Anti-dumping duty is basically a tariff that is imposed on goods that are imported and priced below the fair market value of similar goods in the domestic market. The government imposes anti-dumping duty on foreign import goods only at the time when they believe that the goods are being ‘dumped’ in the domestic market. Anti-dumping duty is imposed only to protect local markets from unfair price – competition by foreign imports.
Taxes are one of the biggest earning sources for any government in the world, we pay taxes in the form of income tax, GST, etc. As an imported or an exporter you must know what is an anti-dumping duty and you know also stay updated with the anti-dumping duties and related news in the product and the countries which you deal with.
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What is an anti-dumping duty?
In order to protect the local businesses and local markets, many countries impose anti-dumping duties on a few products which are imported and manufactured at foreign countries. If the government believes the products are cheaper which are being imported than the same or similar product that is available in the domestic market.
The anti-dumping duty is sometimes also called a protectionist tariff for the domestic market of any country. If a government notices that some product can harm or disrupt a sector or market then the government will impose the anti-dumping duty on that product. Here the main objective is only to protect the local market and local manufacturers from any possible unfair competition or disruption.
Importing products at a very low cost can also hurt the fair trade balance and that is why many governments impose anti-dumping duties on many products in order to maintain fair trade practices in local domestic markets.
Examples of anti-dumping duty
To know exactly how anti-dumping duty gets imposed and what is anti-dumping duty, let us understand it through some factual examples.
Anti-dumping duty examples in India
Aluminum imports anti-dumping duty in China – case study example:
In recent news published by the economic times India on September 10, 2021. Anti-dumping duty was imposed on certain aluminum products from China as certain ‘Flat Rolled Products made from aluminum’ had been imported in India due to which our domestic aluminum material industry was suffering. The DGTR (Director General of Trade Remedies) recommended anti-dumping duty at USD 65 per tonne and USD 449 per tonne on imports originating and exported from China.
Vitamin C imports from China anti-dumping duty – case study example:
In another recent case in 2021, Anti-dumping duty has been imposed on Vitamin C imports from China as many domestic pharmaceutical companies filed complaints to DGTR (Director General of Trade Remedies) that Vitamin C is been imported from China at rates lower than it is sold in the domestic market of India due to which pharmaceutical companies manufacturing vitamin C were suffering. DGTR after investigation recommended imposing anti-dumping duty on Vitamin C imports from China at USD 3.2 per kg and USD 3.55 per kg for Five years.
This is the list of items on which anti-dumping duty is imposed – As on the CBIC Gov website.
Differences between Custom duty and Anti Dumping duty
- The customs duty fall under the fiscal policy of the government. While anti dumping duty is merely the measures to ensure the fair trade and to protect domestic markets.
- Custom duty ensures government revenue for the development of the country while anti-dumping duties are just effects of international price discrimination.
- Custom duties are permanent and changing the price of the product may not impacted much. While the anti-dumping duties can also be permanent but in most cases it is a temporary measure that can be removed once the price is normalized.
For example, the steel companies of America such as United States steel Corp, AK steel Corp, California steel industries filed a complaint in the year 2014 against China. They mentioned that they are dumping steel into the market of the United States and keeping prices of steel imports low which was unfair for them.
One year later after the complaint in June 2015, The United States announced that it is going to imposed a 500% import duty on select steel imports from China to protect the domestic steel industry of the USA. You can know more about this here – Dumping of Steel by Chinese Companies in 2015.
Why is an anti-dumping duty imposed
Even though anti-dumping duty is a tax that increases the price of products that are underpriced. But that doesn’t mean that anti-dumping duty is a bad thing. it also has a few benefits let’s talk about these.
Anti Dumping duty can reduce unwanted foreign competition and secure profitability along with a market share of local businesses in any country.
The request to impose anti-dumping duty is usually done by the local producers, market, and trade groups of products. Whenever they start facing ill practices of business like very low unfair prices which creates competition, they can request to impose an anti-dumping duty that secures their right to a fair market and healthy competition.
Because government follows the guidelines given by the World Trade Organization on anti-dumping duties not every request by the local business owners gets fulfilled on an immediate basis.
If the request is legal and real the government or respective agencies will take necessary actions depending on the guidelines given by the World Trade Organization from time to time.
Disadvantages of Anti Dumping duty
Now at this point of time after reading the article till here you must have understood what is an anti-dumping duty. Just like any other thing in the world anti-dumping duty also has a few cons which we have discussed down below.
Even though the anti-dumping policy was introduced and imposed by the World Trade Organization but sometimes if a country implements it, the anti-dumping duty policy of a country toward another country may cause some problems. However, The World Trade Organization and European Union aren’t known to impose bans on the country’s policy.
Other than that some countries may retaliate back if one country tried to impose anti-dumping duty on the other. Similarly, we saw a trade war between the United States of America and the People’s Republic of China. Both of the countries tried to impose as many Ban as they could in form of retaliation and protest.
In the above article, we have talked all about the enter dumping duty policies. we have included enough information about what is an anti-dumping duty and its examples. Other than that we have also talked about but are important benefits and why the government imposed the entire dumping duties.
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