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TERM PAPER
OF
Economics
Submitted by:
WASEEM AHMAD
ROLLN0: 04
PROGRAM: M.COM(3402)
REG.NO:11003613
Submitted to:
Prabhajot Kaur
DEPARTMANT OF BUSINESS AND ARTS
SCHOOL OF MANAGEMENT
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CONTENTS
TOPIC PAGE NO.
Introduction3
Concept of dumping4
Types of dumping5
Anti dumping duties6
Anti dumping measures6
Historical perspective of Anti- dumping 9Why do firms dump?10
India and anti-dumping11Implication of dumping.12
Technology Boon or bane
15
Cell phones boon or bane
16
Labour dumping 19
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W.T.O rules against U.S.A20
Regulation of anti-dumping against USA22
Conclusion23
Bibliography 24
INTRODUCTION:
Over the past few years, antidumping duty is being increasingly used as a
tool to rectify the market distortions that have resulted from liberalization of
international trade. Several newly industrialized countries like Japan, Korea,
Taiwan and now China have been accused of dumping their products in the
international market with the main objective of ensuring better market
penetration so that in the long term, they may realize better margins once
their competitors exit the marketplace.
Although India hasnt been too heavily accused of dumping
products in the foreign
market, it has been subject to heavy dumping from other countries and is in
fact the largest user of antidumping measures in the world (between 1995
and 2004) in terms of absolute numbers of definitive measures imposed.
While there can be no clear cut decision on whether antidumping duty on a
product brings overall benefits to the economy as a whole, there can be no
doubt that excessive use of antidumping duty is bound to be harmful to the
economy in the long run.
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So the question that arises is what exactly is excessive use? On one hand, it
has been proven that in some (genuine) cases, antidumping protection is in
fact quite a practical option if domestic industries of the importing country
are to survive. On the other, one may argue that for a developing country
like India, which has adequate natural resources, semiskilled and unskilled
labor, are these protectionary measures required.
Infrastructure is improving rapidly. As such, one would expect that the
manufacturing sector should be able to compete well with industries in other
parts of the world. So why have so many antidumping cases been approved
during last fifteen years.
Concept of Dumping:
Dumping is said to occur when the goods are exported by a country to
another country at a price lower than its normal value (Lesser than domestic
price). This is an unfair trade practice which effects on the international
trade.
Selling goods at less than the normal price, usually as exports in
international trade. It may be done by a producer, a group of producers, or a
nation. Dumping is usually done to drive competitors off the market and
secure a monopoly, or to hinder foreign competition. To counterbalance
international dumping, nations often resort to flexible tariffs. In international
trade, acute competition from foreign producers often leads to charges of
dumping. A policy of dumping depends for its effectiveness on the possibility
of maintaining separate domestic and foreign markets, on monopolistic
influences maintaining a high price in the home market, on export bounties,
or on low import duties in the foreign market. Dumping disturbs those
markets that receive dumped goods, and it may drive local producers out of
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business. Governments may condone, or even sponsor, dumping in other
markets for either political reasons or to achieve a more favorable balance of
payments. In the late 19th cent., dumping became part of the trade policy of
great European cartels, especially German cartels. Britain, France, Japan, and
the United States also have practiced dumping. Antidumping legislation was
first passed (1904) by Canada. In the United States various tariff acts have
been passed to deal with different types of dumping; in particular the 1921
Emergency Tariff Act imposed special duties on goods imported for sale at
less than their fair value or cost of production. It was amended by the
Customs Simplification Act of 1954. The General Agreement on Tariffs and
Trade (GATT) prohibits dumping and provides for increased import duties to
combat the practice
Dumping, is a pricing practice where a firm charges a lower price for
exporting goods than it does for the same goods sold domestically. It is said
to be the most common form of price discrimination in international trade.
Dumping can only occur at places where imperfect competition and where
the markets are segmented in a way such that domestic residents cannot
easily purchase goods intended for export. It is a suitable measure of
protection which comes under the non-tariff barriers and is product andsource specific.
