India initiates anti-dumping probe against imports of vinyl tiles from China, Taiwan, Vietnam

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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.