The Directorate General of Trade Remedies (DGTR) has recommended that anti-dumping duties (ADD) be levied on viscose staple fibre imported from Indonesia.
Dumping
- Dumping is the process by which a company exports a product at a significantly lower price than it normally charges in its home (or domestic) market.
- This is an unfair trade practise that has the potential to distort international trade.
- Anti-dumping is a trade distorting measure used to correct the situation caused by dumping of goods.
Anti-Dumping Duty
- An anti-dumping duty is a protectionist tariff imposed by a domestic government on foreign imports that it believes are underpriced.
- Many countries impose duties on products they believe are being dumped in their domestic market in order to protect their respective economies.
- In reality, anti-dumping is a tool for ensuring fair trade, not a form of protection for domestic industry.
- Such ‘dumped’ goods have the potential to undercut local businesses and the economy.
- Anti-dumping duties protect domestic industries from the harm caused by dumping.
Mechanism in India
- The anti-dumping duty, whether provisional or final, is recommended by the Department of Commerce.
- Within three months, the Department of Revenue in the Finance Ministry acts on the recommendation and imposes such duties.
WTO and Anti-Dumping Duties
- The World Trade Organization (WTO) enforces a set of international trade rules, including the international regulation of anti-dumping measures.
- It does NOT intervene in the activities of dumping companies.
- Instead, it focuses on how governments can—or cannot—respond to dumping.
- In general, the World Trade Organization agreement allows governments to take action against dumping if it causes or threatens material harm to an established domestic industry.
Problems with such duties
- Anti-dumping duties may cause market distortions.
- Governments cannot normally determine what constitutes a fair market price for any good or service in a free market.
Source: https://www.thehindu.com/business/dgtr-recommends-anti-dumping-duty-on-viscose-fibre-from-indonesia/article66289616.ece