Types of dumping:
Sporadic Dumping: Occasional sale of a commodity at below cost in order
to unload an unforeseen and temporary surplus of the commodity withouthaving to reduce domestic prices.
Predatory Dumping: Temporary sale of a commodity at below cost or a
lower price abroad in order to derive foreign producers out of business, after
which prices are raised to take advantage of the monopoly power abroad.
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Persistent Dumping: Continuous tendency of a domestic monopolist to
maximize total profits by selling the commodity at a higher price in the
domestic market than internationally (to meet the competition of foreign
rivals). For international price discrimination to take place, conditions must
be met:
Domestic and foreign markets must be separated.
Demand elasticity of the product must be different in two markets. The
good can be sold with a lower price where the demand elasticity is
high; and with a higher price where demand elasticity is low.
ANTI DUMPING DUTIES:
Antidumping duties were initiated with the intention of nullifying the effect of
the market distortions created due to unfair trade practices adopted by
aggressive exports. They are meant to be remedial and not punitive in
nature. Although dumping does benefit the consumers of the importing
country in the short run, it is harmful to the domestic producers as their
products are unable to compete with the artificially low prices imposed by
the imported goods. As a method of protection to the domestic industries,
anti dumping duties are thus levied on the exporting country which has been
accused of dumping goods in another country. As the antidumping duty is
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only meant to provide protection to the domestic firms in the initial stages,
as per the international laws, the antidumping legislations may last for a
maximum period of five years.
Antidumping Measures:
Antidumping duty: - This is imposed at the time of imports, in addition
to other customs
duties. The purpose of antidumping duty is to raise the price of the
commodity when
Introduced in the market of the importing country.
Price undertaking:- If the exporter himself undertakes to raise the price
of the product
then the importing country can consider it and accept it instead of imposing
antidumping duty.
If a company exports a product at a price lower than the price itnormally charges in its own home market, it is said to be dumping the
product, according to WTO. Particularly in times of recession, dumping can
wreak havoc on local economies. The gigantic size of Indias market can
make it a tempting dumping target. However, care has to be ensured that
anti-dumping complaints are investigated and found to be genuine, rather
than used as a cover-up for protectionist trade policies.
India has adequate anti-dumping investigation mechanisms in place, like the
Directorate General of Anti-dumping and Allied Duties (DGAD), which
carefully determine the normal value of imports and the extent of anti
dumping measure to be levied upon the imported goods. The DGAD initiates,
investigates, and makes recommendations for imposition and collection of
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antidumping and countervailing duty by the Department of Revenue, Ministry
of Finance.
In India, the national legislation on anti-dumping was enacted in 1985 and
the first case of anti-dumping was initiated only in 1992. Since then,
Designated Authority (DA) in the Department of Commerce has been
handling anti-dumping cases. The DGAD came into existence in April 1998 in
the Department of Commerce, Ministry of Commerce & Industry.
The world economy is going through a financial and economic turmoil for
more than a year now. This period has seen many countries including
America adopting protectionist measures (Buy American) to protect their
domestic industries. Such protectionist measures help countries only in the
short run, by creating jobs and business opportunities. But in the long run it
causes more harm than good to the international trade. In the recent times
we have seen a spurt in the number of anti dumping cases, with India being
the chart topper along with other developing nations.
China took the world by storm with its low-cost manufactured products.
Foreign markets flooded with Chinese goods are a testimony to that. Chinatherefore becomes the obvious target for countries initiating anti-dumping
measures. Most of the anti-dumping measures have only been initiated but a
final verdict is yet to be out as all these cases have to go through WTOs
Dispute Settlement Body to come into effect. So it would be premature to
say whether most of the cases are under protectionist measures. But at the
same time there is a high probability of such a situation to occur.
Increasing imports from China have been a rising cause of concern for the
Indian domestic markets. In the wake of the global downturn, demand from
Chinas biggest export contributor, the United States, has slackened. As a
consequence of this, the Chinese economy is trying to sustain itself by
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thrusting its manufacturing produce into fast growing developing economies
like India.
