The international trade was badly affected in 1930s; which was a year of great depression; many countries imposed restrictions on import of goods for safeguarding their economies. This resulted in a great reduction of world trade.

 USA put forward many proposals for extending international trade and employment in the year 1945. An agreement was signed by 23 countries on October 30th, 1947 at Geneva relating to tariffs imposed on trade. .Hence, it was amended on 1st Jan, 1948. The main motive of GATT[ GENERAL AGREEMENT ON TARIFFS AND TRADE] was to make international trade easier by trade expansion, increasing world production resulting in full employment in participating nation, development of world resources, improving standard of living of the communities on global level.  GATT consisted of committee each dealing with different sectors.  The GATT had total eight rounds of negotiations from April 1947 to September 1986 each with remarkable results.

GATT was hence converted from an agreement into an international organisation called world trade organisation ( WTO) with came in being from Jan 1, 1995 with an aim to strengthen world economy and to increase trade and investments. The main objective of WT was to provide equal opportunities to all countries in international market, to minimize tariffs on trade and to provide proper remedies for disputes relating to international trade.

ANTI DUMPING

In the 19th century, the European industry appealed to their government to protect them against the products being dumped at low prices i.e. lower than the market value.1902 to 1904 was crucial year as the year witnessed the formal agreement of anti-dumping and Canada being the first country to adopt anti-dumping law. This was hence followed by European countries and US in 1916. This incident hence formed the basis for original GATT article on anti-dumping in 1947.

Dumping takes place when one country exports goods to other country at a lower price than the normal value in the home country, i.e. the price that is lower in the foreign market than the value of the product in the domestic market.    Hence, dumping is an unfair trade practice.  it is regarded as a deliberate move to attain a competitive advantage in the importing market.

The anti-dumping duty is like tariff imposed by the government on goods imported that is believed to be of lower price than the normal market price. Here, WTO agreement allows the government to impose duty on dumping where there is an injury to the domestic industry. The agreement puts in a special provision when the export goods should be compared with the export price and the normal value of the product in the market in order to not increase the margins.

Hence, any exporter whose dumping margin is less than 2 % of the export price is excluded from the anti-dumping duties. Similarly, if a country’s import is less than 3% of the total imports of a product than the investigation against that country is terminated.

Some of the countries also resort to subsidisation of the product exported to other countries. Subsidisation of export is thus considered as an unfair trade practice and such subsidies are prosecuted by imposing anti subsidy countervailing duty. There is one more remedy for trade issues is safeguard means the country temporarily restricts the import if goods or product if the domestic industry is facing material injury. 

THE ANTI- DUMPING AGREEMENT

The GATT[GENERAL AGREEMENT ON TARIFFS AND TRADE] agreement has been altered to create the WTO ANTI DUMPING AGREEMENT. The agreement of article VI OF GATT 1994, also known as ANTI -DUMPING AGREEMENT provides detailed information on rules of article VI.

GATT (article 6) permits the country to take action against dumping. The anti-dumping AGREEMENT sheds light and refines article 6 which allows the countries to act. GATT allows imposing of duty on goods which has been dumped after the contradicting party has found out that the effect of the dumping is such as to cause injury, in excess of bound rates or materially delays the establishment of a domestic industry.

The ANTI Dumping AGREEMENT (WTO) permits the government to take actions against the dumped goods imported which has resulted in the material injury of domestic industry. thus, in order to do the imports, the government has to discover by investigation that dumping has occurred and calculate the level the dumping taking place i. e. differentiate the export price to the price in the exporter’s home market and then determine that dumping is causing injury. 

Before imposing anti-dumping duty, members must carry out investigation as under article 5 of anti-dumping AGREEMENT through their national authorities. The purpose of the investigation is to provide evidence of import or dumped goods and injury caused.

GATT article VI permits the countries to take action against dumping. The ANTI DUMPING AGREEMENT filters and expands article VI by adding comprehensive procedural and essential requirements, and they act together. 

Hence, they allow countries to operate in a way that would usually break the GATT principles of binding a tariff and not discriminating among trading partners. Normally a positive finding on anti-dumping case results in an additional import duty on the dumped goods from a particular exporting country so as to bring a price closer to the normal value or to eliminate the injury caused to the domestic industry of the importing country. 

The treaty lays out a set of rules which ensure that the anti-dumping duties are followed in a non-discriminatory manner. 

CONCLUSION:

Hence, GATT[GENERAL AGREEMENT ON TARIFFS AND TRADE] mainly aims at eradication of quotas and tariff duties and to ensure smooth functioning of trade among various nations .The GATT was renewed to create or make a path for WTO anti-dumping agreement which compiles a set of rules of trade for WTO members.

The main objective of the anti-dumping agreement is to ensure complete transparency of proceedings and to give a full opportunity to the contracting parties to safeguard their interests, during investigation. Also one of the major achievements of GATT was to carry out trade without discrimination . Article VI of GATT 1994, clearly allows the imposition of anti-dumping duty on imported goods from a specific country if the dumping causes material injury to the domestic industry of the import country.

References:

1. https://www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm
2. https://www.yourarticlelibrary.com/trade-2/gatt-general-agreement-on-tariffs-and-trade-origin-objectives-tariff-negotiation/26279
3. http://www.legalserviceindia.com/article/l287-Anti-Dumping-Laws.html
4. http://www.dgtr.gov.in/search/node/anti%20dumping
5. https://www.wto.org/search/search_e.aspx?search=basic&searchText=anti+dumping+agreement&method=pagination&pag=0&roles=%2Cpublic%2C

Author:

Zeel Davda, Legal Intern (July 2020)

She is a third-year law student at Pravin Gandhi College Of Law, Mumbai. Her areas of interest include family law, corporate law, and constitutional law.