Anti Dumping Duty

By : Neha Dhyani

Updated : May 13, 2022, 13:43

Anti Dumping Duty refers to a protectionist tariff to protect the interests of businesses in a country. Dumping happens when an exporter charges lower rates for exporting goods to a foreign country than the fair price of such products in the concerned foreign country.

The following sections explain what is Anti Dumping, the rules governing it, and examples.

What is Anti Dumping Duty?

Anti Dumping Duty is a protectionist tariff imposed on goods and services imported to a country from a foreign country.

Tariffs are quite common in international trading. The primary objective of imposing an Anti Dumping Duty on imported goods is to ensure that foreign goods do not spoil the business prospects of domestic business owners.

Therefore, the government determines the Fair Market Value (FMV) of a product before imposing the Anti Dumping Duty.

Anti Dumping Duty - Fair Market Value

Fair Market Value (FMV) refers to the market-approved value of a product, security, or stock. FMV also refers to the asset price mutually accepted by buyers and sellers.

FMV applies to products that are traded or sold in the domestic market under normal conditions. The government imposes Anti Dumping Duty on foreign goods being imported into the country when it believes that the foreign goods are sold at a lower price than the FMV of similar goods in the domestic market.

Also, the government determines the duty by analysing the dumping margin, which is the difference between the domestic selling price and the export price. The export price, coupled with the dumping margin, is aimed at making the price equal to the FMV of the product in question.

The government imposes an Anti-Dumping Duty to protect domestic businesses from unfair competition.

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Anti Dumping Duty - International Law Governed

Article VI of the General Agreement on Tariffs and Trade 1994 presents a detailed explanation of Dumping. It also contains the Anti Dumping Agreement that specifies clearly that any importing country can levy a duty to provide relief to businesses in the domestic market injured by imports.

Before the Uruguay Round negotiation, the Anti Dumping Agreement was referred to as the Tokyo Round Anti Dumping Code. Amending the Code became necessary because the existing price discovery procedures measuring the damage to domestic industries were too complex and highly technical. Moreover, the Tokyo Round Anti Dumping Code was not suited to tackle the complexities of ongoing international transactions. Due to the outdated rules of the Tokyo Round, traders rampantly abused the anti-dumping provisions, thus necessitating an overhaul.

The World Trade Organization (WTO) conducts two meetings of the AD (Anti Dumping) Committee every year to discuss the implementation of several anti-dumping measures. The Committee also reviews anti-dumping implementation laws and hears reports. The AD Committee works under the Council for Trade in Goods.

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Anti Dumping Duty - Example

Some American steel companies, including Steel Dynamics Inc., United States Steel Corp, ArcelorMittal USA, etc., complained to the US Department of Commerce and the International Trade Centre (ITC) about the Dumping of steel in the US by some countries, including China.

After carefully analysing the complaint, the US imposed an Anti Dumping Duty of 522% on the steel imported from China.

The Anti Dumping Duty has emerged as a tool to protect the interests of domestic businesses. It offers a level-playing field for domestic businesses to compete with international businesses.

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FAQs on Anti Dumping Duty

Q1) What is Anti Dumping Duty?

Anti Dumping Duty is a protectionist tariff imposed on goods and services imported to a country from a foreign country.

Q2) What is Fair Market Value in the Context of Anti-Dumping Duty?

Fair Market Value (FMV) refers to the market-approved value of a product, security, or stock.

Q3) Which International Law Governs Anti Dumping Duty?

The International Law Governs Anti Dumping Duty, that is Article VI of the General Agreement on Tariffs and Trade 1994 presents a detailed explanation of Dumping.

Q4) What is the World Trade Organization’s role in Anti Dumping Duty?

The World Trade Organization's role in Anti Dumping Duty conducts two meetings of the AD (Anti Dumping) Committee every year to discuss the implementation of several anti-dumping measures.