China has been increasingly resorting to measures such as dumping it sells
its products in the Indian market at very cheap prices. The result is that
China has the potential to cause injury to the domestic producers. Indias
infrastructure does not permit it as yet to observe huge economies of scale
like those of China. Having this competitive advantage, the Chinese industry
is bolstering itself by diverting its products to India. But in the process, it is
causing irreparable damage to the Indian domestic market and producers.
Chinas increasing dumping activities into India are evident from a look at
sectors such as rubber, steel, auto parts, and aluminum, which have been
bombarded by Chinese goods and where China has taken the domestic
market with a storm.
Chinese tyres sold in India are 30% cheaper than the cost of tyres produced
in India. About 80-85% of the demand for tyres is met with Chinese imports.
As such, the share of domestic producers in the market is a meager 15% to
20%. Moreover, even those producers are not able to fully utilize theircapacity of production due to the rising share of China in the market.
For instance, imports of auto parts in the third quarter of 2008 were recorded
to be 61.8% of the total demand as compared to a mere 21.8% in the first
and second quarters of the same year. The share of crankshaft in Chinese
imports increased from 2.3% in the first half of 2008 to 15.75% in the
following quarter of 2008. We have to take significant note that the sudden
increase in Chinese auto parts exports to India is in sync with the deepening
of the financial crisis and slackening demand across other parts of the globe.
Stainless steel products imported from China similarly have witnessed a
consistent annual increase by 20-30% since the year 2006. Moreover, the
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imports of aluminium and chemical products from China have expanded
nearly three times, to cover a share of 15%, in the April to December period
of 2008.
It is therefore evident from the facts that if the current situation continues
Indian industry would cease to exist. The current situation is that China is
selling its products in Indian markets at such low prices that domestic
products keep losing their market share. Being unable to operate at such a
large scale as China, India is left with no other option but to restrict the
imports of China through suitable measures, in compliance with the norms of
the World Trade Organization.
Historical perspective of Anti- dumping
It is commonly perceived that anti dumping legislations have been enforced
only in the past twenty years, after it was internationally discussed in the
Doha ministerial conference. However, research reveals that the first anti-
dumping statutory provisions in any jurisdiction was received by the RoyalAssent in Canada on the 10th of August 19043, with the provisions coming
into force retroactively on the 8th of June 1904. The measures implemented
in 1904 formed part of the amendments to the Customs Tariff Act of 1897.
The second case then followed consecutively with New Zealand filing its first
anti dumping case in 1905 followed by Australia in 1906. The items for which
the anti dumping legislation was applied ranged from false teeth to
machinery and equipment intended for exclusive use in alluvial gold mining.
The application of the duty was limited to goods which were produced in
Canada. and provisions were made for the exemption of goods from the
special duty if the domestic supply conditions were found to be inadequate.
Further, no injury test was conducted to determine the dumping margin.
Instead, special duty was set at the difference between the selling price in
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Canada and the "fair market value", where the latter was identified with the
value of the goods for purpose of application of the advalorem tariff.
The difference however, between pre- and post-1980
antidumping policy was that in
the past, most antidumping complaints did not result in the imposition of
import duties. Today's antidumping cases are much more likely to be
successful. This change has been brought largely because of the formation
and widespread acceptance of the WTO in the proceedings of international
trade.
Why do firms dump? The economics behind it
Dumping occurs when firms start using price discrimination as a
strategy for profit
maximization. The conditions mandatory for dumping to take place
are
Presence of an imperfect market where price discrimination between
markets is
possible. (Because in imperfect market firms are price setters not price
takers).
Segmented markets where there is no arbitrage easily possible
between markets.
Only if the above two conditions are satisfied is it profitable for the exporting
firm to
engage in dumping. For any firm, price discrimination in favour of exports is
more
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common because the share of exports is usually lesser than the domestic
demand.
In the export market, individual firms have lesser monopoly power and hence
choose
to keep prices lower in foreign markets while charging higher prices for
domestic
markets. This can also be explained through the price elasticity of demand
for goods.
