Anti-Dumping Measures and Policies: A Comparative Analysis

~ Shruti Singh, Vedant Arora

Abstract

In today's international trade atmosphere, anti-dumping legislations provide cover for domestic
industries against unfair pricing practices. This research attempts to discuss dumping and its
consequent impact on the economy, along with countermeasures. It discusses the World Trade
Organization anti-dumping agreement or ADA that provides member countries guidelines for the
proper managing and enforcement of anti-dumping duties. By examining the types of anti-
dumping law application in countries such as the US, EU, China, and India to protect their
economies, the paper aims to discuss some national policy objectives and some methods for
enforcement. A comparative study illustrates that the effectiveness of the anti-dumping measures
is fairly different across regions, equally with respect to procedural practices and regulatory
approaches. The study also attempts to chart alternative strategies to ensure fair competition in
global trade and evaluates those in light of the existing anti-dumping regulations while sensitively
dealing with issues and criticisms raised against such laws. This report offers several
recommendations on how to establish a more equitable and transparent trading environment
while providing an in-depth analysis of evolving anti-dumping rules and their impacts on
international trade.

Keywords: WTO, Government Policy, China &India

Introduction

The expansion of markets, increased competition, and economic advancement are reliant on
international commerce within the presently interconnected world economy. However, other
trade practices, like dumping most conspicuously due to their economic and legal repercussions,
have courted controversy. Dumping refers to the practice whereby a country or company, by
selling goods at a price lower than what is properly determined, most often below the cost of
manufacture, ventures into a foreign market to gain advantages at the cost of the importing
country. Serious consequences could result if such blunders lead to monopolies for the products
involved, rampant unemployment, and eventual suppression of the home industries. Hence, other
nations that operate under such circumstances have set up stringent laws against dumping to
protect their economy against unfair trade practices and victimization.

To administer and control such activity so as to encourage fair competition in international trade,
the World commerce Organisation (WTO) has established a framework of rules, notably
including the Agreement on Anti-Dumping (ADA). Anti-dumping laws and procedures are
present in many nations around the world that look into and disallow dumping of products, as
well as impose duties on those products. But because these measures often lead to trade disputes,
they really need to be closely examined in terms of effectiveness and impact on the global trade
environment.

This essay highlights the notion of dumping in international trade law, elaborating on its
financial consequences, the World Trade Organisation, governmental interventions, and internal
anti-dumping schemes. Apart from that, comparative evaluation of anti-dumping laws of the
major economies is done in order to evaluate their efficiency and the consequent challenges in
reconciling the anti-dumping policies worldwide. The paper concludes with a discussion on
objections and alternative methods to anti-dumping duties, permitting an evaluation of their
feasibility within the ever-changing trade environment.1

Definition and Concept of Dumping

Dumping is an act of international trade by which a country or business sells a product at less
than its customary price, usually below cost or below the price at which the product is sold in the
exporting country's market. Market penetration, driving competitors from the market, and
increased dependence on foreign suppliers are common reasons that different forms of dumping
exist.

Basically, according to the WTO, dumping occurs when the price of an exported good is below
that of a similar good in the exporting country's domestic market. In order to ascertain whether

1
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.
the domestic industry has suffered material harm, an extensive inquiry is needed; price
disparities alone do not always signify unfair trade.

Out of all the types of dumping, the most common one is dependent on its intent and impact on
prices:

Persistent dumping will be practice on the long-term basis and will weaken the foreign
competition for the maintainability of the market.

Predatory dumping will experience the lower price being charged for a short time by the
exporter to get rid of competitors and then sooner or later in that time it will be raised.

Sporadic dumping is the short-term practice of adhering to primarily sell surplus product in
markets abroad without upsetting prices within the home market.

Reverse dumping is primarily the practice of selling a certain product at lower prices in foreign
markets, while higher prices apply in the local market, because of the difference in elasticities of
demand.

For it is considered an interesting trade practice that interferes with normal market operations
and leads to retaliations on the part of other countries against dumping practices. It does reap
some short-term benefits for consumers. Abuse of cheap prices may ruin domestic sections and
dampen competition and finally lay long-term economic instability on the affected ones.

