An Essay on Anti Dumping

AN ESSAY ON ANTI-DUMPING

South Korea — Anti-Dumping Duties on Pneumatic Valves from Japan

A contemporary problem in international trade is the Japanese “dumping” of pneumatic valves. In 2014, Japan exported about USD 55.5 million of these to South Korea. Holding that these were being sold at below market prices, South Korea imposed anti-dumping duties of 11.66%  to 22.77%  on the imports^[1].

The central issues have been to ascertain whether there was dumping of pneumatic valves by Japan, and whether procedural breaches occurred, namely flaws in South Korea’s determination of injury and causal relationship, including shortcomings in its investigation procedure.

Dumping is a situation of international price discrimination, where the exporting country sells a product at a much lower price than in the importing country (Bossche & Zdouc, 2014). However, it is to be noted that every case where an exporter sells goods in a foreign market (importing country) at a cheaper price than that of like goods in that local (importing) market, is not necessarily a case of dumping. It would be so only if it has been priced less than what it is sold for in the original market (exporting country) or is sold at less than its foreign cost of production^[2].

The World Trade Organisation does not prohibit dumping because  product processes are set by private companies and the WTO does not want to regulate it, unless dumping becomes injurious to domestic industries of the importing country (Bossche & Zdouc, 2014).

Despite a voluntary regulations’ regime, anti-dumping duty is the most invoked trade remedy. especially where the importing country’s industry is small and slowly growing, and there is danger of it being overwhelmed by the cheaper imports (Dinlersoz & Dogan, 2010).

Under the WTO, measures on anti-dumping are covered under Article VI of the General Agreement on Tariffs and Trade (GATT) 1994 (Bossche & Zdouc, 2014). WTO members are not bound to have anti-dumping legislation, but if they adopt such legislation, it should be consistent with WTO laws (World Trade Organisation, 2016). 

Accordingly, as both Japan and South Korea are WTO members, Japan referred the matter to WTO claiming that the Korean anti-dumping duty was inconsistent with the WTO’s Anti-Dumping Agreement (Swire, 2016).

Relevant rules and regulations have been invoked by Japan to seek Consultation with S.Korea namely under Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes, Article XXIII-1 of the General Agreement on Tariffs and Trade 1994 ("GATT 1994") and Articles 17.2 and Article 17.3 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("AD Agreement"). (Source: WTO - WT/DS504/1 G/L/1143 G/ADP/D113/1 dated 16 March 2016).

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