In areas where the demand is price inelastic, producers tend to charge a
higher price.
This is said to be the case in domestic markets. In foreign markets, price
elasticity of
demand is elastic and hence prices are low. Thus, if there is high elasticity on
export
sales than on domestic sales, firms will dump.
Anti Dumping Duty Need and Relevance
Trade is increasingly being seen as a means of achieving economic
development.
Ricardos theory of comparative advantages clearly predicts that only trade
Liberalization will ensure more efficient use of all recourses which would help
underdeveloped and developing countries free themselves from the shackles
of
poverty. Genuine Trade Liberalization is possible only if more and more
economies participate in free trade rather than keep protecting their
markets. But free trade also implies distortion and exploitation. Free trade,
which is unfair could undermine and distort competitive and well-functioning
markets, leading to inefficiencies. Putting in place a system by which
countries can punish such activity with duties to counteract these unfair
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trade practices, (similar to allowing countervailing duties on export subsidies)
seems reasonable.
India and Anti dumping
Which are the acts and laws that govern dumping?
The first Indian Anti-dumping legislation came into existence in 1985 when
theCustoms Tariff (Identification, Assessment and Collection of duty or
Additional duty on
Dumped Articles and for Determination of Injury) Rules, 1985 were notified.
Section 9
of the Customs Tariff Act, 1975 empowers the central government to impose
antidumping
duty. The manner and procedure of anti- dumping investigations and the
appointment of designated authority, are governed by the anti-dumping
rules. These rules contain the operational provisions and confirm to the WTO
agreement on antidumping.
The Directorate General of Anti-Dumping & Allied Duties (DGAD) was
constituted in
April 1998. It is located in New Delhi. Since then, all anti dumping cases in
India have
been handled by DGAD. Today, the DGAD is headed by the Designated
Authority of the
level of Additional Secretary to the Government of India who is assisted by a
Joint
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Secretary and a Director. Besides, there are eleven Investigating and Costing
Officers
to conduct investigations. The Directorate is serviced by one Section headed
by a Section Officer.
Organizational Set-up of the Directorate General of
Antidumping
& Allied Duties (DGAD)
ADDITIONAL SECRETARY & DESIGNATED AUTHORITY
JOINT SECRETARY
INVESTIGATING OFFICERS (6) COSTING OFFICERS (5)
4 Directors 2 Joint Directors Director Joint Deputy Assistant
Director Director Director
SECTION OFFICER
STAFF MEMBERS-7
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Critical Implications of the Anti Dumping
The number of anti dumping cases in India has increased significantly and
that chemical, petro- chemical and pharmaceutical industries have been the
most frequent users of this protectionary measure. Whether society on the
whole benefits by intense use of dumping is open to debate.
All the affirmative cases of anti dumping duty lead to ad valorem5 duties
received by the government of the importing country and thus it is easy to
assume that the economic welfare consequences of AD duties are identical
to those of an import tariff. When either an anti dumping duty or tariff isimposed, it leads to a rise in the price of the commodity in question for the
consumers of the importing country. Thus, the domestic producer (through
protection) gains at the cost of the consumer. The government gets revenue
which it then distributes over its population. So overall, the tariff or AD duty
would be beneficial to the economy if:
Evidence suggests that foreign firms often respond to antidumping duties by
raising their prices to the importing country because of the administrative
review process. This reduces the calculated dumping margin and leads to
lower future anti dumping duties for the firm. Thus, although the anti
dumping duty was formed with the intension of removing market distortions,
it may end up creating more.
Gains to
producer + Tariff revenue >Loss to consumer from higher prices
The concept of dumping in international trade is not a new
one (Viner, 1923). In the economics literature dumping is normally defined
as selling a good at less than its marginal, or variable, cost. It is one of the
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standard maxims of microeconomics that producers will maximize profits, or
minimize losses, by producing at the point where marginal costs (variable
costs) equal marginal revenue.1 However, where marginal revenue is below
variable cost, production should cease. In that way, losses are minimized.
