Anti-Dumping Duty:
The Union Ministry of Commerce and Industry recently recommended imposing an anti-dumping duty on aluminium foil imported from China.
- 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 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.
- The duty is priced in an amount that equals the difference between the normal costs of the products in the importing country and the market value of similar goods in the exporting country or other countries that produce similar products.
- It is imposed to protect local businesses and markets from unfair competition by foreign imports.
- Thus, the purpose of anti-dumping duty is to rectify the trade distortive effect of dumpingand re-establish fair trade.
- The use of anti-dumping measures as an instrument of fair competition is permitted by the World Trade Organization (WTO).
- The WTO allows the government of the affected country to take legal action against the dumping country as long as there is evidence of genuine material injury to industries in the domestic market.
- The government must show that dumping took place, the extent of the dumping in terms of costs, and the injury or threat to cause injury to the domestic market.
- While the intention of anti-dumping duties is to protect local businesses and markets, these tariffs can also lead to higher prices for domestic consumers.
- In India, the Ministry of Finance makes the final decision on whether to impose anti-dumping duties.
