Anti dumping regulations:
Common mechanism to protect domestic industries vital
It is important to implement anti-dumping regulations in Sri Lanka.
In other words a common mechanism to protect the domestic industry from
unfair trade practices has become a necessity.
Most of the emerging economies such as India, Brazil and China are
already practicing it to protect local industries. Over the past decade,
China and India have rapidly increased their use of anti-dumping laws,
the world's most dominant form of trade protectionism, against their
The international law on anti-dumping was drafted primarily by
Americans and Europeans. They were among the first to take advantage of
these rules and remain among the most active users of anti-dumping
sanctions. Not surprisingly, legal studies on anti-dumping have tended
to focus on American and European practices.
In Sri Lanka, the Anti-Dumping and Countervailing Duties Bill was
presented to Parliament by the Minister of Trade, Commerce, Consumer
Affairs and Marketing Development and Minister of Highways in February
2006, to give effect to the Agreement on Implementation of Article VI of
the General Agreement on Tariffs and Trade 1994 and the Agreement on
Subsidies and Countervailing Measures.
This regulation was meant for the investigation and imposition of
anti-dumping duties and countervailing duties with regard to products
imported to Sri Lanka. The Director General of Department of Commerce
was named as the authority for investigating the regulations under the
supervision of an inter-ministerial committee, which assures the process
of application to higher level of involvement.
The Bill was not adopted as an Act at that time. It is vital to take
appropriate measures to implement the same to protect local industries.
The General Agreement on Tariffs and Trade (GATT) lays down the
principles to be followed by the member countries for imposition of
anti-dumping duties, countervailing duties and safeguard measures.
Pursuant to GATT, 1994, detailed guidelines have been prescribed
under the specific agreements which have also been incorporated in the
national legislation of most of the member countries of the WTO.
Dumping is said to take place when an exporter sells a product to a
country at a price less than the price prevailing in its domestic
market. It is also recognised that price discrimination in the form of
dumping is a common international commercial practice. It is also not
uncommon that the export prices are lower than the domestic prices of
the exporting country.
Therefore, from the point of view of anti-dumping practices, there is
nothing inherently illegal or immoral about the practice of dumping.
However, where dumping causes or threatens to cause material injury
to the domestic industry of the importing country, the designated
authority should investigate and impose of anti-dumping duties.
Dumping occurs when the price of goods imported into a country is
less than the Normal Value of 'like articles' sold in the domestic
market of the exporter. Imports at cheap or low prices do not per se
The price at which 'like articles' are sold in the domestic market of
the exporter is referred to as the 'Normal Value' of the articles. The
normal value is the comparable price at which the goods under complaint
are sold, in the ordinary course of trade, in the domestic market of the
exporting country or territory.
The local industry must show that dumped imports are causing or are
threatening to cause material injury to the 'domestic industry'.
Material retardation to the setting up of an industry is also regarded
as injury. Sufficient evidence must be provided to support the
contention of material injury. Injury analysis can broadly be divided
into two major areas, 'The Volume Effect' and 'The Price Effect'.
The Designated Authority may examine the volume of the dumped
imports, including the extent to which there has been or is likely to be
a significant increase in the volume of dumped imports, either in
absolute terms or in relation to production or consumption in the
domestic market, and its effect on the domestic industry.
The effect of dumped imports on prices in the domestic market for
'like articles', including price undercutting, or the extent to which
the dumped imports cause price depression or preventing price increases
for the goods which otherwise would have occurred.
The consequent economic and financial impact of the dumped imports on
the concerned domestic industry can be demonstrated, inter alia, by:
decline in output, loss of sales, loss of market share, reduced profits,
decline in productivity, decline in capacity use, reduced return on
investments, prices adversely affecting cash flow, inventories,
employment, wages, growth, investments and raising capital.
The writer is the Secretary General and CEO of the National Chamber
of Commerce of Sri Lanka.