Comparisons of average cost and average revenue (price) have nothing to do
with determining whether or not a producer continues to produce once a
production facility is established. Pricing below average cost causes a
producer to incur losses, but as long as some contribution is made to
covering fixed costs after variable costs are covered, continuing to produce
will tend to minimize losses.Pricing below average cost is normal economic
behavior whenever demand is depressed and a portion of costs is fixed.
When demand is depressed, prices fall. Prices may fall such that the
producer is not able to cover his total fixed cost and therefore incurs losses.
Consider those producers who already exist and who face an unexpected dip
in demand. They have already made their investments and have committed
themselves to some fixed costs. The producer is faced with the choice of
continuing to produce despite losses, or ceasing production. If he ceases
production he will incur a loss equal to his fixed cost. If by maintaining
production he can makesome contribution to covering his fixed costs, he will do so. In this case, he
will reduce his losses below what they would be if he ceased production.
Therefore, when faced with the decision to continue or to cease production,
the producer will choose to continue only if the price is sufficient to cover all
variable costs and make some contribution to fixed costs, thereby minimizing
losses. If the depressed price is simply a reflection of a market cycle, the
producer may earn profits over the long run even though he incurs losses in
the short run. If prices are depressed over the long run, perhaps because of
excess capacity, some producers will eventually cease production as their
capital stock wears out and their fixed costs drop toward zero. Clearly, for
potential producers who have not yet invested, the activity in question is not
attractive and they will not make new investments in it.
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In economic analysis, selling items below the average
cost of production is not
necessarily dumping. Selling items below the variable cost of production may
be dumping or illogical behavior. If it is the latter, those producers who are
illogical will be quickly driven from business as losses mount. The simple
observation that producers are selling below average cost is not sufficient
economic information to determine if a firm is dumping. Only reference to
variable costs can determine whether or not dumping may be occurring. If a
firm is selling its product at a price below variable cost, then its motive for
doing so is not profit maximization in the short run. Its motive may be a
strategic one that aims at extraordinary profits in the long run. It may be
dumping.
Thus, any economic definition of dumping must be oriented
around whether or not a firm is selling below costs. Furthermore, a strict
definition would be selling at a price that is below average variable costs. For
purposes of this paper, let us define economic dumping as selling an item
below the variable cost of production.
Technology A Boon or Bane
we cannot live without electricity nor can we survive the whole day without
knowing whether which is the latest Gadget in use which would benefit the
driver of an automobile to drive safely and at the same time work on his
immediate assignment at hand. Basically, we need TECHNOLOGY and we are
a big part of it already. We live, strive and thrive on computers, data base
online, communication network, and the latest gadgets.
Technology today has given us both Nuclear weapon and Medicines that
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could cure the unthinkable of pain and diseases. It has given us a better
opportunity to preach and teach knowledge to those less privileged, those
who cannot hear or see or speak and understand their language and be one
and at the same time it has made it possible to grow in millions and preach
out freedom to one.
Technology creates options. Options lead to confusion. A man getting into a
crowded bus will sit on any available seat. The same man in an empty bus
will wonder whether he should sit in the front or back, window or aisle.Err
why I am even talking about all this. Without technology there wouldnt be
buses!!! Options besides creating confusion also create conflict. Technology
creates wants, wants and more wants. The moment you satisfy few of them,
many more raise their hydra head.
In conclusion, we think that Technology is a must. Its a Boon and it will stay
so forever. Without it we could not have had this debate. We would not
realize that it is possible to go beyond the age of 90 and still be fit and
healthy. Technology has given that to us today
CELL PHONES: BOON OR BANE
From the invention of fire to the world of digital, man has forced his scientific
advance. In this fast moving generation computers are considered to be the
greatest gift of science. Cellphones are modified forms of computers which
are utilized mainly for communication that have rapidly spread throughoutthe world in less than 20 years. Even calculation of numerical values, storing
of data and retrieval of data are possible in cellphones. According to the
survey nearly 300 crores of people are using cellphone. It is estimated by
2010 nearly 500 crores of people use cellphone having internet and camera
facility. The largest cell users in the world is china, next comes to India. The
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market share of Nokia is 52.8%, followed by 10.2% LG and 8.3% Samsung.
