CASE GROUP 11:

Sudhanshu Sharma
Uplaksh Gupta
Urvika Saxena
 What is Dumping and its
measures?
Dumping occurs if a company sells at a lower price
in an export market than in its domestic market.

If such dumping injures the domestic producers in

the importing country, under certain circumstances
the importing country authorities may impose anti-
dumping duties to offset the effects of the dumping.

In addition, since anti-dumping measures directly

affect pricing, which is the most fundamental element
of business strategy, their abuse will have a
tremendous negative impact on the pattern of trade
and on the overall economy.
 Anti-dumping
investigation?
The investigation will examine whether:
Dumping is taking place from the Country/countries
concerned,
Material injury has been suffered by the Community
industry
The dumping is causing the injury
It is not against the economic interests of the
Countries to impose measures (which are usually in
the form of an anti-dumping duty).
 Anti-Dumping Statistics
According to WTO (World Trade Organization):
Comparing 2008 to 2007, the number of new anti-
dumping investigations opened in 2008 was up
31%.
While the number of anti-dumping measures
actually applied increased by 19%.
Developing countries dominated this trend on both
sides; they initiated 73% of all new investigations
and were the target of 78% of them.
Top 20 users of anti-
dumping 1995-2008 (by Top 10 targets of AD
initiations) investigations 2008
India 564 China 73
US 418 Thailand 13
EC 391 Taiwan 10

Argentina 241 Indonesia 10

South Africa 206 Korea 9

Australia 197 Malaysia 9

US 8
Brazil 170
India 6
China 151
Ecuador 4
Canada 145
Saudi Arabia 4
Turkey 137
Turkey 4
Why did anti dumping investigations
increased world over in 2008?
Since 2008, the world economy has faced
severe crisis. It has moved from financial
sector to real economy crisis. The wide-
scale crisis made many countries have
problems related to the increasing
unemployment rate and decreasing
economic activity.
In order to handle the economic recession
and maintain or generate employment,
some countries impose protectionism. It is
aimed to defend their domestic companies
by imposing trade barriers.
 Why anti dumping investigations also
considered as the protectionist measure?
Protectionism is defined as an effort imposed by a country to
help its domestic trade in global trade competition or
deliberative use of policy barriers or regulations to assist
local industries or to promote export
Protectionism has two broad objectives to be achieved,
namely providing visible and immediate relief to industries
which experiencing severe difficulties; and allowing ongoing
adjustment to change circumstances
These objectives correspond to an employment and social
equity concern, and on the other hand to promote greater
economic efficiency and industrial restructuring. By reducing
import, protection seeks to raise the market share of
domestic producers and the price they receive for their
goods. Greater output and profitability in the domestic
industry is presumed to increase employment and promote
modernization.
 Criticisms against Anti
Dumping Investigations
Tariff Barriers cause the Deadweight Loss
When government imposes tariff barrier, automatically
tariff revenue will be received by the government, the
price of the imported product raises, the producer surplus
increases. In contrast, the number of imported product
decreases, the consumer surplus declines, and total
surplus decrease (a deadweight loss -DWL).

It Might lead to the Global Depression

The protectionism that shields local companies from the
effect of economic recession through the implementation
of trade barriers might turn the global economic recession
into a global economic depression . This argument is
based on the implementation of protectionism action in
the 1930s.
 Protectionism Can Be Misused by Particular Country
that Might Lead to a Trade War
For example, if the US had been imposing anti-dumping measures to steel
and tire from China with tariff on tire up to 35% without proper investigation,
China as an exporting county might not felt do the dumping, but China
might also do anti-dumping measures to the product from the US. The US
might want to protect their local industries on behalf of anti-dumping
scenario. If many countries do the same things, trade wars cannot be
avoided.

Leads Countries to Implement Regional Trade

Agreements
Following are the disadvantages of regionalism:
(1) Producer gains less benefit than multilateral trading system .Regionalism
offers less compensation for loss commodity price support to producers
than global free trade does,
(2) Trading system becomes more fragmented and focus only on specific
regions,
(3) The high risk of trade wars among trade regions might cause global
instability