have been the

most frequent users of this protectionary measure. Whether society on the

whole benefits by intense use of dumping is open to debate.

All the affirmative cases of anti dumping duty lead to ad valorem5 duties

received by the government of the importing country and thus it is easy to

assume that the economic welfare consequences of AD duties are identical

to those of an import tariff. When either an anti dumping duty or tariff isimposed, it leads to a rise in the price of the commodity in question for the

consumers of the importing country. Thus, the domestic producer (through

protection) gains at the cost of the consumer. The government gets revenue

which it then distributes over its population. So overall, the tariff or AD duty

would be beneficial to the economy if:

Evidence suggests that foreign firms often respond to antidumping duties by

raising their prices to the importing country because of the administrative

review process. This reduces the calculated dumping margin and leads to

lower future anti dumping duties for the firm. Thus, although the anti

dumping duty was formed with the intension of removing market distortions,

it may end up creating more.

Gains to

producer + Tariff revenue >Loss to consumer from higher prices

The concept of dumping in international trade is not a new

one (Viner, 1923). In the economics literature dumping is normally defined

as selling a good at less than its marginal, or variable, cost. It is one of the


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standard maxims of microeconomics that producers will maximize profits, or

minimize losses, by producing at the point where marginal costs (variable

costs) equal marginal revenue.1 However, where marginal revenue is below

variable cost, production should cease. In that way, losses are minimized.

Comparisons of average cost and average revenue (price) have nothing to do

with determining whether or not a producer continues to produce once a

production facility is established. Pricing below average cost causes a

producer to incur losses, but as long as some contribution is made to

covering fixed costs after variable costs are covered, continuing to produce

will tend to minimize losses.Pricing below average cost is normal economic

behavior whenever demand is depressed and a portion of costs is fixed.

When demand is depressed, prices fall. Prices may fall such that the

producer is not able to cover his total fixed cost and therefore incurs losses.

Consider those producers who already exist and who face an unexpected dip

in demand. They have already made their investments and have committed

themselves to some fixed costs. The producer is faced with the choice of

continuing to produce despite losses, or ceasing production. If he ceases

production he will incur a loss equal to his fixed cost. If by maintaining

production he can makesome contribution to covering his fixed costs, he will do so. In this case, he

will reduce his losses below what they would be if he ceased production.

Therefore, when faced with the decision to continue or to cease production,

the producer will choose to continue only if the price is sufficient to cover all

variable costs and make some contribution to fixed costs, thereby minimizing

losses. If the depressed price is simply a reflection of a market cycle, the

producer may earn profits over the long run even though he incurs losses in

the short run. If prices are depressed over the long run, perhaps because of

excess capacity, some producers will eventually cease production as their

capital stock wears out and their fixed costs drop toward zero. Clearly, for

potential producers who have not yet invested, the activity in question is not

attractive and they will not make new investments in it.


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In economic analysis, selling items below the average

cost of production is not

necessarily dumping. Selling items below the variable cost of production may

be dumping or illogical behavior. If it is the latter, those producers who are

illogical will be quickly driven from business as losses mount. The simple

observation that producers are selling below average cost is not sufficient

economic information to determine if a firm is dumping. Only reference to

variable costs can determine whether or not dumping may be occurring. If a

firm is selling its product at a price below variable cost, then its motive for

doing so is not profit maximization in the short run. Its motive may be a

strategic one that aims at extraordinary profits in the long run. It may be

dumping.

Thus, any economic definition of dumping must be oriented

around whether or not a firm is selling below costs. Furthermore, a strict

definition would be selling at a price that is below average variable costs. For

purposes of this paper, let us define economic dumping as selling an item

below the variable cost of production.

Technology A Boon or Bane

we cannot live without electricity nor can we survive the whole day without

knowing whether which is the latest Gadget in use which would benefit the

driver of an automobile to drive safely and at the same time work on his

immediate assignment at hand. Basically, we need TECHNOLOGY and we are

a big part of it already. We live, strive and thrive on computers, data base

online, communication network, and the latest gadgets.

Technology today has given us both Nuclear weapon and Medicines that


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could cure the unthinkable of pain and diseases. It has given us a better

opportunity to preach and teach knowledge to those less privileged, those

who cannot hear or see or speak and understand their language and be one

and at the same time it has made it possible to grow in millions and preach

out freedom to one.

