An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market
What is Anti-Dumping Duty?
Anti-dumping duty is a tariff imposed on imports manufactured in foreign countries that are priced below the fair market value of similar goods in the domestic market. The government imposes anti-dumping duty on foreign imports when it believes that the goods are being “dumped” – through the low pricing – in the domestic market. Anti-dumping duty is imposed to protect local businesses and markets from unfair competition by foreign imports.
Normal Customs Duty vs Anti-Dumping Duty
- While anti-dumping measures are linked with the notion of fair trade, customs duties aim at the overall development of the economy.
- Customs duties fall under the ambit of trade and fiscal policies of the Government, whereas anti-dumping is a remedial measure.
- Anti-dumping is implemented to offset the injurious effect of international price discrimination, while customs duties have implications for the government revenue and the overall development of the economy.
- Anti-dumping measures may not necessarily be in the form of duties/tax.
- Anti-dumping duties are imposed against exporter/country inasmuch as they are country specific and exporter specific, in contrast to customs duties which are universally applicable to all imports irrespective of the country of origin or the exporter.
Initiating Anti-Dumping Investigation
- There is sufficient evidence to prove the existence of dumping. Dumping exists if there is adverse impact on the domestic industry, and the dumped imports led to the alleged adverse impact on domestic industry.
- The domestic producers expressly supporting the anti-dumping application must account for at-least 25% of the total production of a similar article by the domestic industry.
FAQs
What is anti-dumping duty?
Anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. This measure aims to protect local industries from unfair competition by foreign companies.
Why is anti-dumping duty imposed?
- Protect domestic industries from unfair trade practices.
- Prevent the flooding of the market with cheaper foreign goods.
- Ensure fair competition between domestic and foreign manufacturers.