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China’s Dilemma: Anti-Dumping Investigations

The World Trade Organization’s (WTO) anti-dumping (AD) investigation process is highly discretionary because the complainant has enormous latitude in selecting a country that possibly produces relatively expensive like products in determining the normal value of a product. China has brought many complaints against the U.S. for using questionable tactics in establishing dumping margins within proceedings, but China’s position within the WTO is weakened by the fact that it is one of the larger targets in terms of AD suits – many of which are filed by India.1 A positive correlation exists between an increase in Chinese exports within India and an increase in AD cases targeted at China by India, and this phenomenon begs the question as to whether causality exists behind the positive correlation. Further research seems to support the argument that India’s proclivity for launching AD investigations stems from a place of protectionism.

When India joined the WTO in 1995, it was allowed to maintain quantitative restrictions (QRs) as a result of alleged balance-of-payment difficulties.2 India was eventually formally asked to remove its QRs when the U.S. brought a complaint to the WTO and the Appellate Body (AB) concluded that India’s balance-of-payment position was strong enough to fall outside of GATT Article XVIII:B.3 Since then, many papers have explored the positive correlation between the elimination of QRs and India’s initiated AD investigations.

Data from a paper written by Prakash Narayanan shows that in the years that the QRs were being lifted, between 1997-2002, the number of AD initiations rose rapidly.4 Furthermore, while the process of QR elimination was completed in the last period of 2002-2003, the weighted average tariff dropped fairly significantly and the number of initiations consequently remained high.5 Thus, as these figures show that a high amount of AD initiations commenced as a result of QR elimination, some theorize that the domestic industry uses AD initiations as a method of self-protection, especially since the decline in weighted average tariffs has ‘negatively’ affected the domestic industry.6

However, if these theories were true, the chemical sector (which experienced the largest number of AD initiations from 2001-2002) should be the sector from which QRs were recently eliminated and therefore should be the sector to have experienced a substantial increase in trade throughout the process of QR elimination (because theoretically speaking, the less restrictive the trade barriers, the more chemical imports in India, and the more AD initiations to prevent this phenomenon).7 According to data collected from the Government of India Economic Surveys, imports of chemicals remained steady relative to the changes in overall imports and chemical imports actually dropped in one year (2000-2001) when tariffs were lowered, remaining roughly the same percentage share of total imports (ranging from 5.4% – 7.9%) over the entire period of 1999 – 2004.8 This data thereby could debunk the theory that AD initiations are used by Indians as a weapon to protect local industries.

Nevertheless, in approximately 55 % of AD investigation initiations, the petitioners were essentially monopolies with an average market share of 97.4%.9 In a majority of India’s AD initiations, petitioners had a greater than 80% market share of the domestic market.10 This data clearly suggests that AD complaints are a strategy used by dominant market players (a politically vocal group that possesses the resources to lobby) to protect domestic industries.11 Thus, there exists substantial support for the hypothesis that India’s AD initiations against countries like China stem from a protectionist root.

If AD measures are a response to successful market “monopolists”, then many consumers’ voices actually remain unheard. It has been averred that AD duties pose a large issue for consumers who actually want to buy cheap imported products, especially since the imposition of tariffs only makes products more expensive.12 Even if the global economy has slowed down and China may have compensated for its losses by dumping, some believe that AD investigations should not be initiated because dumping is a good thing insofar as it creates cheaper prices.13

China is not the only nation frustrated with India’s tariffs. The U.S. has even condemned India’s insurmountable trade barriers. A 2014 U.S. International Trade Commission (USITC) report claimed: “other issues, including investment and intellectual property policies, have large negative effects on specific industries… If tariff and investment restrictions were fully eliminated and standards of IP (intellectual property) protection were made comparable to U.S. and western European levels, (USIT) Commission model results indicate that U.S. exports to India would rise by two-thirds, and U.S. investment in India would roughly double.”14 As such, other countries also bear the brunt of India’s tariff policies, which are largely driven by dominant, vocal Indian market players who petition for AD investigations.


  1. See Robert M. Feinberg, Trends and Impacts of India’s Antidumping Enforcement 7, Office of Econ. of the U.S. Int. Trade Comm’n, Working Paper No. 2010-10A (2010). 

  2. See Prakash Narayanan, Anti-dumping in India-Present State and Future Prospects, 40 J. World Trade 1081, 1084 (2006). 

  3. Id. at 1084-85. 

  4. Id. at 1086. 

  5. Id

  6. Id. 

  7. Id. at 1087. 

  8. Id. at 1088. 

  9. See, e.g., Aradhna Aggarwal, Anti-dumping Law and Practice: An Indian Perspective, Research Study, Indian Council for Research on Int. Econ. Relations (2002). 

  10. Id. 

  11. Narayanan, supra note 2, at 1090. 

  12. Tim Worstall, India Continues to Make the Mistake of Anti-Dumping Duties on Chinese Steel, Forbes (Nov. 3, 2016), http://www.forbes.com/sites/timworstall/2016/11/03/india-continues-to-make-the-mistake-of-anti-dumping-duties-on-chinese-steel/#5c6afd2c147d

  13. Id. 

  14. Indian Policies Creating Trade Barriers: US Report, Times of India (Dec. 24, 2014), http://timesofindia.indiatimes.com/business/india-business/Indian-policies-creating-trade-barriers-US-report/articleshow/45623910.cms

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Lucy Liu

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