This paper analyses the anti-dumping policy of India against Bangladesh which is
causing the damage to the economies of the countries by attacking its domestic
markets leading to trade destruction and trade diversion in both the countries.
Both India and Bangladesh are putting restriction over the trade upon each other
to put the losses caused under control.
Even though the World Trade Organization (WTO) members are expected to engage in
free trade, there are some exceptions. One is when there is concern that
products are being dumped in a foreign market, which occurs when an exporter
sells a product there for less money than it would for domestic consumption.
GATT's Article VI regulates this along with the Agreement against Dumping.
The majority of nations have seen a shift in their trade policy regimes from
protectionist, inward-looking regimes to more liberal, outward-looking regimes.
Any government with a liberal trade policy, though, is vulnerable to calls for
temporary protecting particular industries. As a result, the GATT includes some
contingent measures. which allow the signatories to forego their regular
obligations in certain circumstances conditions and impose greater safeguards
against the import of one or more products from one or more nations. Contingent
security measures can be divided into three groups: safeguard, countervailing,
and antidumping measures.
Statement Of Problem
The research paper delves into the anti-dumping policy between India and
Bangladesh, exploring its impact on the economies of both countries. The central
problem addressed is the alleged damage caused by India's anti-dumping measures
on Bangladesh, particularly concerning garments, jute, acid used in batteries,
yarn, and fishing nets. The study aims to assess whether these anti-dumping
duties lead to trade destruction and trade diversion, examining their effects on
domestic and international markets.
The overarching hypothesis posits that India's imposition of anti-dumping duties
on select Bangladeshi products, encompassing garments, jute, acid used in
batteries, yarn, and fishing nets, results in a dual impact of trade destruction
and trade diversion, detrimentally affecting the economies of both nations.
Building upon this primary assertion, secondary hypotheses delve into the
discernible and significant effects of trade destruction and diversion on the
domestic markets of both India and Bangladesh. Furthermore, the study explores
the ripple effects of these anti-dumping measures on the international markets,
intricately influencing the global trade dynamics between the two countries.
Specifically focusing on the years 2017 and 2018, the research scrutinizes how
these anti-dumping measures intricately shape the production, export, and
overall economic well-being of Bangladeshi industries involved in the identified
product categories. As a consequence of the limitations imposed by these
anti-dumping duties, the research hypothesizes a strategic reevaluation of trade
policies by both India and Bangladesh as they strive to mitigate the economic
Ultimately, the application of anti-dumping duties, governed by
the Customs Tariff Act, 1975, and subsequent amendments, is posited to play a
pivotal role in determining and influencing the economic relationship between
the two nations while shaping the strategies of the industries involved.
Review Of Literature
An article titled "India's tariff body for anti-dumping duty on Bangladeshi
goods" written by "Mr. Abul Kashem" published on a website called the business
standard says that, garments into India is imported by global brands as part of
their global import for their own retail chain shops and their import price for
different chain shops throughout the world have similarity of price. Bangladesh
is exporting garments import worth about US$ 35 billion to different countries
of the world and the cost and vend price are veritably transparent.
An article titled "laws on Anti-dumping in India" authored by "Ms. Prachi Darji"
explains all the overview of the anti-dumping laws that are prevailing in India
and the development of those laws to prevent any ill-effects towards the
domestic market with the changes in the global economy through ups and downs
between globalization and de-globalization.
A thesis by Mr. Syed Margub Elahi titled "Bilateral trade between India and
Bangladesh: the dumping issue contents" explains Trade between the two nations
existed long before Bangladesh's liberation war, but as soon as both economies
began to prosper, India adopted a different strategy for limiting imports from
Bangladesh. Several instances involving unfair antidumping between nations have
Scope Of The Study:
- Whether the anti-dumping duties-imposed by India towards Bangladesh leads to trade destruction and trade diversions in the market.
- Whether the trade destruction and trade diversion caused due to anti-dumping policies affect the domestic and the international markets.
- This study is limited to the explanation of what is trade destruction, trade diversion, and its correlation with the anti-dumping duties that India has imposed on Bangladesh.
- This study will also talk about the Indian laws that are related to the anti-dumping policies.
- The paper examines the effect of anti-dumping measures enforced by India on Bangladeshi products like garments, jute, acid used in batteries, yarn, fishing net, etc. in the year 2017 and 2018.
The present study is based on the secondary data. This study emphasises on the
concepts of trade destruction and trade diversion with respect to the Indian
anti-dumping duties against Bangladesh. The collection of data and information
will be from relevant articles, legislations, internet websites and relevant
cases. This study also includes texts from legal and non-legal sections.
