Ref : https://indianexpress.com/article/business/economy/govt-clamps-down-on-dumping-from-china-over-1-3rd-anti-dumping-duties-levied-in-cases-with-sole-or-two-producers-since-fy22-9310194/

Why in the news?

The government tightens restrictions on imports from China. More than a third of anti-dumping tariffs imposed in cases involving only one or two manufacturers since the fiscal year 2022.

What is Anti-Dumping Duty?

• Anti-dumping duty refers to a tariff imposed on imports from foreign countries if they are priced below the fair market value of similar domestic goods.
• The government applies it when foreign goods are being sold in the domestic market at unfairly low prices. This practice is known as “dumping.”
• The primary goal of anti-dumping duty is to safeguard local businesses and markets from unfair competition posed by foreign imports.
• Its purpose is to counteract the distortive impact of dumping and restore fair trade conditions.
• The World Trade Organization (WTO) permits the use of anti-dumping measures as a means of ensuring fair competition.
• Governments can legally implement anti-dumping measures against dumping countries if there is substantial evidence of harm to domestic industries.
• To justify the imposition of anti-dumping duty, the government must demonstrate the occurrence of dumping, quantify its extent in terms of costs, and prove actual or potential harm to the domestic market.
• While aimed at protecting local businesses, anti-dumping duties may result in higher prices for domestic consumers.

What is Countervailing duty (CVD)?

• Countervailing duty (CVD) – a specific type of duty levied by a government to safeguard domestic producers from the adverse effects of import subsidies.
• CVD functions as an import tax imposed by the importing country on imported items.
• It is imposed to counteract the consequences of subsidies provided by foreign governments to their producers. which result in cheaper products and increased demand in other countries.
• To prevent an oversupply of these subsidised goods in the domestic market, the importing country imposes CVD. It charges a fixed amount on the importation of such items.
• The duty serves to offset and eliminate the price advantage enjoyed by imported products.
• The World Trade Organization (WTO) permits its member countries to impose CVD as a measure to address unfair trade practices.