Important Topics for UPSC 2017 Exams (Anti-Dumping Duty)
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What?
What?A penalty is imposed on questionably low-priced imports, to escalate their price in the importing country and therefore to protect domestic industry from unfair competition.
Why?
- Because, to rectify the trade distortion effect of dumping and re-establish fair trade.
- WTO under the GATT (General Agreement on Tariff and Trade) allow their member countries to take specific decision on imposing such anti-dumping duty to ensure fair trade rather than protecting domestic industry.
Example:
Steel sector in India was facing severe loss for past 3-4 years due to very low price imports from china. Prices of steel plummeted in the international market due to lower demand and excess capacity of Chinese steel manufacturers. Scenario was such bad that many steel companies across the globe including India were facing huge economic loss and even some defaulting cases in India.
Further, reason for such a low steel prices was found out to be over subsidised production in china. Therefore to counter such predatory pricing many countries including India has adopted the Anti-dumping duty therefore raising the cost of import and therefore the final prices. The result of which seems effective from the recent quarter results of steel companies where most of them either government controlled (SAIL) or public limited companies (Tata Steel, Jindal etc.) have shown huge profits and reversal of economic activity.