Alexander Graham Bell introduced telephone to a less developed society. But
by the time when cell phones are invented; people are ready to accept any
form of development. In a fast moving society such as ours we cannot spare
time just for walking to friends or for official purposes.
Besides this, with the aid of the latest WAP technology users can surf the
internet, send emails and chat with other people at a low cost. It is obvious
that the communication has become a lot easier now compared to the pre-
mobile phones period.
Mobile phones are lessening the pressure of the business and office work
too. These days, the latest mobile phones are powered with Microsoft Office
application for viewing and editing various types of files including Word, PDF,
and Excel etc easing the office and business work Moreover, in this modern
world of advanced communication loads of business deals are made through
mobile phone conferences.
The cellphone is without doubt a technological blessing, but its sounds, theringing and the talking and the resultant cacophony in public places are
turning out to be a source of irritation
(Markley,
We have arranged a civilization most crucial elements profoundly depend
on science and technology. - Carl Sagan
When legendary American scientist Alexander graham bell 1870s, he
probably did not fathom the extent of the prospective telecommunication
revolution that his invention was bring about in the world. About a century
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later, a similar path breaking invention by mattin cooper was designed to
bring similar strides in the field of telecommunication. That particular
invention was the cell phone, which instantly gave mankind the freedom of
movement during a conversation, due to its non requirement of wires.
However, the intial mass hysteria about the telephone being wireless, has
become sort of an impasse in a few decades down the line. The reason is
that the cell phone has become indispensible thing in almost all activities of
modern life, to such an extent that its absence makes some of feel
incomplete or restless, as if it were a crucial limb of ones own body.
In recent times, people have begun to question such unconditional
acceptance of cell phones, in the light of certain harmful effects it can lead
to. In this context my argument would be that indiscriminate and illogical
use if technology is bound to bring harm.
A simple example will make it clear. It is common knowledge that nuclear
technology could be developed for peaceful purposes like production of
clean energy and the like. But thoughtless use of the same can beget horrors
of unspeakable proportions, as was evident in the in the wonton destruction
wrought in Hiroshima and Nagasaki cities of Japan at the fag-end of the worldwar 2nd .The point here is that technology is always good when used
perspicaciously. Hence this focuses this on cell phones as boon.
The elephant, the tiger and the cell phone a book by author Sashi Tharoor
points out the significance of cell phones as a symbol of Indias booming
economy thriving in a Kaleidoscopic culture and a pluralistic society. With
more than 600 million cell phone users in the country. India currently has the
fastest growing telecom network in the world. It has left behind the US in
terms of the number of cell phone connections and presently ranks only after
chinas
In economics, "dumping" can refer to any kind of predatory pricing.
However, the word is now generally used only in the context of international
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trade law, where dumping is defined as the act of a manufacturer in
one country exporting a product to another country at a price which
is either below the price it charges in its home market or is below its
costs of production. The term has a negative connotation, but advocates
of free markets see "dumping" as beneficial for consumers and believe
that protectionism to prevent it would have net negative consequences.
Advocates for workers and laborers however, believe that safeguarding
businesses against predatory practices, such as dumping, help
alleviate some of the harsher consequences of free trade between
economies at different stages of development
Remedies and penalties:In United States, domestic firms can file an antidumping petition under
the regulations determined by the Department of Commerce, which
determines "less than fair value" and the International Trade Commission,
which determined "injury". These proceedings operate on a timetable
governed by U.S. law. The Department of Commerce has regularly found that
products have been sold at less than fair value in U.S. markets. If the
domestic industry is able to establish that it is being injured by the
dumping, then antidumping duties are imposed on goods imported
from the dumpers' country at a percentage rate calculated to
counteract the dumping margin.
