What is anti-dumping?

Last Updated at: Nov 04, 2019
What is anti-dumping

No state in the world has abundance with respect to resources and in order to ensure that such limitations don’t restrict the growth and development, the States enter into trade relations with each other. However, in these trade relations, there are those actors who are involved in mischief. For instance, it is the natural habit of a seller to be done away with a product by the end of a particular quarter by disposing of it in a low price, if it is not sold as per the estimation. The same principle can also be said to guide all sellers across the world. So in order to protect the businesses and markets, all the countries have come up with a set of laws. Anti-dumping duty is one of them that has been brought into effect by the government.

Anti-dumping duty

There are instances wherein, the imported products are priced relatively low in comparison to the market price. So in order to safeguard the local industries from competition, a penalty is levied upon such low-priced imported products. Anti-dumping can be better understood by dividing it into two parts viz., dumping and anti-dumping. Dumping can be regarded as a process wherein companies export products at a lower price than what is normally charged at their own home market. The imported products, when are brought at lower prices brings with them the risk of competition as consumers are guided by the principle of best quality products at a lower price. In this instance, products by the local marketers are left out. Thus, in order to protect the markets from running into frequent losses, the domestic government imposes an anti-dumping duty.

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Anti-dumping duty is the protectionist tariff that is imposed by the domestic government to protect the domestic markets, which are suspiciously priced below the market value of the product. The application of such tariffs ensures the free flow of trade between countries.

WTO Agreement

As it is mentioned, following these tariffs ensure a systematic trade of goods. But there are instances wherein the equal application of laws can be excused. These excusable circumstances are determined by the World Trade Organisation (WTO). The WTO Agreement provides three such instances, wherein the application of such laws can be excused, these are:

  1.      Selling at an unfairly low price:

Domestic governments can impose penalties in order to safeguard their own markets. However, it must be noted that the WTO agreement allows a government to take action against dumping when a material injury is caused to the country. The agreement as such only regulates the action taken by the governments. Article 6 of the GATT and the Anti-dumping agreement operate together. Whether a particular product is dumped heavily or not is basically measured in three ways. But one of the methods most used is to determine the price in the exporter’s domestic market.

  1.    Subsidies and special ‘countervailing’ duties to offset the subsidies:

Subsidies can be withdrawn with the help of the WTO’s dispute settlement procedure. Otherwise, a country can also opt for its own investigation and charge extra duty known as the countervailing duty. The measure of the subsidies has a two-way effect. First, it disciplines its usage and second, it counters the effect of subsidies.  

  1.  Emergency measures to restrict imports for a temporal period in order to protect the domestic market:

Countries, in order to protect their markets and enhance such markets, can temporarily restrict imports from foreign countries. However, it can only be done in cases where serious injuries to the market are realized. Article 19 of GATT provides for this measure. However, countries mostly prefer bilateral negotiations which are outside the purview of GATT.


Trade relations do not only help in the growth and development of the economy of the respective states but is also an important aspect of International Relations and as such it should proceed with great caution and care for trade products are also a very important source of income.