Objectives Of The Study:
Benefits Of The Study:
- To analyse the anti-dumping policies imposed on Bangladesh by India
- To analyse anti-dumping measures taken by the countries to control trade destruction and trade diversion
- To understand how anti-dumping affects the domestic markets and the consumers
- We get an empirical understanding of the trade effects between the two nations, i.e., India and Bangladesh
- We get to give suggestions regarding how we can develop the domestic markets of the countries
- Determination of material injury caused to domestic industry
Trade Destruction Of Indian Anti-Dumping Duties Against Bangladesh:
Trade destruction is a concept in transnational trade law. still, it's possible
that you may be pertaining to a situation where a country's trade programs or
practices have a negative impact on the trade or diligence of another country.
In similar cases, trade controversies may arise, and transnational trade law may
come into play.
Some common scripts that can lead to controversies related to trade"
destruction" or detriment to another country's trade interests include
Countervailing Duties: These are tariffs assessed in response to subventions
handed by a foreign government to its domestic industries. However,
countervailing duties can be assessed to neutralize the subvention's impact, If
these subventions harm the diligence of another country.
Safe-guard Measures guard measures are temporary trade restrictions that a
country can put to cover its domestic diligence from a unforeseen swell in
significances that causes or threatens to beget serious injury to domestic
directors. These measures aren't inescapably about" destruction" but rather
Trade Remedies Under World Trade Organization (WTO) Rules the WTO provides a
frame for addressing trade controversies and illegal trade practices among
member countries. However, it can bring a disagreement to the WTO for
resolution, If a country believes that another member's conduct are negatively
affecting its trade interests.
In transnational trade law, controversies are generally resolved through
accommodations, consultations, and, in some cases, through the disagreement
agreement mechanisms handed by transnational trade agreements like those
administered by the WTO. These mechanisms aim to ensure that trade practices are
conducted fairly and don't harm the licit interests of other countries.
In international commerce, price discrimination refers to the practise of
charging a product at a different price in foreign markets than in the home
market. This practise frequently takes the form of dumping. Competitive
businesses using this tactic to obtain a competitive advantage. Trade diversion
is the phenomenon wherein tariff agreements shift imports from low-cost to
higher-cost nations, therefore concentrating manufacturing in countries with
lower comparative advantage and greater opportunity costs�a situation that is
typically undesirable. Trade divergence may result from entering a free trade
zone with a unified external tariff.
The World Trade Organisation's "Anti-Dumping Agreement" addresses dumping
debates by allowing countries to take action when it damages domestic
industries. The agreement aims to balance protecting local businesses with
promoting fair competition in international trade, requiring governments to
prove dumping, determine domestic market prices, and demonstrate harm caused.
The Concept Of Dumping
The concept of dumping was first introduced by Jacob Viner in his study Dumping:
A problem in International Trade in 1923. He defined the concept 'dumping' as
'price discrimination between national markets' (Jacob Viner, 1923, Dumping: A
problem in International Trade in 1923, p. 3). Dumping occurs when a company
sells the same product for less money abroad than it does domestically. Dumping
is a very divisive practice or problem in the international trade practices.
Dumping is the practice of selling an identical good for less money abroad than
it would cost domestically. The definition also covers unusual circumstances in
which the same product is sold for more money abroad than it does at home.(also
referred to as reverse dumping) and the circumstance in which the price of the
product different international markets. The primary factor is that a business
assesses a different price in different market. Price discrimination occurs when
a product is sold in various markets. Dumping differs from general price
discrimination in that it takes place on a global scale.
Since, antidumping law only addresses this situation, economic analyses of
dumping currently concentrate primarily on instances where a product is sold for
less on a foreign market than on a domestic market. Sales below the cost of
production are now included in the definition of "dumping," regardless of
whether there is price discrimination across national markets
Sometimes the topic of dumping is brought up in conjunction with rewards and
subsidies. However, the concept of subsidies is distinct from dumping. In some
circumstances, the producer receiving subsidies may dump products by selling
them for less on the international market. However, not all dumping is the
result of subsidies, and the two are subject to different regulations.
Reasons To Dump A Good
Firms looking to maximise profits and further their economic interests are the
ones that engage in market dumping, a practise wherein enterprises offer the
same product overseas at a cheaper price than domestically. Differentiating
across markets' demand elasticities requires various price settings in the
context of a monopoly model, where a business must match marginal cost with
marginal revenue to maximise profits. Through deliberate pricing differentiation
across several markets, organisations may optimise their total profitability.
Since different markets will have different marginal revenues from uniform
pricing, monopolistic firms must choose high marginal revenue and high demand
elasticity marketplaces in order to maximise earnings. A company that sells a
product in two marketplaces at various prices and quantities makes a total
income of Rs.104, which is Rs. 4 more than the scenario with uniform pricing.
This is demonstrated by the example. The idea that more money from sales of an
extra unit should cover more manufacturing costs serves as a basis for
determining alternative pricing points. In essence, market dumping is a
profit-maximizing tactic used by businesses to maximise their financial benefits
by taking advantage of the subtleties of the market, especially in monopolistic
Effects Of Dumping
Both proponents and opponents of anti-dumping agree that dumping always favours
the consumers of the importing nation. Dumping results in low-cost imported
goods, which lowers market prices in the nation. According to the European
Commission's investigations, subsidized imports are typically less expensive
than locally produced goods that are similarly priced. even if the dumped
imports' prices are not reduced, the additional Products on the market have the
power to drive down prices. In both situations, the clients in the
The lower prices of the commodities will benefit the importing nation.