Technology creates options. Options lead to confusion. A man getting into a

crowded bus will sit on any available seat. The same man in an empty bus

will wonder whether he should sit in the front or back, window or aisle.Err

why I am even talking about all this. Without technology there wouldnt be

buses!!! Options besides creating confusion also create conflict. Technology

creates wants, wants and more wants. The moment you satisfy few of them,

many more raise their hydra head.

In conclusion, we think that Technology is a must. Its a Boon and it will stay

so forever. Without it we could not have had this debate. We would not

realize that it is possible to go beyond the age of 90 and still be fit and

healthy. Technology has given that to us today

CELL PHONES: BOON OR BANE

From the invention of fire to the world of digital, man has forced his scientific

advance. In this fast moving generation computers are considered to be the

greatest gift of science. Cellphones are modified forms of computers which

are utilized mainly for communication that have rapidly spread throughoutthe world in less than 20 years. Even calculation of numerical values, storing

of data and retrieval of data are possible in cellphones. According to the

survey nearly 300 crores of people are using cellphone. It is estimated by

2010 nearly 500 crores of people use cellphone having internet and camera

facility. The largest cell users in the world is china, next comes to India. The


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market share of Nokia is 52.8%, followed by 10.2% LG and 8.3% Samsung.

Alexander Graham Bell introduced telephone to a less developed society. But

by the time when cell phones are invented; people are ready to accept any

form of development. In a fast moving society such as ours we cannot spare

time just for walking to friends or for official purposes.

Besides this, with the aid of the latest WAP technology users can surf the

internet, send emails and chat with other people at a low cost. It is obvious

that the communication has become a lot easier now compared to the pre-

mobile phones period.

Mobile phones are lessening the pressure of the business and office work

too. These days, the latest mobile phones are powered with Microsoft Office

application for viewing and editing various types of files including Word, PDF,

and Excel etc easing the office and business work Moreover, in this modern

world of advanced communication loads of business deals are made through

mobile phone conferences.

The cellphone is without doubt a technological blessing, but its sounds, theringing and the talking and the resultant cacophony in public places are

turning out to be a source of irritation

(Markley,

We have arranged a civilization most crucial elements profoundly depend

on science and technology. - Carl Sagan

When legendary American scientist Alexander graham bell 1870s, he

probably did not fathom the extent of the prospective telecommunication

revolution that his invention was bring about in the world. About a century


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later, a similar path breaking invention by mattin cooper was designed to

bring similar strides in the field of telecommunication. That particular

invention was the cell phone, which instantly gave mankind the freedom of

movement during a conversation, due to its non requirement of wires.

However, the intial mass hysteria about the telephone being wireless, has

become sort of an impasse in a few decades down the line. The reason is

that the cell phone has become indispensible thing in almost all activities of

modern life, to such an extent that its absence makes some of feel

incomplete or restless, as if it were a crucial limb of ones own body.

In recent times, people have begun to question such unconditional

acceptance of cell phones, in the light of certain harmful effects it can lead

to. In this context my argument would be that indiscriminate and illogical

use if technology is bound to bring harm.

A simple example will make it clear. It is common knowledge that nuclear

technology could be developed for peaceful purposes like production of

clean energy and the like. But thoughtless use of the same can beget horrors

of unspeakable proportions, as was evident in the in the wonton destruction

wrought in Hiroshima and Nagasaki cities of Japan at the fag-end of the worldwar 2nd .The point here is that technology is always good when used

perspicaciously. Hence this focuses this on cell phones as boon.

The elephant, the tiger and the cell phone a book by author Sashi Tharoor

points out the significance of cell phones as a symbol of Indias booming

economy thriving in a Kaleidoscopic culture and a pluralistic society. With

more than 600 million cell phone users in the country. India currently has the

fastest growing telecom network in the world. It has left behind the US in

terms of the number of cell phone connections and presently ranks only after

chinas

In economics, "dumping" can refer to any kind of predatory pricing.

However, the word is now generally used only in the context of international


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trade law, where dumping is defined as the act of a manufacturer in

one country exporting a product to another country at a price which

is either below the price it charges in its home market or is below its

costs of production. The term has a negative connotation, but advocates

of free markets see "dumping" as beneficial for consumers and believe

that protectionism to prevent it would have net negative consequences.

