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Anti-dumping and countervailing measures vital for Sri Lanka

23 September 2014 05:34 am - 0     - {{hitsCtrl.values.hits}}


It is very important to implement anti-dumping regulations  in Sri Lanka. In other words, a common mechanism to protect our domestic industry from unfair trade practices has become a necessity.

Most of the emerging economies like India, Brazil and China are already practicing it with the view of protecting local industries. Over the past decade, China and India have rapidly increased use of their antidumping laws, the world’s most dominant form of trade protectionism, against their trading partners.

The international law on antidumping 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 antidumping sanctions. Not surprisingly, legal studies on antidumping have tended to focus on American and European practices.
In Sri Lanka, the Anti-Dumping  and Countervailing Duties Bill  was presented to the parliament by the Minister of Trade, Commerce, Consumer Affairs and Marketing Development and Minister of Highways in February 2006, specially  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 Dept of Commerce was named as the authority for investigating the said regulations with the supervision of an inter-ministerial committee, which assures the process of application to higher level of involvement.  

It is pertinent to note that the said bill was not adopted as an Act at that time, and it is so vital in the present context for Sri Lankan authorities to take appropriate measures to implement the same in order to protect our local industries.   

What is dumping?

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 the 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 recognized 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 antidumping 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 initiate necessary action for investigations and subsequent imposition of anti-dumping duties.

Normal value of ‘like articles’

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 indicate dumping.

The price at which “like articles” are sold in the domestic market of the exporter is referred to as the “Normal Value” of those 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.

 Injury to domestic industry

The local industry must be able to show that dumped imports are causing or are threatening to cause material injury to the ‘domestic industry’. Material retardation to the establishment 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 namely “The Volume Effect” and “The Price Effect”.

Volume 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 domestic market, and its effect on the domestic industry.

Price effect

The effect of the dumped imports on prices in the domestic market for like articles, including the existence of price undercutting, or the extent to which the dumped imports are causing 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 utilization, reduced return on investments,  price effects adversely affecting  on cash flow, inventories, employment, wages, growth, investments, ability to raise capital etc.

So, in conclusion it is very vital to implement anti-dumping and countervailing measures in Sri Lanka and protect local industries which we deem would be supportive in achieving higher economic growth and keeping in line with the vision of Wonder of Asia.

(The writer is the Secretary General / CEO of the National Chamber of Commerce of Sri Lanka)

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