Comprehensive Guide to Anti-Dumping Duties (ADDs)

What Are Anti-Dumping Duties (ADDs)?

Anti-Dumping Duties (ADDs) are essential trade remedy measures introduced by countries when foreign exporters sell goods at prices lower than their fair market value—this includes the domestic market price or the cost of production. The primary aim of these duties is to protect local industries from unfair competition by raising the import price to a fair level.

Why Are ADDs Imposed?

Countries implement ADDs for several reasons:

• To protect local industries from unfair competition.
• To prevent market distortions resulting from artificially low prices.
• To support domestic employment and ensure manufacturing capacity remains robust.

What Is WTO’s Position on Dumping?

• The World Trade Organization (WTO) does not label dumping as inherently unfair.
• However, it permits countries to impose ADDs when dumping results in "material injury" to domestic industries.
• ADDs require substantial evidence and must undergo a formal investigation process.

Pros of Imposing ADDs

• They shield domestic industries from unfairly cheap imports.
• ADDs can aid new or strategic sectors, such as electronics and chemicals, in their growth.
• They promote fair trade by deterring exporters from engaging in unfair pricing practices.
• ADDs offer temporary relief to companies that are struggling due to foreign dumping activities.

Cons of Imposing ADDs

• They can increase input costs for Indian manufacturers reliant on imports, such as PCBs and solar glass.
• MSMEs are disproportionately affected compared to larger firms due to their limited lobbying power.
• ADDs can distort national policy goals, including the adoption of renewable energy and PLI-linked manufacturing.
• They create uncertainty for industries, complicating long-term planning due to unpredictable duties.
• There is a risk of misuse by dominant firms to stifle competition, with over 33% of cases originating from just 1–2 companies.
• Imposing ADDs can lead to retaliatory measures or legal actions at the WTO level.

India’s Track Record on ADDs

• India ranks as the world's largest user of ADDs.
• Since 1995, India has initiated over 1,100 investigations related to ADDs.
• ADDs are imposed not just on imports from China but also from the EU, US, Japan, South Korea, and others.
• In 2024 alone, India launched 47 new investigations in various sectors, including aluminium foil and solar glass.
• Recent ADDs were placed on imports from countries like China, Hong Kong, Bangladesh, and Nepal.

What Needs to Change?

• ADDs should be utilized selectively, accompanied by a thorough cost-benefit analysis.
• Consider introducing an Economic Interest Test similar to that in the UK to balance the needs of producers and consumers.
• Avoid the risk of ADDs becoming tools of protectionism favoring a select few large firms.
• Focus on reforms that enhance domestic competitiveness, such as better logistics and fair taxation.
• Align ADD policies with national goals, including clean energy and manufacturing growth.

Frequently Asked Questions (FAQs)

Q1. What are Anti-Dumping Duties (ADDs)?
Answer: Anti-Dumping Duties are tariffs imposed by a country to protect its local industries from foreign companies selling goods at unfairly low prices. These duties aim to raise import prices to a fair level.

Q2. Why would a country impose ADDs?
Answer: Countries impose ADDs to protect their local industries, prevent unfair competition, and maintain employment levels. ADDs help ensure fair trading practices.

Q3. How does the WTO view dumping?
Answer: The WTO does not consider dumping to be inherently unfair but allows countries to impose ADDs if it causes material injury to domestic industries.

Q4. What are the benefits of ADDs for domestic industries?
Answer: ADDs protect domestic industries from low-priced imports, encourage fair trade, and provide temporary relief to struggling companies affected by dumping.

Q5. What is India's stance on ADDs?
Answer: India is the largest user of ADDs globally, having initiated numerous investigations to protect its industries from unfair competition, including from major economies.