Economic Consequences of Dumping on Domestic Industries-2

Harmful economic effects of dumping can emerge for local industries in the country of import.
They include:

Market Distortions: Local producers could face difficulties if they are up against depressed
prices, thereby lowering sales and revenues. This could lead to a very serious aggravating
circumstance for local firms to continue functioning in the domain and invest toward their
expansion.

2
Dumping, available at: https://corporatefinanceinstitute.com/resources/economics.
Joblessness: The decline of the local industry signifies thousands of job losses, particularly in
the sectors that are/might be directly affected by the dumping. Workers are dismissed when firms
close down or cut back on employees because of bad market conditions, which causes income
loss and conserves a tight consumer spending environment.

Market Monopolization: Foreign enterprises may monopolize some domestic markets if they
are overly aggressive when it comes to pricing tactics. Monopolization will allow the company
to raise prices drastically, eventually limiting choices for consumers and increasing costs.

Decreased Innovation: Due to uncertain viability and reduced revenues, domestic companies
may drastically cut their R&D investment. Without any competition or incentive to innovate,
local industries may stagnate, which would slow technological advancement while also reducing
global competitiveness.

Trade Deficits: Extended dumping can be injurious to the trade balance of a country as it ruins
the domestic production base and increases the dependence on imports. Trade balances can
become developing to excessive trade deficits, tainting national and macroeconomic stability and
even exciting opportunities of currency through devaluation.

Erosion of Domestic Supply Chains: Local producers can go out of business as a result of
dumping when market demand falls. This damages the industrial ecology and increases
dependence on imports that leave the economy vulnerable to external shocks.

Long-Term Structural Damage: Dumping creates short-term distortions and longer-term

dislocations within the economy. A long-term recovery plan is invoked each time local industries
fall to dumping, with financial resources and utility policy pledges eagerly brought forth to help
local companies revamp manufacturing, usually consistent, though not with ease.

Case Studies on Dumping Practices and their Impacts-3

China’s Steel Dumping Case (2016)

3
Global: A comparative table of anti-dumping procedures in key jurisdictions, India, available at:
https://www.globalcompliancenews.com.
The US, the EU, and India have levied anti-dumping tariffs on China, which Beijing has been
accused of dumping steel onto global markets at unreasonably low rates. This has caused
massive job losses, falling incomes for local steel industries, and a global growth in protectionist
trends in many countries. Citing the negative effects on American businesses, the US has
imposed high tariffs on Chinese steel imports. The EU, too, imposed anti-dumping regulations,
citing damage to its own steel industry and the rise in production costs that ensued.

European Union vs US Poultry (1997-2009)

Showing the value of the exports, imports, and production of poultry in both regions is US
Poultry versus the European Union. The anti-dumping duties developed with respect to poultry
imports from the US into the European market were consequences of receiving alleged subsidies
by the US poultry industry that treated chicken produced in America at very low prices and
dumped it into the EU market. The dispute is in the protracted trade war between the EU and the
US in which the latter has been contesting the former's actions at the WTO. It is the scenario
emphasizing the contradiction between free trade principles and what governments do to protect
their industries from unfair prices.

Indian Anti-Dumping Measures on Chinese Solar Panels (2018)

Anti-dumping measures will be imposed on Indian Solar Panels in the year 2018. India took this
step for protecting its rising renewable energy market from importation of cheap solar panels
from China. Although this action creates a level playing field for domestic manufacturers
because it suffers reduced competition from unfair sources, it increased solar panels' prices,
thereby delaying the country's adoption of renewable energy. This goes to show the fine line
existing between encouraging various sustainable energy projects and protecting the local
industry.

Russia’s Anti Duping Duties on European Trucks (2013)

As a matter of fact, Russia has already levied Anti-Dumping tarrifs on European Imports,
claiming that truck manufacturers in Europe are exporting their cars at unfairly low prices in
order to hurt the domestic automotive sector. This is a demonstration of how Anti-dumping
legislation may influence diplomatic relations and have geopolitical implications increasing trade
tensions between EU and Russia.

