What are Anti-dumping taxes?

Answer 1

The Anti Dumping duty (Tax) is an amount not exceeding the difference between 'normal value' and export price on the same level of trade, terms and conditions for a 'LIKE PRODUCT' sanctioned by GATT under the legal frame work of an Agreement on Anti Dumping. The normal value is the value at which the subject goods are sold in the ordinary course of trade in the home market of the exporter or in absence of which, the highest third country export price or a constructed cost in the country of origin which would obviously include not only the cost of inputs and utilities but also all other overheads and a reasonable profit.

GATT Article VI sets out the conditions when dmping can be condemned and the same is:

Article VI

Anti-dumping and Countervailing Duties

1. The contracting parties recognize that dumping, by which products of one country are introduced into the commerce of another country at less than the normal value of the products, is to be condemned if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry. For the purposes of this Article, a product is to be considered as being introduced into the commerce of an importing country at less than its normal value, if the price of the product exported from one country to another

(a) is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country, or,

(b) in the absence of such domestic price, is less than either

(i) the highest comparable price for the like product for export to any third country in the ordinary course of trade, or

(ii) the cost of production of the product in the country of origin plus a reasonable addition for selling cost and profit.

Due allowance shall be made in each case for differences in conditions and terms of sale, for differences in taxation, and for other differences affecting price comparability.*

2. In order to offset or prevent dumping, a contracting party may levy on any dumped product an anti-dumping duty not greater in amount than the margin of dumping in respect of such product. For the purposes of this Article, the margin of dumping is the price difference determined in accordance with the provisions of paragraph 1.*

There being considerable objectivity vesting in the National Authorities of the WTO member nations, most determination of the Anti Dumping Duty quantum, tenor and mode of collections have been concluded throughout the history of the ADA in a manner unbecoming of the Authorities.

J Michael Finger, a former director of World Bank who has researched authoritatively observed-

Anti dumping is not public policy, it is private policy. It is a harnessing of state power to serve a private interest: a means by which one competitor can use the power of the state to gain an edge over another competitor. Antidumping regulation was created by removing from antitrust law the checks and balances that limit it to disciplining only the competitive practices that compromise society's overall interests. Antitrust is in both theory and practice an instrument to defend the public interest. Antidumping is a different matter. Free from the constraints that the rule of law imposes on antitrust, antidumping is an instrument that one competitor can use against another. The only constraint is that the beneficiary interest must be domestic and the apparent victim must be foreign. Antidumping puts the fox in charge of the henhouse: trade restrictions certified by GATT. The fox is clever enough not only to eat the hens, but also to convince the farmer that this is the way things ought to be. Antidumping is ordinary protection with a grand public relations program.