Anti Dumping Meaning
Anti-dumping is a trade policy that the economy implements to protect domestic business organizations from unfair trade practices. Foreign businesses make Unfair trade practices by selling or exporting their products at a price less than the domestic market or less than the production cost. The purpose of foreign business organizations may be to beat domestic business organizations or to capture market share easily.
Anti-dumping measures are the practices of any government to protect the domestic market from unfair practices. Such unfair practices are mostly avoided by imposing customs duties on imported goods at lower prices than the production cost or domestic market.
Components of anti-dumping
Investigation
The investigation starts when any business organization or association or domestic industries make complaints regarding unfair trade practices made by a foreign business organization. such investigation starts by the government to verify whether dumping has occurred, and how it is influencing domestic businesses and the economy. It is very essential to investigate the ways unfair practices are implemented. It helps to determine the appropriate anti-dumping duty that should be applied to imported goods.
The pricing policies implemented by foreign companies may be unfair when the prices are below the production cost and or below the domestic market. such pricing may damage domestic industries and hence the economy.
Determine the Dumping margin
The determination of the dumping margin is easy to calculate by comparing the exported price of a foreign company and the normal price(domestic market price or cost of production plus profit margin). The dumping margin directs how much duty should be imposed on the goods imported.
Impose the duties or tariffs
After deciding on the dumping margin a customs duty is imposed on imported goods to make them less competitive in the domestic market. this decision plays an important role in maintaining fair competition in the domestic market along with the availability of a variety of goods.
Taking periodic review
This component of anti-dumping involves collecting the current information regarding unfair trade practices specifically dumping made by foreign industries. The periodic review contributes to imposing fair customs duty and enables the economy to impose necessary changes.
Example
- Japanese company Toyota was exporting their vehicle across the world but some of the Western countries like the USA, and UK were facing problems. This problem was related to damage to domestic industries due to affordable and better vehicles offered by Toyota. By implementing anti-dumping practices these countries applied heavy duty on imported vehicles and protected their domestic industries.
- Anti-dumping duty imposed on imports of Chinese chemical product phosphoric acid in the year 2017. These products were imported in India from China at a price below than normal value. These imported products were damaging domestic business significantly due to which the government imposed a duty on this good.
- Anti-dumping duty was imposed on the import of Vitamin C from China in the year 2020.
- It was also found in the year 2013 when the Chinese were exporting solar cells and modules at an unfair price. Due to unfair prices domestic business were damaging. Not only from China, India was importing from Taiwan, Malaysia, and the USA. To protect our businesses the Indian Government imposed an anti-dumping duty.
Advantages of anti dumping
Auntie dumping pl vital rule for keep maintaining the fair competition in the market.
Protect domestic industries
Anti dumping duty imposed on imported goods which implements unperturbed practices or sell the product at the price below the normal value. This imposed duty can protect the domestic businesses and maintain the fair competition in the market. Imposed anti-dumping duty on the imported goods increase their prices higher than the normal value. Bye making all the goods showed at the price more than the normal value ensures stability in the competition or fair competition.
Fair competition
Business organization compete in the market by providing or offering the products or services with good quality and affordability. While implementing all the policies of the businesses they take care of normal value that means the product must not be sold below the normal value. Anti-dumping duty avoids selling of imported goods below the normal value for production cost or less than the market price. Due to this the competition in the domestic market maintained with fair trade practices by all the organizations selling the goods or services.
encouraging investment
Due to anti dumping duty the competition in the domestic market can be fair and free from unfair trade practices. The fair competition leads to stable market and enables organization to invest in innovation technology and hence the productivity.
Protect intellectual property:
Anti dumping measures can implement the practices which protect the intellectual properties. Unfair practices can be involved in infringement of intellectual property. By implementing anti-dumping majors it can be possible to protect the intellectual property.
Supporting trade relations
Anti dumping measures imposed on the goods which involve in unfettered practices influences positively the business environment. This stabilization of the business environment and a healthy competition maintained by anti-dumping majors. Healthy competition leads to maintain the Hindi relationship trade relationship in accordance with the international market.