WTO Agreements on Anti-Dumping Measures4

Legal Framework under the WTO

The Anti-Dumping Agreement (ADA) was ratified by all the member countries of World Trade
Organization to monitor anti-dumping, also referred to as Agreement on Implementation of
Article VI of General Agreement on Tariffs and Trade 1994. If any member country finds that
the national economy is being affected by dumping, it has the right to take action against such a
practice under the Article VI of GATT 1994.

The following forms the main aspects of the Anti-Dumping Agreement (ADA):

Recognition Mode of Dumping: The ways of determining whether or not a product is dumped
are mentioned in that agreement. The import price is then compared to normal value - domestic
price or manufacturing cost plus elements of profit margin as appropriate - thus forming
comparison between the export price and normal value.

As per WTO rules, the proof for material injury by dumping is requiring demonstration that
either damage is suffered by or serious threat to the domestic industry. The economic indices
include reduced sales, market shares, profit and productivity, as well as employment levels.

Investigation Processes: The ADA specifies the procedure of anti-dumping investigations. The
process must be transparent, must be based on adequate evidence, must provide various
stakeholders—domestic producers, importers, and exporters—the means to collect and present
their evidence.

4
Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.
Imposition of anti-dumping duty: If dumping and material injury are determined, anti-dumping
duties shall be levied only in respect of the injury caused. Such duties shall not exceed the
dumping margin, that is, the difference between normal value and export price.

Sunset clause: The anti-dumping duties shall be reviewed every five years as to whether they are
still required.

Dispute resolution: Anti-dumping procedures may be challenged by member countries through

the Dispute Settlement Mechanism (DSM) of the WTO. Any dispute arising out of violation of
the provisions of the ADA shall be decided by the WTO Panel and Appellate Body.

Key Importance of the Anti-Dumping Agreement (ADA)

The ADA plays an essential role in maintaining a balance between the ideals of free trade and
that of trade justice by:

Preventing abuse of anti-dumping laws for protectionist purposes; to ensure objective and
transparent investigations;

It limits the duration and scope of anti-dumping duties in order to preclude unnecessary
impediments to trade;

Also, it provides relief to members if their domestic industries are hurt by unfair trade practices
while ensuring fair competition.

WTO Dispute Resolution Mechanism in Anti-Dumping Disputes

The WTO Dispute Settlement Mechanism serves as a major forum for solving anti-dumping
disputes among member states. Key steps in this procedure include the following:

Consultation Phase: The complainant asks the respondent for consultations with a view to
reaching a solution.
Panel formation: If consultations do not resolve an issue, then a panel is formed to consider the
matter and to give it a report.

Appeal: Decisions by the Panel may be subject to appeal to the WTO Appellate Body by the
parties involved.

Execution and compliance: Any country that does not respect the WTO disciplines must
change or be threatened with retaliatory measures as recommended by the WTO.

Noteworthy WTO Dispute Cases Concerning Anti-Dumping5

US-Antidumping Actions on Vietnamese Shrimp (2014): Excessively high antidumping

duties were imposed on the Vietnamese shrimp, thus violating WTO principles, and
underscoring the need to adhere to A.D.A. Standards.

EU-Antidumping Duties on Chinese Footwear (2011): The E.U. lost a W.T.O. case brought
by China contesting anti-dumping duties on footwear because those measures did not conform to
their A.D.A. obligations.

India's Anti-Dumping Duties on Chinese Industrial Products (2020): The anti-dumping

duties imposed by India on steel and chemical products were ridiculed as being unreasonable for
their failure to assess injury, for which a partial ruling was in China's favor by the W.T.O. Panel.

WTO's concern in anti-dumping disputes has brought to attention the balancing act between the
protection of home industries and non-distortion in trade. Although the Agreement on Anti-
dumping (ADA) provides a formal mechanism for dealing with dumping, problems persist with
compliance, misuse, and with encouraging ethical international trading practices.

5
Anti-dumping news archive, available at: https://www.wto.org/english/news_e/archive_e/anti_arc_e.
Government Policies and National Anti-Dumping Mechanisms6

Objectives of Anti-Dumping Policies-

Anti-dumping laws would help in mitigating the scourge of such unfair trade practices that affect
regional businesses. Main objectives of such measures are as follows:

Protection of Local Industries: Anti-dumping duties would protect domestic producers from
price competition by discouraging any possible drop in their market presence.