Advocates for workers and laborers however, believe that safeguarding

businesses against predatory practices, such as dumping, help

alleviate some of the harsher consequences of free trade between

economies at different stages of development

Remedies and penalties:In United States, domestic firms can file an antidumping petition under

the regulations determined by the Department of Commerce, which

determines "less than fair value" and the International Trade Commission,

which determined "injury". These proceedings operate on a timetable

governed by U.S. law. The Department of Commerce has regularly found that

products have been sold at less than fair value in U.S. markets. If the

domestic industry is able to establish that it is being injured by the

dumping, then antidumping duties are imposed on goods imported

from the dumpers' country at a percentage rate calculated to

counteract the dumping margin.


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LABOURDUMPING:

The flood of foreign labor pouring into the U.S., the European Union and

other hospitable environs has brought political strains. In the U.S., President

George W. Bush and Senator Edward M. Kennedy failed to win passage of an

immigration reform bill that the President viewed as legacy legislation. In

Europe, France's new President, Nicolas Sarkozy, has been busy promising to

get tough on immigrants and erecting roadblocks to Turkey's bid for

European Union membership.

These are only the latest shots in a long and ultimately futile debate about

immigration policy. There is little chance of stemming migrant inflows, as

long as the countries supplying immigrants embrace policies that effectively

mandate labor dumping.

Marshal Josef Tito broke ranks with Moscow in 1948, Yugoslavia rejected

notions of Soviet-style central planning and created its own brand ofsocialism. The Yugoslav model mandated that resources be allocated by

worker-managers instead of central planners. This decentralized socialist

setup was supposed to mimic markets, but without capitalists, it was

doomed. Worker-managers viewed additions to the labor force as

competitors for their slice of the pie. Consequently, they hung out "no

vacancy" signs and wouldn't hire new employees

Today Mexico is the world's largest labor dumper and the source of much of

the contentious U.S. immigration reform debate. Surprisingly, the political

combatants on both sides of the debate fail to mention the source of the

problem: Mexico's statist economy. Like Yugoslavia, Mexico can't produce

enough jobs. According to the World Bank's Doing Business 2007 report,


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Mexico's labor market ranks 108th out of 175 countries in terms of the ease

of hiring and firing workers and labor-market flexibility.

Rather than modernize the economy, Mexico's politicians use Tito's broom.

Mexico's 47 consulates in the U.S., more than any other country has,

facilitate the sweeping by issuing passports and offering assistance when

Mexican immigrants run into trouble. Thus 30% of Mexico's labor force is

working in the U.S., and in 2006 they sent home $23 billion, 12% of Mexico's

exports.

Poland is another labor dumper, with 7.6% of its labor force at work in

foreign countries. Poland's overregulated economy and overtaxed labor

market (the tax wedge is 42.2%) can't produce enough jobs. Even with labor

dumping the jobless rate is 13%.

In Indonesia, says the Doing Business 2007 report, firing a worker costs the

employer 108 weeks of wages, three times the OECD average. As a result,

Indonesian companies are extremely reluctant to make legal use of the

country's labor supply, forcing an estimated 70% of the labor force to work in

the informal sector of the economy and 10.3% to remain unemployed.

WTO rules against U.S. anti-dumping trade policy

The World Trade Organization ruled that the U.S. had applied unfair anti-

dumping duties on a number of goods, overturning an earlier decision that its

tariff rates on some carbon steel products and ball bearings were in line with

international trade rules.

The decision was a victory for Japan, which challenged the U.S. over the way

it sets dumping fees


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In an unusually high-level reaction, Japan's Foreign Minister Taro Aso praised

the WTO appeals body for the decision, which he said would help strengthen

the system of rules guiding international trade.

The office of the U.S. trade representative in Washington said it was still

studying the decision and could not immediately comment.

Governments investigate dumping when they suspect that producers are

exporting products at below the market price in their own country -- usually

because exports have been subsidized or when it is believed there is an

attempt to corner the market.

The Geneva-based WTO had previously chided the U.S. in disputes with the

EU and Canada for how it determines what corrective fees to apply, known in

trade jargon as "zeroing."

Despite the legal setbacks, Washington stuck to its policy and appeared to

have won an important test case when the WTO rejected most of Japan's

arguments in September.

