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Anti-dumping Duty

Topics Covered: Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth.

Anti-dumping Duty:


Context:

The U.S. Department of Commerce is preparing to tax aluminium sheet exporters from 18 countries including India after determining that they had benefited from subsidies and dumping.

  • The US International Trade Commission (ITC), an independent body, must approve the final decision by April 15 to impose anti-dumping or countervailing duties.

What is Dumping?

In international trade practise, dumping happens when a country or a firm exports an item at a price lower than the price of that product in its domestic market.

  • Dumping impacts the price of that product in the importing country, hitting margins and profits of local manufacturing firms.

What is anti-dumping duty?

Anti-dumping duty is imposed to rectify the situation arising out of the dumping of goods and its trade distortive effect.

  • According to global trade norms, including the World Trade Organization (WTO) regime, a country is allowed to impose tariffs on such dumped products to provide a level-playing field to domestic manufacturers.

How is it different from CVD?

  • Anti-dumping duty is different from countervailing duty. The latter is imposed in order to counter the negative impact of import subsidies to protect domestic producers.
  • Countervailing Duties (CVDs) are tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country.
  • CVDs are meant to level the playing field between domestic producers of a product and foreign producers of the same product who can afford to sell it at a lower price because of the subsidy they receive from their government.

InstaLinks:

Prelims Link:

  1. About DGTR.
  2. What is anti dumping duty?
  3. What is CVD?

Sources: the Hindu.