The law of World Trade Organization (WTO) doesn’t forbid dumping. In reality, since costs of products are normally decided by private organizations, ‘dumping’ all by itself is not controlled by WTO law.
‘Dumping’ is the bringing of a product onto the market of another nation (or customs region) at a cost not same but less than the typical value of that product. Any item can be considered ‘dumped’ where the export cost of that product is less than its typical price, that is, the similar cost in the normal course of buying-selling for the ‘like product’ bound for consumption in the exporting nation.
Nonetheless, Dumping is to be ‘denounced’ if it becomes the cause of injury to the domestic business of the importing nation. The embodiment of the WTO principles on dumping is that Members are permitted to take certain measures, which are in any case WTO-conflicting, to ensure protection to their domestic industry from the adverse impacts of dumping.
Article VI of the GATT 1994 describes, in significant part, that: The members perceive that dumping is to be denounced provided it causes or compromises material injury to a built up industry in the region of a member or significantly hinders the foundation of a domestic industry. While attempting to cure dumping, anti-dumping agreement further expounds on the substantive and procedural laws to be followed.
Normally alluded to as the Anti-Dumping Agreement, the dumping and anti-dumping measures by law of WTO are set in GATT 1994- Article VI and in the WTO Agreement on Implementation of Article VI.
In the case of US-Hot-rolled Steel, it was held that Article 2.6 of the Anti-Dumping Agreement characterizes the ‘like product’ as a product which is indistinguishable, i.e. comparable in all regards to the product viable, or in the nonexistence of such a product, a different item which, even though not alike in all aspects, has qualities intently resembling those of the product under deliberation.
For ascertaining normal cost, Article 2.1 of the Anti-Dumping Agreement characterizes the ‘normal value’ of an item as: “…the equivalent cost, in the normal course of buying-selling, for the like product when bound for utilization in the exporting nation”.
The skillful authorities must build up the existence, or danger, of injury to the domestic industry; and the casual connection between the dumping and the injury for the purpose of determining injury. Article 3.1 of the Agreement on anti-dumping necessitates that a injury determination to the domestic manufacturing business be founded on positive proof and include an objective assessment of both: (a) the quantity of imports dumped and the impact of the imports dumped on costs in the domestic marketplace for like items; and (b) the subsequent effect of these imports on domestic makers of such items.
Levying of anti-dumping measures is made simply after an examination started and directed as per the Agreement based on prior legislation that has been appropriately notified to the WTO, an assurance is made that there is dumping; the domestic industry creating the like product in the importing nation is experiencing injury; and there is a causal connection between the dumping and the injury.
It is not obligatory for a WTO member country to institute anti- dumping legislation, though if the a Member government settles on the policy decision to have the choice of commanding anti-dumping measures, Article 1 of the Anti-Dumping Agreement oversees such measures and indicates that an anti-dumping measure will be made applicable distinctly under the situations provided in accordance with Article VI of GATT 1994 and as per examinations started and led in accordance with the articles of this Agreement.
Article 7 of the Agreement may appear as a provisional obligation or, ideally, a security, by money deposit or bond, equivalent to the amount of the preliminarily decided margin of dumping. There must be a preliminary agreed determination of dumping, causation and injury. The examining authorities must decide that such a measure is important to forestall injury being caused at some point in the investigation. It cannot be applied sooner than sixty days following the inception of the examination.
Application will be limited to brief periods not surpassing 4 months on verdict of the authorities concerned, upon demand by exporters on behalf of a considerable percentage of the trade in question, to a period not surpassing six months.
Article 18.1 of the Anti-Dumping Agreement states that no particular action against dumping of exports from another member can be taken aside from the provisions of GATT, 1994 and it efficiently limits anti-dumping measures to conclusive anti-dumping duties; temporary measures; and cost undertakings.
Article 11 of the Anti-Dumping Agreement sets up rules overseeing the duration of anti-dumping measures and provides for a pre-requisite for the occasional review of any continuing need for the imposition of anti-dumping measures. An anti-dumping duty will stay in force just as long as and to the degree of extend important to balance dumping that is the cause of injury.