Anti-dumping and safeguard duties

At least two judicial pronouncements have taken a dim view of the finance ministry’s decisions against imposing anti-dumping and safeguard duties. Recently, in many cases, the Centre chose not to impose anti-dumping duty. This was despite the findings and recommendations of the Directorate General of Trade Remedies (DGTR) establishing adverse impact of cheap or subsidised imports on domestic industry.

Background –

• Recently, the revenue department opted to be selective in imposing anti-dumping or safeguard duties to protect domestic industry.
  • E.g., the revenue department decided to unilaterally suspend countervailing duty on certain varieties of stainless steel from China, which was quashed and set aside by the Gujarat high court.
• Many a times, it chose to do so against the recommendations of the designated authority such as DGTR.
• Several Indian companies and industry bodies have gone to court against the revenue department’s these decisions.
• Hearing a set of cases, the Customs, Excise & Service Tax Appellate Tribunal asked the Centre to reconsider its decisions in a bunch of cases where it decided against accepting the designated authority’s recommendations.
  • It asked the Centre to give tentative reasons for not accepting the recommendations so as to give the domestic industry an opportunity to submit a representation.
• In several cases, where the revenue department in the finance ministry did not bother to communicate its final decision, the tribunal has taken the same view.
  • The law governing anti-dumping cases requires the revenue department to decide on a matter within three months of the DGTR’s recommendations.

What are these duties?

• Binding tariffs, and applying them equally to all trading partners (most-favoured-nation treatment, or MFN) are key to the smooth flow of trade in goods.
• The WTO agreements uphold the principles, but they also allow exceptions — in some circumstances. Three of these issues are:
  • Actions taken against dumping (selling at an unfairly low price) – by imposing anti-dumping duties.
  • Special “countervailing” duties to offset the subsidies made to producers of these goods in the exporting country.
  • Emergency measures to limit imports temporarily, designed to “safeguard” domestic industries.
    • A WTO member may restrict imports of a product temporarily (take safeguard actions) if its domestic industry is injured or threatened with injury caused by a surge in imports.
• These duties are extra import duties imposed on goods in addition to the normal duties that apply in the country.

Difference of opinion within government –

• The Finance Ministry and NITI Aayog are of the view that imposing anti-dumping duty impact other producers in the chain adversely.
• On the other hand, the Commerce Ministry believes the DGTR recommendations come after establishing adverse impact on domestic producers and are in line with World Trade Organization rules.
• The Commerce Department is of the opinion that unless such an action is taken, domestic industry will be wiped out.

About the ‘Directorate General of Trade Remedies’ –

• Earlier known as DGAD (Directorate General of Anti-Dumping & Allied Duties), it was renamed in May 2018.
• It works under the Ministry of Commerce and Industry.
• It was formed as a single national entity dealing with all kinds of Trade Remedial measures (anti-dumping, countervailing, safeguard).
• The DGTR provides a level playing field to the domestic industry against the unfair trade practices like dumping, subsidisation and surge in imports.