Ensuring Fair Competition: Anti-dumping laws should also promote an environment enabling
equals to compete in the market between domestic producers and international producers.

Avoiding Market Monopolization: Market monopolization can be done by adoptions of

dumping tactics in which foreign competitors will drive away domestic competitors into their
control over the market. Anti-dumping measures will rather help remove that difference in the
market.

Job Preservation: Job opportunities are created by a robust domestic industrial base. Anti-
dumping laws are thus meant to cover jobs lost due to unrestrained dumping.

Encouragement for Economic Stability: Extended periods of instability may occur if dumped
imported goods are relied upon. Governments control dumping so that continuous industrial
development and an equitable trade environment can be fostered.

Investigation Procedures and Remedies

By the way, investigations against anti-dumping legislation in many countries will vary in their
respective jurisdictions, depending on the legislative framework conforming, in general, with
WTO guidelines. The main stages of an anti-dumping investigation are:

6
Directorate General
of Trade Remedies,available at: https://www.dgtr.gov.in/faq
Filing a Complaint: A complaint in writing is lodged by a domestic producer or trade
association with an appropriate national authority, giving evidence of material injury or
dumping.

The initial inquiry: Investigators look to see whether there is enough evidence to warrant the
proceeding into a full investigation. If so, interim anti-dumping duties may be imposed.

Data collection and analysis: The authorities collect information from concerned domestic
industries on production costs, export and domestic prices, and financial information.

Dumping Margin Determination: This is the margin of dumping defined between export price
and ordinary value (domestic price) for the item.

Determination of Injury: The authorities shall examine the factors like sales decline, loss of
profits, and reduction in employment in determining whether an injury is caused due to dumping.

Final Decision and Levying of Duties: Once proved existence of dumping and consequent
harm, final anti-dumping duties to eradicate distortions in prices would become applicable.
These are, however, subjected to periodic review and mostly imposed for a span of five years.

Appeals and Settlement of Disputes: The affected party may challenge the decision in his
domestic courts or through a dispute settlement process before the WTO.

Remedies against Dumping-

Governments adopt myriad options to counter dumping, and these include:

Anti-Dumping Tariffs: These are extra tariffs on dumped goods aimed at correcting their prices
to a more reasonable level in the market.

Price Commitments: For avoidance of anti-dumping duties, exporters may voluntarily commit
to adjusting their prices.

Safeguard Measures: Short-term restraints on imports which are applied in order to protect
domestic companies against unforeseen surges in dumping imports.
Countervailing Duties: Countervailing duties are imposed to counteract the dumping sustained
by government subsidies.

Tariff and Anti-Dumping Duty Efficiency

Both anti-dumping duties and levies are very controversial issues and have indirectly affected
global trade.

Pros:

Protection of Industries: Anti-dumping tariffs cushion domestic producers financially so they

can compete fairly.

Market Stability: They eliminate price-distorting factors, thus enabling steady growth of any
industry and preventing market instability.

Saving Jobs: Keeping the domestic producers protected from undue pricing helps save jobs.

Encouragement of Fair Trade Practices: Anti-dumping laws prevent unfair pricing practices
and set standards for decent business conduct.

Cons:

Trade retaliations: It becomes a tricky situation when countries hit by anti-dumping have their
retaliatory measures.

Higher prices to consumers: Import restrictions would mean higher prices for consumers and
less purchasing power.

Administrative Complexity: The lengthy and resource-consuming nature of the anti-dumping

investigations produces costs.

Danger of Protectionism: Some countries use anti-dumping laws as an undercover means to the
end of obstructing lawful trade.
Comparative Analysis of Anti-Dumping Laws Across Countries7

WTO Norms are implemented and followed by all the major economies but there are major
differences in how the anti-dumping measures are implemented and enforced:

Investigation Timeline: It's common for countries like China or India to fast track inquiries,
while both US and EU conduct large inquiries with huge data requirements.

Standards of Proof: In most cases, all industry complaints should have less verification with
China and India's case; on the contrary, the US has quite stringent specifications in order to
constitute serious injury.

Retaliatory Measures: There have been instances whereby China imposed antidumping tariffs
in retaliation to restrictions placed in international trade.