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LABOURDUMPING:
The flood of foreign labor pouring into the U.S., the European Union and
other hospitable environs has brought political strains. In the U.S., President
George W. Bush and Senator Edward M. Kennedy failed to win passage of an
immigration reform bill that the President viewed as legacy legislation. In
Europe, France's new President, Nicolas Sarkozy, has been busy promising to
get tough on immigrants and erecting roadblocks to Turkey's bid for
European Union membership.
These are only the latest shots in a long and ultimately futile debate about
immigration policy. There is little chance of stemming migrant inflows, as
long as the countries supplying immigrants embrace policies that effectively
mandate labor dumping.
Marshal Josef Tito broke ranks with Moscow in 1948, Yugoslavia rejected
notions of Soviet-style central planning and created its own brand ofsocialism. The Yugoslav model mandated that resources be allocated by
worker-managers instead of central planners. This decentralized socialist
setup was supposed to mimic markets, but without capitalists, it was
doomed. Worker-managers viewed additions to the labor force as
competitors for their slice of the pie. Consequently, they hung out "no
vacancy" signs and wouldn't hire new employees
Today Mexico is the world's largest labor dumper and the source of much of
the contentious U.S. immigration reform debate. Surprisingly, the political
combatants on both sides of the debate fail to mention the source of the
problem: Mexico's statist economy. Like Yugoslavia, Mexico can't produce
enough jobs. According to the World Bank's Doing Business 2007 report,
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Mexico's labor market ranks 108th out of 175 countries in terms of the ease
of hiring and firing workers and labor-market flexibility.
Rather than modernize the economy, Mexico's politicians use Tito's broom.
Mexico's 47 consulates in the U.S., more than any other country has,
facilitate the sweeping by issuing passports and offering assistance when
Mexican immigrants run into trouble. Thus 30% of Mexico's labor force is
working in the U.S., and in 2006 they sent home $23 billion, 12% of Mexico's
exports.
Poland is another labor dumper, with 7.6% of its labor force at work in
foreign countries. Poland's overregulated economy and overtaxed labor
market (the tax wedge is 42.2%) can't produce enough jobs. Even with labor
dumping the jobless rate is 13%.
In Indonesia, says the Doing Business 2007 report, firing a worker costs the
employer 108 weeks of wages, three times the OECD average. As a result,
Indonesian companies are extremely reluctant to make legal use of the
country's labor supply, forcing an estimated 70% of the labor force to work in
the informal sector of the economy and 10.3% to remain unemployed.
WTO rules against U.S. anti-dumping trade policy
The World Trade Organization ruled that the U.S. had applied unfair anti-
dumping duties on a number of goods, overturning an earlier decision that its
tariff rates on some carbon steel products and ball bearings were in line with
international trade rules.
The decision was a victory for Japan, which challenged the U.S. over the way
it sets dumping fees
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In an unusually high-level reaction, Japan's Foreign Minister Taro Aso praised
the WTO appeals body for the decision, which he said would help strengthen
the system of rules guiding international trade.
The office of the U.S. trade representative in Washington said it was still
studying the decision and could not immediately comment.
Governments investigate dumping when they suspect that producers are
exporting products at below the market price in their own country -- usually
because exports have been subsidized or when it is believed there is an
attempt to corner the market.
The Geneva-based WTO had previously chided the U.S. in disputes with the
EU and Canada for how it determines what corrective fees to apply, known in
trade jargon as "zeroing."
Despite the legal setbacks, Washington stuck to its policy and appeared to
have won an important test case when the WTO rejected most of Japan's
arguments in September.
But Tuesday's decision reversed all findings from the ruling, and urged the
U.S. to bring its anti-dumping measures into line with WTO obligations.
"The zeroing procedures adopted by the U.S. in any type of anti-dumping
procedures violate its obligations under the WTO agreement," Aso said.
The appeals body had made it clear such restrictions on international trade
would not be tolerated.
