International Trade & Finance Assignment Anti-Dumping Agreement
International Trade & Finance Assignment Anti-Dumping Agreement
International Trade & Finance Assignment Anti-Dumping Agreement
TRADE &
FINANCE
ASSIGNMENT
ON
ANTI-DUMPING
AGREEMENT
Submitted by:
Shimran Zaman
B.A LL.B(Hons.) S/F
5th Sem
Roll No.-54
INDEX
1. INTRODUCTION
2. HISTORICAL BACKGROUND
3. UNDERSTANDING DUMPING
6. CONCLUSION
7. BIBLIOGRAPHY
INTRODUCTION
“In a world where tariff and non-tariff barriers decrease rapidly, antidumping
measures are becoming increasingly important in protecting domestic
manufacturers.”
HISTORICAL BACKGROUND
Anti-dumping rules started to develop in the early part of this century with the
adoption of legislations firstly by Canada in 1904, New Zealand in 1905,
Australia in 1906 and United States in 1916, which were later subjected to
quite a few amendments. In 1921 the United Kingdom also enacted its first
anti-dumping legislation.
Notwithstanding these developments anti-dumping remained a relatively
infrequent instrument until well after the advent of the GATT, despite the fact
that Article VI of the 1947 GATT provided the basic conditions for adopting
anti-dumping measures. In the immediate post-war period only South Africa,
Canada and Australia were the only countries using anti-dumping as an
important trade instrument. During the Kennedy Round of trade negotiations,
discussions took place for the, first time on Article VI of the GATT in order
to secure more standardized approach to anti-dumping. This in turn led to the
“Agreement on Implementation of Article VI of the GATT” which, in turn
formed the basis for the first European Community anti-dumping legislation
adopted in 1968. Subsequent trade rounds have more precisely dealt with the
rules and procedures that WTO members are expected to adhere to in
implementing their anti-dumping legislations although even now the WTO
members are allowed certain leeway in their behaviour.
UNDERSTANDING 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. A product is being considered
as being dumped if the export price of the product from one country to
another is less than the comparable price, in the ordinary course of trade, for
the like product when destined for consumption in the exporting
country. Opinions may differ as to whether or not this practice, per
se, constitutes unfair price competition. Anti-dumping is a measure to rectify
the situation arising out of the dumping of goods and its trade distortive
effect. Thus, the purpose of anti-dumping duty is to rectify the trade distortive
effect of dumping and re-establish fair trade. The use of antidumping measure
as an instrument of fair competition is permitted by the WTO.
Anti-dumping, in common parlance is understood as a measure of protection
for domestic industry. However, anti-dumping measures do not provide
protection per se to the domestic industry. It only serves the purpose of
providing remedy to the domestic industry against the injury caused by the
unfair trade practice of dumping. 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 value), and not in absolute sense. Import of cheap
products through illegal trade channels like smuggling does not fall within the
purview of anti-dumping measures.
Ironically, the use and importance of anti-dumping law is inversely related to
the prevalence and efficacy of free trade agreements. As free trade agreements
have reduced tariffs and outlawed most import quotas, anti-dumping cases
have increased dramatically. Over the last fifty years, the average tariff level
has fallen from 40 percent to 3.9 percent, and 43 percent of goods are now
exempt from all tariffs. Over the same period of time, the number of
successful anti-dumping cases filed in the United States alone has increased a
staggering 2500 percent. This powerful inverse relationship between free
trade agreements and antidumping actions is easy to explain. As domestic
market participants around the world lose access to their traditional
protectionist weapons — tariffs and import quotas — they find that they have
only one protectionist weapon left — an anti-dumping action. That weapon is
at least as potent as the traditional weapons. As a result, market participants
use it liberally and with great success.
BIBLIOGRAPHY