Anti-dumping duty imposed on Chinese chemical for 5 years
17, Dec 2018
Prelims level : Economy- Trade Mains level : India and its Neighborhood- Relations
- The revenue department of government of India has imposed anti-dumping duty for five years on a Chinese chemical used in making detergents to guard domestic players from cheap imports from the neighbouring country.
- The levy on ‘Zeolite 4A’ [Detergent grade] has been imposed on recommendations of Directorate General of Trade Remedies (DGTR) after conducting a probe in this regard.
- The duty in the range of USD 163.90-207.72 per tonne of the chemical will remain in force for five years (unless revoked, superseded or amended earlier), said the Central Board of Indirect Taxes and Customs (CBIC) in a notification.
- DGTR, the investigation arm of the commerce ministry, had conducted the probe on complaint
- Countries carry out an anti-dumping probe to determine whether their domestic industries have been hurt because of a surge in below-cost imports. As a countermeasure, they impose duties under themultilateral regime of WTO.
- The duty is also aimed at ensuring fair trading practices and creating a level playing field for domestic producers with regard to foreign producers and exporters.
- India has already imposed anti-dumping duty on several products to check cheap imports from countries including China with which India has a major concern of widening trade deficit.
- The deficit has increased to USD 63.12 billion in 2017-18 from USD 51.11 billion in the previous fiscal.
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.
- Dumping is a process where a company exports a product at a price lower than the price it normally charges in its own home market.
- To protect local businesses and markets, many countries impose stiff duties on products they believe are being dumped in their national market
- The WTO began life on 1 January 1995, but its trading system is half a century older. Since 1948, the General Agreement on Tariffs and Trade (GATT) had provided the rules for the system.
- The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994 and led to the WTO’s creation. Whereas GATT had mainly dealt with trade in goods, the WTO and its agreements now cover trade in services, and in traded inventions, creations and designs (intellectual property).
Principles of the WTO trading system:
MOST-FAVOURED-NATION (MFN) PRINCIPLE: TREATING FOREIGNERS EQUALLY:
- Under the WTO Agreements, a country should not discriminate between its trading parties. According to the MFN principle, any advantage, favour, privilege or immunity granted by a Member to any product originating in or destined for any other country shall be accorded immediately and unconditionally to the like product of all Members. The MFN principle is one of the cornerstones of the WTO.
NATIONAL TREATMENT PRINCIPLE: TREATING FOREIGNERS AND LOCALS EQUALLY:
- Within national territory, WTO Members cannot favour domestic products over imported products
- The principle of national treatment also applies, with some differences, to trade in services (Article XVII of the GATS) and intellectual property protection (Article 3 of the TRIPS Agreement).
GENERAL PROHIBITION OF QUANTITATIVE RESTRICTIONS (QRS):
- WTO Members cannot prohibit, restrict or limit the quantity of products authorized for importation or exportation (Article XI of the GATT 1994), subject to limited exceptions.
OBSERVANCE OF BINDING LEVELS OF TARIFF CONCESSIONS (GOODS) AND OF SPECIFIC COMMITMENTS (SERVICES):
- Minimum market access conditions are guaranteed by commitments undertaken by Members regarding customs duties (tariff concessions for goods – Article II of the GATT 1994) and market access for the supply of services (specific commitments – Article XVI of the GATS)
- It is fundamentally important that regulations and policies are transparent.WTO Members are required to inform the WTO and fellow-Members of specific measures, policies or laws through regular “notifications”.
- In addition, the WTO conducts periodic reviews of individual Members’ trade policies through the Trade Policy Review Mechanism (TPRM).