The World Trade Organization (hereinafter referred as "WTO") established in the
year 1995 is a premier organization for the governance of International Trade
across the world. With over 164 member states the aim of WTO has been to
supervise and liberalize trade and commercial transactions across nations. Since
there isn't any uniformity in the governance of different countries and their
rules with respect to trade transactions, WTO comes in as a middle ground where
rules for governance can be created and adopted by the member states in tandem
with their domestic laws.
The WTO performs several functions including Trade negotiations, implementation
and monitoring, dispute settlement, building trade capacity etc. It means that
they set certain standards and rules through their agreements for the
international trading of goods and services. These agreements ensure that trade
is done ethically and without causing any member state financial harm.
Therefore, they have created trade remedies or defence mechanisms to protect
countries' domestic markets from unfair practices like dumping of goods, import
of prohibited and actionable subsidized goods, and they also provide Safeguards
from import surges in the domestic market of a country.
India is long standing member of the WTO and hence has adopted to the use of
these trade mechanisms for its benefit. In 1997 India formed the Directorate
General of Anti-Dumping and Allied Duties (DGAD) and Directorate General of
Safeguards. Both these bodies were being controlled separately by different
ministries under the Indian Government up until the restructuring of the trade
remedial ecosystem in India into a single national body. This article focuses on
understanding these trade defence mechanisms and India's role, being a member of
WTO, in the adoption and enforcement of these mechanisms to protect the
interests of Indian Industries from abusive trade practices.
Trade remedies are the measures available to any member state which they can
exercise if they have been subjected to abusive or anti-competitive trade
practices or even if they face threat of such practices. These remedies are
available in the form of Agreement on Anti-Dumping Measures and Agreement on
Subsidies and Countervailing Measures and Agreement on Safeguards. The
importance of these agreements is that they help protect the interest of the
domestic nation from injury suffered due to dumping which means selling goods at
an unfairly low rate, unfair subsidized imports and surges of imports in the
local industry. The following agreements have been discussed below.
What are Anti-Dumping Measures?In today's era where international trade is the norm, a duty has been assumed
for every nation to protect its domestic markets from anti-competitive or
unfairly competitive practices. Dumping is one such practice that needs to be
tackled by a country to protect its financial interests. Dumping can be
understood as an anti-competitive activity wherein a country exports a certain
product at a price lower than the selling price of that product in the country
so exporting. This practice however isn't considered dumping in all
situations. The country importing the goods has to prove material injury to
their industry due to the dumped goods. A mere bargain sale cannot be
levelled to dumping of goods.
Article VI of General Agreement on Tariffs and Trade (hereinafter referred as
"GATT") has established the law with respect to dumping and anti-dumping
measures. According to the said Article, upon investigation and finding of any
financial injury due to dumped imports an anti-dumping duty can be imposed as a
remedy against dumping.
What are Subsidies and Countervailing Measures?The WTOs Agreement on Subsidies and Countervailing Measures help monitor the
usage of subsidies and oversees the actions that countries can take
(countervailing actions) to offset injury being caused due to subsidized
imports. It means that countervailing duties can be imposed by countries to
balance out the negative impact of subsidies. While some subsidies can be good
for businesses and are not prohibited or subjected to countervailing measures
like Research and Development (R&D) subsidies, regional development and
environmental conservation subsidies, other subsidies that cause serious
prejudice to other countries meaning they cause an adverse injury can be
subjected to countervailing duty post-investigations.
Subsidies can be categorized into- 1. Prohibited subsidies and 2. Actionable
subsidies. All specific types of subsidies fall into one of the above mentioned
two categories. Prohibited subsidies as given under Article 3 of the Subsidies
and Countervailing Agreement include export subsidies and local content
subsidies. Both these subsidies are intended to directly affect trade and thus
Actionable subsidies on the other hand are not prohibited per se. If in any case
they cause an adverse effect to another member then these subsidies can be
challenged through countervailing action or dispute settlement. Adverse effect
in in terms of actionable subsidies include Injury caused due to subsidized
imports to a domestic country, serious prejudice and nullification or impairment
of benefits accruing under GATT 1994.
What are safeguards?Safeguards or safeguard actions means that a country can as a trade remedy
temporarily restrict the imports of a product on their land if there is a surge
in imports that has caused or threaten to cause that country with injury. A
surge of imports that can cause a country to take safeguard actions has to be
serious and it can be a real increase in the imports of that product or relative
increase. The agreement of WTO on Subsidies and Countervailing Measures has set
certain guidelines for countries to conduct safeguard investigations and also
the criteria to understand the factors to determine the impact of imports on a
country and if serious injury that may require safeguard action has occurred or
has been threatened or not.
The trade remedies or trade remedial measures as given by WTO through their
agreements are highly effective for its member countries to ensure smooth and
ethical trade between them and if any country faces an anti-trade practice, they
may use such remedial measures against other member countries as a defence
mechanism to protect its local industries. India is one such country that is a
member of WTO and GATT and has adopted the WTO trade remedy mechanism to protect
its trade interests.
These instruments have helped the Indian government in the last ten years to
initiate and conduct 393 anti-dumping and countervailing duty cases against 41
countries and out of those investigations, measures have been taken in 282 cases
against 33 countries. It can easily be assessed from the given data that
India is a major user of trade remedial instruments. The Indian government in
2018 created the Directorate General of Trade Remedies (DGTR) under the Ministry
of Commerce and Industry as a single umbrella unit to perform all the functions
related to WTO trade remedies. The DGTR performs trade remedial functions in
India related to Anti-Dumping, Countervailing Duty and Safeguard.
The adoption of these instruments under one umbrella entity has had a
significant impact with regards to the improvement and effectiveness in
investigations whereas earlier the investigations weren't that effective as they
were being controlled by different entities. In my opinion, post restructuring
the trade remedial agency in India has improved with creation of a unified body
it has also created various wings like policy cell, training and development
cell, litigation cell etc. A helpdesk has also been created which is
responsible to address the concerns raised by exporters/firms and other
- Briefing note: Anti-dumping, subsidies and safeguards, WORLD TRADE ORGANIZATION (Nov. 2013), https://www.wto.org/english/thewto_e/minist_e/mc9_e/brief_adp_e.htm.
- Directorate General of Trade Remedies, Limitations in earlier institutional arrangement and policy framework, GOVERNMENT OF INDIA (Jan 2021), https://commerce.gov.in/wp-content/uploads/2021/06/DGTR-Reform-booklet-1.pdf.
- Directorate General of Trade Remedies, DEPARTMENT OF COMMERCE AND INDUSTRY, https://commerce.gov.in/about-us/attached-offices/directorate-general-of-trade-remedies-dgtr/.