But Tuesday's decision reversed all findings from the ruling, and urged the

U.S. to bring its anti-dumping measures into line with WTO obligations.

"The zeroing procedures adopted by the U.S. in any type of anti-dumping

procedures violate its obligations under the WTO agreement," Aso said.

The appeals body had made it clear such restrictions on international trade

would not be tolerated.

"Japan highly values the report as it will serve to maintain and promote the

rule-based multilateral trading system," Aso added


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European Union anti-dumping duties can slap a heavy tax bill on an

otherwise profitable foreign supply deal. So make sure you know the risks

and your rights, says Robert MacLean

IMAGINE THE SITUATION. AFTER protracted negotiations with a supplier in

the Far East, you have secured competitively priced products for your

company. Then a letter arrives from HM Customs & Excise containing an

assessment for European Union "anti-dumping" duties. These charges are for

50 per cent of the value of the imported products, and are in addition to

normal customs duties.

Article: Anti-Dumping Measures under Ukrainian Law.(Dumped

Imports Act of Ukraine)

The World Trade Organization (WTO) was established for progressive

liberalization of international trade by means of lowering and/or eliminatingtrade barriers (both tariff and non-tariff) based on the principles of most-

favored-nation, national treatment, freer trade, predictability and promoting

fair competition, etc. Notwithstanding the fact that the WTO is destined

mainly to eliminate any obstacles in international trade, the WTO

agreements envisage some exceptions, in particular: (a) actions against

dumped imports, i.e. anti-dumping duties; (b) actions against unlawful

subsidies, i.e. countervailing duties; (c) actions against surge imports, i.e.

safeguard measures (quotas and duties). Taking into account the fact that

Ukraine could well become a member of the WTO shortly, it is worth

analyzing the practice of applying the said exceptions in Ukraine.


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This article proceeds with analyzing the trade measures available under

Ukrainian law and allowed under the WTO agreements and concentrates on

anti-dumping measures. First of all we shall provide a very brief overview of

the WTO agreements applicable to anti-dumping measures; thereafter, we

will pay special attention to the provisions of the Ukrainian legislation in the

field in a question-and-answer format.

How are Anti-Dumping Measures Regulated Under the

WTO Agreements?

Broadly speaking the applicable WTO agreement, i.e. the General Agreement

on Tariffs and Trade 1994 (GATT 1994) allows governments to act againstdumping where there is genuine (material) injury to the competing domestic

industry. In order to do that the government has to be able to show that

dumping is taking place, calculate the extent of dumping (how much lower

the export price is compared with the price on the exporter's home market),

and show that the dumping is causing injury or threatening to do so.

Thus, under Article VI of the GATT 1994 anti-dumping measures (anti-

dumping measures) shall apply to offset or prevent dumping, by which

products of one country are introduced into the commerce of another

country at less than the normal value of the products, which causes or

threatens to cause material injury to an established industry in the territory

of an importing country or materially retards the establishment of a domestic

industry. The Agreement on Implementation of Article VI of the GATT 1994

(the Agreement) sets out the rules for application of the anti-dumping

measures pursuant to Article VI of GATT 1994. The major guidelines of the

Agreement with respect to the anti-dumping measures provide that :

(a) Such measures shall apply in the event of dumping taking place;


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(b) they may be imposed only when dumped imports are found to cause or

threaten to cause material injury to the domestic industry or materially

retards the establishment of a domestic industry;

(c) The measures may be levied only as a result of investigations initiated

and conducted under the Agreement;

(d) They must be temporal;

(e) The sum of the measures shall be the full dumping margin or less;

(f) As a rule, they shall apply to each supplier of products subject to

investigation individually; however, the Agreement sets out some exceptionsto the said rule. The Agreement also provides for special requirements

applicable to investigation, application of measures and establishes the

Committee on Anti-Dumping Practices.

CONCLUSION:

Dumping is simply a pricing policy where by 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 .A

dumping can also affect the market adversely by exporting the goods at

lower prices,there by it can also affect the market competition.

Bibliography:

Wikipedia

http://www.centad.org/relatedinfo13.asp

http://EzineArticles.com, retrieved 30th October, 2007

Economic times news paper
http://www.centad.org/relatedinfo13.asphttp://www.centad.org/relatedinfo13.asp


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Completion Refresher Nov.2010

Documents

Tp on Dumping by w Raja