India initiates anti-dumping probe against imports of vinyl tiles from China, Taiwan, Vietnam
- Following a complaint from domestic players, India has launched an anti-dumping investigation into imports of a certain type of tile used to cover the flooring in residential and commercial buildings from China, Taiwan, and Vietnam.
Why do countries use anti-dumping duties?
- Countries begin anti-dumping investigations to see if a boom in low-cost imports has harmed their native businesses.
- Domestic players have suffered significant losses as a result of the dumping.
- if established The Directorate General of Trade Remedies (DGTR) would suggest an anti-dumping duty on these goods.
- As a countermeasure, India would implement these tariffs under the World Trade Organisation's global structure (WTO).
What is Dumping?
- Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.
- This is an unfair trade practice which can have a distortive effect on international trade.
- Anti dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect.
What is Anti-Dumping Duty?
- An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
- In order to protect their respective economy, many countries impose duties on products they believe are being dumped in their national market.
- In fact, anti-dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry.
- Such ‘dumped’ products have the potential to undercut local businesses and the local economy.
- Anti-dumping duties provide relief to the domestic industry against the injury caused by dumping.
Mechanism in India
- The Department of Commerce recommends the anti-dumping duty, provisional or final.
- The Department of Revenue in the Finance Ministry acts upon the recommendation within three months and imposes such duties.
WTO and Anti-Dumping Duties
- The WTO operates a set of international trade rules, including the international regulation of anti-dumping measures.
- It does NOT intervene in the activities of companies engaged in dumping, Instead, it focuses on how governments can—or cannot—react to the practice of dumping.
- In general, the WTO agreement permits governments to act against dumping if it causes or threatens material injury to an established domestic industry.
Issues with such duties
- Anti-dumping duties have the potential to distort the market.
- In a free market, governments cannot normally determine what constitutes a fair market price for any good or service.