Protection Oriented: India protects much of its manufacture and consumer goods whereas the
United States and the European Union are mostly protecting their industrial goods and high-tech
items.

Challenges in Harmonizing Global Anti-Dumping Measures8

To make harmonization possible, we need to establish a global system of anti-dumping measures

with the undue difficulty offered by varied economic interest among countries. For instance,
among the countries that are encouraging the protection of domestic manufacturing against
dumping, the developed ones are usually more concerned about attacks on advanced industries
during the anti-dumping procedures. That is why some countries misuse anti-dumping measures
for retaliation and not as protective measures. Other than that, there are inconsistencies as a
result of differences in legal interpretations. WTO laws specifically allow for this flexibility as a
result of the defined concepts of injury and dumping. Rather, other than remaining autonomous
and compliant with WTO provisions, anti-dumping decisions have been deeply affected by
domestic political considerations, thereby making a cohesive international enforcement harder
still.

WT0 dispute settlement takes time, which can lessen the effects of countermeasures.

7
UNU-WIDER,available at: www.wider.unu.edu
8
AUC Knowledge Fountain,available at: fount.aucegypt.edu
Effectiveness and Future of Anti-Dumping Measures9

Criticism and Difficulties with Anti-Dumping Laws

Despite the aim of anti-dumping laws to curb unfair trade practices, they have plenty of criticism
against them.

A Fair Trade versus Protectionism: Anti-dumping laws are misused more often in the way of
disallowing unfair trade competition for protectionist purposes that causes grey areas in markets
with deteriorating effectiveness in trade with reduced efficiency.

Long-Dwelling and Expensive Investigations: Due to the very long duration of anti-dumping
investigations and also its highly expensive nature, smaller companies shy away from making
applications. Such scenarios further aggravate the existing market uncertainties in terms of the
economy since they further delay the resolution of trade disputes.

Retaliatory Trade Conflicts: Anti-dumping measures often trigger responses in form of

retaliatory tariffs from trading partners which only start the cycle of spiraling trade conflicts that
are adverse to both importers and exporters.

Influence on Customers: According to the imposed anti-dumping taxes, the increasing price of
the imported goods benefits consumers. This may limit the possible goods within home markets
and diminish consumer welfare.

Difficult to Prove Dumping: Extensive data and economic evaluation are needed for
determining the presence of dumping and the material injury making enforcement quite
complicated and often arbitrary. Various methods of comparing prices may provide different
results.

Influence of Political Factors: Most of the times, the anti-dumping penalties are contingent
upon the domestic political factors prevailing at that time, which may simply take priority over
fairly convincing proof from local producers of unfair trade practices.

Limited Effectiveness in Certain Cases: Export subsidy may often be too important for anti-
dumping duties to affect in the industry importing dumped goods.

9Browse FLASH Collections, India, available at: ir.lawnet.fordham.edu.

Alternatives to Anti-Dumping Duties (Subsidies, Safeguard Measures)10

In reaction of all these opposition against the anti-dumping duties, there have been some
alternative trade remedies introduced:

Countervailing Duties (CVDs) are imposed on some imports receiving government subsidies and
are meant to provide the fair competition without calling the exporting country as dumping. It
confronts the cases of unfair competition encouraged by the state.

Safeguards are temporary import limitations to allow domestic companies to adapt to increased
competition without branding foreign exporters as unfair competitors. They assist depressed
industries without exacerbating trade disputes.

Promoting discussions among the parties affected in an effort to develop equitable pricing
structures instead of seeking punitive tariffs, is the spirit of bilateral and multilateral agreements.
Long-term solutions are available to both importer and exporter through trade agreements.

Strengthening Domestic Policy: Employing domestic industrial policy measures that enhance
competitiveness without resorting to trade restrictions, including sponsoring training programs,
investing in innovation, and subsidizing national companies.

Price undertakings, which do not involve the application of anti-dumping duties and are
willingly or voluntarily entered into by exporters through an agreement to raise price levels, are a
flexible and less market-disturbing alternative for settlement.

Market Adjustment: Encouraging domestic industries to choose market-based strategies,

competitive pricing approaches, diversify their markets, and improve on their own efficiencies
instead of relying on protection measures.

