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Anti-Dumping Policy Between India And Bangladesh

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 losses incurred.

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 been filed.

Research Questions:
  • 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.
Scope Of The Study:
  • 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.

Research Methodology
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:
  • 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
Benefits Of The Study:
  • 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

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 precluding it.

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.

Trade Diversion

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 situations.

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 Tariff Act.

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.

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