If industrial users are using dumping imports in their manufacturing, they can
also benefit from lower prices. If it is possible to switch from subsidized
imports to alternatives when the dumping ends, there is no harm done. Consumers
will only be harmed by dumping if it is predatory, meaning the company is
lowering prices to put domestic competitors out of business. When the domestic
businesses are gone, the predatory business can enjoy a monopoly in the market
and set any cost they choose.
Anti-Dumping Tariffs And Their Impact
- Anti-dumping tariffs are implemented by nations to prevent unfair trade practices by imposing taxes on imports from countries selling goods cheaper than their own domestic market.
- The aim is to maintain the domestic market and prevent foreign exporters from creating monopolies.
- The General Agreement on Tariffs and Trade (GATT) of 1994 and the Antidumping Agreement (ADA) of the World Trade Organisation are used as guiding principles.
- The ADA outlines procedures for initiating and conducting anti-dumping investigations.
- Certain conditions, including the incidence of dumping and the resulting domestic industry harm, must be met before imposing anti-dumping duties.
- Countries like the EU, Australia, and Canada have additional public interest requirements before enforcing anti-dumping penalties.
Anti-Dumping Duty In India
Anti-dumping duties are a tool used by the Indian government to protect its own
industry from grave or significant harm from exporters. These regulations, which
were first aimed at the iron and steel industry and were revised in 1995, were
governed by the Customs Tariff Act of 1975. As imports from countries such as
China, the United Arab Emirates, the United States, and Malaysia rose, the
rules' scope shrank. Anti-dumping taxes on commodities dumped in the Indian
domestic market are subject to certain restrictions outlined in the Customs
The 1995 amendment establishes guidelines for determining, evaluating, and
collecting anti-dumping charges in India. Government investigations determine
normal and import values, identify goods susceptible to taxes, and create
anti-dumping regulations. Damage assessment considers dumped products' impact on
domestic markets. Anti-dumping duties have a five-year maximum duration.
Overview Of India � Bangladesh Anti-Dumping
India assessed anti-dumping duty on Bangladesh's jute yarn, hessian and bags,
ranging between $19 and $352 per tonne, in January 2017 for five times.
piecemeal from jute goods, India in April 2017 assessed anti-dumping duty,
ranging between $27.81 and $91.47 per tonne, on import of hydrogen peroxide.
In 2018, it slighted a analogous duty, $2.69 per kilogram, on fishing net
exported from Bangladesh.
The major part of force of garments into India is imported by global brands as
part of their global import for their own retail chain shops and their import
price for different chain shops throughout the world have similarity of price.
Bangladesh is exporting garments import worth about US $35 billion to different
countries of the world and the cost and vend price are veritably transparent.
Any disquisition or inspection can descry any attempt of jilting of garment to
any other request.
In this critical situation and against the aggressive promotional policy
espoused by the challengers, Bangladesh would have to borrow a sustainable
policy, including duty of anti-dumping duty on yarn import and adding cash
incitement on free on-board prices to 10 per cent from the being 4 per cent, to
cover its spinning and weaving manufactories.
The capacity of Bangladesh against India is far behind to fight any case of
anti-dumping in World Trade Organization (WTO). Bangladesh have veritably many
gests of similar case of anti-dumping shouldn't try to lodge case against India.
The agreement of similar case in WTO may take numerous times. India so far has
initiated 400 cases of anti-dumping, and 20 cases of safeguard measures against
numerous developed and developing countries including Japan, USA, and a number
of countries from the European Union, South and south East Asian countries.
India had also assessed announcement on jute goods from Bangladesh.
In 2004, Bangladesh had won the Anti-Dumping Duty (announcement) case of
supereminent acid battery exported to India. Lead Acid Battery was an
exceptional case for which disquisition was initiated in 2002. Bangladesh went
to appeal bench and after discussion in 2004, the duty was withdrawn.
Conclusion & Suggestion For Further Research
Our analysis does not allow us to determine whether or not the decrease in
Bangladeshi imports resulted in higher sales of Indian goods. It's also possible
that a different party intervened and raised its sales on the Indian market. If
that is the case, the anti-dumping measure did not eliminate the unfair
competition posed at the Indian producers but rather simply assisted another
low-labour producer to replace the Indian market position. This is a question
that requires further research and is important for decision makers.
The imposition of this antidumping measure, as well as other AD measures against
the nation over the years, drew strong responses from Bangladeshi government. It
makes sense that the nation occasionally feels like it is the target of unfair
anti-dumping practices. Bangladesh is one of the nations that has long been the
focus of the majority of antidumping actions taken against any nation. Since the
nation was until 2016 categorized as a nonmarket economy by the WTO,
anti-dumping measures against it have been relatively simple to implement.