"Japan highly values the report as it will serve to maintain and promote the
rule-based multilateral trading system," Aso added
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European Union anti-dumping duties can slap a heavy tax bill on an
otherwise profitable foreign supply deal. So make sure you know the risks
and your rights, says Robert MacLean
IMAGINE THE SITUATION. AFTER protracted negotiations with a supplier in
the Far East, you have secured competitively priced products for your
company. Then a letter arrives from HM Customs & Excise containing an
assessment for European Union "anti-dumping" duties. These charges are for
50 per cent of the value of the imported products, and are in addition to
normal customs duties.
Article: Anti-Dumping Measures under Ukrainian Law.(Dumped
Imports Act of Ukraine)
The World Trade Organization (WTO) was established for progressive
liberalization of international trade by means of lowering and/or eliminatingtrade barriers (both tariff and non-tariff) based on the principles of most-
favored-nation, national treatment, freer trade, predictability and promoting
fair competition, etc. Notwithstanding the fact that the WTO is destined
mainly to eliminate any obstacles in international trade, the WTO
agreements envisage some exceptions, in particular: (a) actions against
dumped imports, i.e. anti-dumping duties; (b) actions against unlawful
subsidies, i.e. countervailing duties; (c) actions against surge imports, i.e.
safeguard measures (quotas and duties). Taking into account the fact that
Ukraine could well become a member of the WTO shortly, it is worth
analyzing the practice of applying the said exceptions in Ukraine.
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This article proceeds with analyzing the trade measures available under
Ukrainian law and allowed under the WTO agreements and concentrates on
anti-dumping measures. First of all we shall provide a very brief overview of
the WTO agreements applicable to anti-dumping measures; thereafter, we
will pay special attention to the provisions of the Ukrainian legislation in the
field in a question-and-answer format.
How are Anti-Dumping Measures Regulated Under the
WTO Agreements?
Broadly speaking the applicable WTO agreement, i.e. the General Agreement
on Tariffs and Trade 1994 (GATT 1994) allows governments to act againstdumping where there is genuine (material) injury to the competing domestic
industry. In order to do that the government has to be able to show that
dumping is taking place, calculate the extent of dumping (how much lower
the export price is compared with the price on the exporter's home market),
and show that the dumping is causing injury or threatening to do so.
Thus, under Article VI of the GATT 1994 anti-dumping measures (anti-
dumping measures) shall apply to offset or prevent dumping, by which
products of one country are introduced into the commerce of another
country at less than the normal value of the products, which causes or
threatens to cause material injury to an established industry in the territory
of an importing country or materially retards the establishment of a domestic
industry. The Agreement on Implementation of Article VI of the GATT 1994
(the Agreement) sets out the rules for application of the anti-dumping
measures pursuant to Article VI of GATT 1994. The major guidelines of the
Agreement with respect to the anti-dumping measures provide that :
(a) Such measures shall apply in the event of dumping taking place;
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(b) they may be imposed only when dumped imports are found to cause or
threaten to cause material injury to the domestic industry or materially
retards the establishment of a domestic industry;
(c) The measures may be levied only as a result of investigations initiated
and conducted under the Agreement;
(d) They must be temporal;
(e) The sum of the measures shall be the full dumping margin or less;
(f) As a rule, they shall apply to each supplier of products subject to
investigation individually; however, the Agreement sets out some exceptionsto the said rule. The Agreement also provides for special requirements
applicable to investigation, application of measures and establishes the
Committee on Anti-Dumping Practices.
CONCLUSION:
Dumping is simply a pricing policy where by a firm charges a lower price for
exporting goods than it does for the same goods sold domestically. It is said
to be the most common form of price discrimination in international trade .A
dumping can also affect the market adversely by exporting the goods at
lower prices,there by it can also affect the market competition.
Bibliography:
Wikipedia
http://www.centad.org/relatedinfo13.asp
http://EzineArticles.com, retrieved 30th October, 2007
Economic times news paper
http://www.centad.org/relatedinfo13.asphttp://www.centad.org/relatedinfo13.asp -
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Completion Refresher Nov.2010