The Future of Global Trade and the Role of Anti-Dumping Policies

With the changing nature of trade, a few factors will determine the future of anti-dumping
policies:
Increase Proposal of Reform in WTO Supervision: More and more have been lobbying the
WTO to undergo reforms that are geared towards making anti-dumping investigations and

10
Anti-dumping, subsidies and safeguards, available at: https://www.wto.org/
dispute settlement systems more transparent, universal, and effective. The consideration is
whether a more stringent international regulatory framework could lead to an abolition of
arbitrary and politically motivated imposition of anti-dumping measures.

Digital Trade and Services: The growing prevalence of online trade has paved the way for calls
to reconsider the regulation of anti-dumping practices, especially with respect to addressing
growing concerns over price manipulation within the framework of the digital economy.
Regional free trade agreements like RCEP and USMCA create new avenues for dealing with the
manner in which the application of rules offers prospects for resolving disputes or enforcing
trade remedies more sensitive to particular economic contexts, independently of WTO
guidelines.

Beyond Pricing: The new anti-dumping laws should broaden the debate to include social and
environmental concerns, in addition to price competition. Trade barriers may apply to imports
sold below cost if there is labor or environmental exploitation involved.
Artificial Intelligence and Trade Regulation: AI and sophisticated data analytics will unify and
accelerate knowledge of how to detect dumping practices and enforce them. AI trade-monitoring
tools would ease some of the often-subjective aspects of anti-dumping investigations.

Enhanced Cooperation Among Nations: Cooperation among countries could evolve to become
one more world monument that brings countries together under a single anti-dumping law,
curbing inconsistencies that, when left unchecked, may lead to unintended consequences and
equal enforcement on a business competing in divergent economies.

Conclusion:

In foreign trade, dumping has proved to be such a problematic and contentious matter that it has
arisen nearly always to become large political and economic conflicts. Consumers are usually
happy about the dumped commodities' lower prices in the short term, at least, whereas domestic
industries will be hurt, losing jobs and customers to inequitable competition and disturbance.
Governments and world bodies, particularly the World Trade Organisation (WTO), have been
setting a lot of anti-dumping procedures that would restrict predatory pricing and relatively
equitable trade in the globe. The ADA (Agreement on Anti-Dumping) turned into the WTO's
anti-dumping agreement to establish a legal framework for equitable investigation and use of
anti-dumping tariffs used in free market cases. The modalities of the operation of national
schemes differ widely among nations, with alternative approaches and means of compliance by
the U.S. from the EU, China, and India. The schemes are ostensibly targeted at the protection of
the established industry but evoke certain apprehensions with regard to the less savory
implications of protection guarantees against punishment by political "interference" and
"retaliation." The majority of arguments are favorable towards the utilization of anti-dumping
duties, but they have been charged with being extremely dubious. Governments also employ this
mechanism as an instrument of economic protection rather than level competition. They also
create ambiguity in international facets due to lengthy, complicated review procedures.
Prongback duties and safeguards along with price undertakings can to some degree be
considered instruments in reducing harm caused by anti-dumping duties.

Enforcement of successful anti-dumping procedures in the future will devolve more into
international cooperation, with supportive regulations and technologies that might survey trade.
Besides having WTO-backed dispute settlement mechanisms, regional trade agreements could
also then be provided with environmental sustainability and fair trade principles to balance out
the former. Additional strategies could be established targeting unfair trade practices in less
developed areas as those areas become more digitized by AI technologies to enhance economic
assessments.

Antidumping, together with other market-oriented measures, should really also emphasize
diplomatic actions to augment the establishment of a fair and efficient international environment
for trade. Balancing should thus ensure that the legislation remains targeted on self-defence but
fully realized such that international trade progressively becomes a catalyst for stimulating
growth and innovation, minimizing distortions instigated by unfair pricing mechanisms.

In less developed countries, however, strategies would be devised to combat unfair trade
practices given that they are becoming digitalized by AI technologies enhancing their economic
assessments. Ultimately, therefore, the combination mentioned above with market instruments,
diplomatic engagement, and solid anti-dumping measures would build up this just and efficient
international numeral set-up on trade.