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More teeth for Article 15 will benefit Third World 

Manas Chakravarty  
Article two of the Anti-dumping Agreement (ADA) defines what dumping is. Wecan conceptually distinguish between two forms of dumping: Price dumping,ie, the selling at a lower price abroad than in the home market; Costdumping, ie, selling below cost in an export market. The establishment ofdumping is a technical arithmetical exercise, which is supposed to focus onprices and costs, and the injury caused to domestic industry as a result.The extent of dumping is calculated on a" fair comparison" between the"normal value" ie, the price of the imported product in the ordinary courseof trade in the country of origin, and the export price.

In reality, importing country authorities have a lot of discretion indeciding on the calculation details. There is another reason for thewidespread use of anti-dumping duties. The attraction of such duties is thatthe dispute settlement mechanism's powers are severely restricted so far asthe application of ADA is concerned. Article 17.6 of the agreement merelysays that if the panel finds that the investigating authorities haveestablished and evaluated facts objectively without bias, it shall notoverturn the conclusion reached by the authorities, even though the panelitself would have reached a different conclusion.

Developing countries technically do have some special protection againstdumping. Article 15 in the ADA is devoted to developing countries, but itmerely provides that special regard must be given by developed countrymembers to the special situation of developing countries when consideringapplication of anti-dumping measures and that constructive remedies providedfor by the agreement must be explored before application of anti-dumpingduties where they would affect the essential interests of developing countrymembers. However, in practice, major users of anti-dumping legislation donot distinguish between developed and developing countries in theirapplication of the anti-dumping instrument.

Indian exports, like those of many other countries, have been made thetarget of anti-dumping duties. But it would be unwise to conclude thatdeveloping countries are always at the receiving end so far as ADA isconcerned. UNCTAD record's a recent study examining the use of anti-dumpingover the period 1987-1997 which concludes that: "...developing countries nowinitiate about half of the total number of anti-dumping cases, and some ofthem employ anti-dumping more actively than most of the developed countryusers. ...this proliferation of anti-dumping is not altogether negative, asit appears to have helped countries navigate from a controlled to aliberalised trading regime: the developing countries liberalising mostintensively, tend to be active users of anti-dumping."

This means that developing countries have graduated into savvy users of ADA.Also, the use of ADA by developing countries has been increasing, incontrast to the eighties when it was the developed countries which dominatedits use. But developed countries continue to be the main beneficiaries ofthe instrument. Of the 225 cases initiated during 1998, 143 targeteddeveloping countries. India's stance, however, has been vigilant. WhileIndia accounts for only 0.6 per cent of world trade, she has beenresponsible for about 6 per cent of the total ADA actions.

So what could be a negotiating stance on ADA? We could argue that theArticle 15 obligation should be given some teeth by providing higher deminimis dumping margin and imports' share thresholds in anti-dumpingproceedings involving developing countries. The de minimis dumping marginfor developing countries could be raised to 10 per cent from the present 2per cent. The de minimis volume margin, currently 3 per cent, can also beincreased to say 7 per cent, as demanded by the CII. These measures can bejustified by pointing to similar relaxations for developing countries in theAnti-Subsidy Agreement.

Reducing the cost of anti-dumping procedures, and the involvement of disputesettlement mechanism to judge the fairness of anti-dumping procedures shouldalso be demanded. The WTO secretariat should be actively involved in makingavailable the required data for developing nations.

Although Article 9.1 provides for the anti-dumping duty to be lower than themargin of dumping if these lower duties would offset the injury caused bydumping, this rule is not followed. It should be made mandatory thatdeveloped countries follow this rule.

However, concentrating on the details of calculating the margin of dumpingmay not be profitable. Given the leeway accorded to importing countriesadministrations, it would be easy for them to distort data in order tosupport the conclusions they wish to reach.

Perhaps the stance India could take is that the grounds for anti-dumpingduties are tenuous, and only a really intolerable impact on domesticproducers warrants the application of a discriminatory duty. The applicationof a discriminatory duty to imports can only be warranted if the impact onthe domestic producers is something more than that following from normalcompetition for markets.

Another grey area has been the confusion between the notion of injury beingdone to the domestic producers, and the notion of the general health of theindustry. In US practice, injury has meant much the same as ill-health,instead of injury caused by dumping, which is what GATT's Article 6 speaksof. This is important, since it is usually weak industries which resort toAD. It is also specially important for developing countries, because theindustries in which they have a competitive advantage are usually sunsetindustries for the advanced countries. Restricting injury to injury causedby dumping, rather than the general ill-health of the industry, wouldhelp.

In US dumping law, the word "cause" has been interpreted to mean that it issufficient if dumping is one of the causes injury. Injury is seen to ariseas the sum of the effects of all the adverse factors impinging on producers,including dumping. This is an extremely protectionist interpretation,because dumping may not be really responsible for the industry's plight, somuch as other factors. Taken in conjunction with the interpretation ofinjury given above, this approach is clearly prejudicial to trade.

Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.

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