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:
- About DGTR.
- What is anti dumping duty?
- What is CVD?
Sources: the Hindu.
