Imposition of Antidumping Measures in UAE
Usually, anti dumping duty is like excise duty that a government charges on imported products if it considers that their export price are lower than their normal value in the exporting country. Dumping is a practice where a company exports products at a price lower than the price it normally charges on its own home market. To provide protection to local producers producing like products, WTO Members impose anti-dumping duty on products they consider are entered in their local market at prices below the normal value.
Anti-Dumping according to World Trade Organization (WTO) Agreements
The WTO is the world trade organization that regulated the dumping and how to counter dumped imports via the Agreement on implementation of Article VI of the General Agreement on tariffs and Trade 1994. The WTO Agreement commonly known as “ the Agreement on Antidumping” doesn’t illegitimate the practice of dumping itself but regulates when there is dumping and the action to be taken against dumping only when it is causing material injury or threatens to cause material injury to the domestic industry or also it materially retards the establishment of an industry. Broadly speaking the WTO agreement allows governments to act against dumping where there is genuine (“material”) injury to the competing domestic industry. In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping (how much lower the export price is compared to the exporter’s home market price), and show that the dumping is causing injury or threatening to do so.
The dumping is not enough, Anti-dumping measures can only be applied if the dumping is hurting the industry in the importing country.
The WTO allows anti-dumping measures to be imposed only once the investigating authority of the importing country determined that dumped imports caused or threatened to cause material injury to the domestic industry. In making this determination, the investigation Authority will examine the volume of dumped imports and the effect of the dumped imports on prices in the domestic market for like products and the consequent impact of these imports on domestic producers of such products. With reference to the effect of dumped imports on the domestic industry, the Agreement on Antidumping provides that the investigating authority shall evaluate all relevant economic factors bearing upon the state of the domestic industry, including actual or potential declines in sales, profits, output, market share, productivity, return on investments, utilization of capacity, actual or potential effects on cash flow, inventories, employment, wages, growth, ability to raise capital or investments, and the magnitude of the margin of dumping.
An example of antidumping measures
Read this example to understand anti-dumping measures. Let’s say, an exporter in Country A exports it’s product at $8 per piece to a company in Country B. This exporter is selling the like product in Country A at $12 per piece. Then, in order to establish the antidumping duty and subject to the proceedings governing fair comparisaon, we will compare the normal value by which the product is sold in country A ( 12$) with it’s export price to country B ( 8$), the difference (4$) is called dumping margin and it is then it is expressed in a percentage of the export price of the product ( 4$/8$*100% =50$) which will correspond to the antidumping duty that will be imposed on each import of the concerned product to country B. This antidumping duty will offset the dumping practice and restore the fair comparison between the domestically produced product and the imported product in the importing country market.
Imposition of antidumping duties measures in UAE
According to GCC Industrial Cooperation Committee decision, an anti-dumping duty is now imposed on every GCC car battery ranging from 35 to 115 empire imported from South Korea. This anti-dumping duty varies according to individual manufacturers and goes from 12 up to 25 percent of CIF value imported batteries. These antidumping duties are being imposed from 25 June 2017. It will be applicable for five years with a possible extension for more five years upon the reception of request of the GCC domestic industry to initiate a sun set review in order to determine whether the expiry of the expiry of the duty would be likely to lead to continuation or recurrence of dumping and injury.
In practice, after the GCC Ministerial Committee ruling to impose this antidumping measure, possible other trade remedy measures can be imposed in the future, especially that there are four trade remedy cases which are currently under investigation.
The international trade-consulting firms, including World Deal Consulting, can play an important role if any business party believes that the above mentioned anti-dumping measures are not fair.