1. INTRODUCTION
Trade remedies are policy tools that governments can utilise against distortions caused by imports to the domestic industry through international trade.[i] The World Trade Organization recognises three main types of import restraints as trade remedies provided for in the Agreements on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the Anti-dumping Agreement); the Agreement on Subsidies and Countervailing Measures; and the Agreement on Safeguards, i.e., Antidumping duties, Countervailing duties and Safeguard duties. The number of anti-dumping investigations initiated in the last few years has been rapidly increasing with more than 85 ongoing investigations by the Directorate General of Trade Remedies.[ii] However, more recently, the discourse on the problem with the nature and characteristics of anti-dumping actions and their effect on restraint of trade, has been increasing.[iii]
2. INTERPLAY BETWEEN ANTI-DUMPING AND COMPETITION LAW
Anti-dumping measures and competition law, both have a significant role in furthering the cause of consumer welfare through the prevention of market distortions by focussing on the functioning of the domestic market. However, the approaches adopted by the two regimes are divergent. On one hand, anti-dumping laws seek to counter predatory dumping by remedying the effects of discriminatory and predatory pricing policies in the importing country;[iv] on the other hand, competition laws control unfair and restrictive trade practices by facilitating and sustaining fair competition in the economy to provide a level playing field to the producers. Both laws seek to protect the market from acts that deter fair trade and as a result, prevent actions that might adversely affect consumers.[v]
In Haridas Exports v. All India Float Glass Association,[vi] the Supreme Court acknowledged this divergence in approaches and independence in operation of both legal regimes, albeit in the context of the MRTP Act.[vii] However, the purpose of the antidumping duty is not to protect consumers, but to protect producers. It is an interventionist/ protectionist trade policy tool for the domestic industry.[viii] The scheme of competition law relies upon the self-correcting nature of the market and does not interfere in the market till a distortion has been established. It aims towards protecting competition and not competitors.
The difficulty arises because anti-dumping measures are usually imposed in oblivion of the impact on the end-user. Anti-dumping remedies have been considered as a Madisonian failure as they only serve the special interests of a faction of domestic producers, based on economic benefits at the expense of the entire economy.[ix]
Foreign competitors dumping goods often benefit consumers by encouraging price competition and efficiency. However, anti-dumping duties can harm consumers by raising import prices and fostering domestic collusion, reducing competition.
3. THE DICHOTOMY
Anti-dumping investigations are initiated by the government, examining if dumping occurred and caused injury based on a domestic industry’s application.[x]
The possibility of non-price predation[xi] to harass foreign competitors and maintain status quo dominance in the market has raised the question of whether the two legal regimes can continue to exist independent of each other. It highlights the need to reflect on the vast dichotomy in the understanding of ‘fair trade’ under both regimes. Such instances, driven by the domestic industry’s intent to evade international competition, undermine the goals of the competition law regime.
In certain cases, Regional Trade Agreements seek to address this problem, however, no consensus has emerged. The European Union (‘EU’) is driven by the goal of a single market to further the cause of trade. It has substituted Anti-dumping with Anti-trust for intra-union trade. In contrast, NAFTA lacks harmonization, as it does not recognize any supranational authority. However, binational panels have been established to ensure the correct application of the laws.[xii]
4. THE NEED TO RE-EVALUATE
To resolve this, the interaction between both regimes must be re-conceptualized with formal communication, as in Russia.[xiii] To harmonize the regimes, assess market distortion. AAEC would evaluate dumping by considering its negative impact on the domestic market, reducing consumer harm, and focusing on competition welfare.
Applicants must prove they are genuine domestic producers harmed by foreign dumping and get approval from the Competition Commission of India. This ensures the duty protects the domestic industry without causing future distortion. The competition regulator must confirm the duty doesn’t legalize cartel or collusion. Therefore, applicants must simultaneously file a contemporaneous application with the competition regulator when submitting the anti-dumping duty application.
This mechanism analyzes the domestic industry’s current actions and potential collusion. If deemed harmful, the authorities reject the anti-dumping duty application, allowing foreign players to compete on price. This would compel the domestic industry to improve efficiency and compete with international producers.
The Competition Commission of India may apply AAEC standards to assess applications, scrutinizing the domestic industry’s actions, particularly the petitioner.
The Commission may evaluate the domestic industry’s structure to identify potential collusion, especially in oligopolistic markets. A closely knit market increases the risk of domestic players colluding to exclude foreign competitors. Alternatively, consider the high barrier to entry in the market. High entry barriers make it harder for domestic players to counter foreign competition. In contrast, low barriers allow new entrants to correct market distortions. Consumer benefits may justify certain domestic petitions. Market share, size, and resources are key in assessing AAEC likelihood.
5. CONCLUSION
Independent assessments by anti-dumping and competition regimes ensure duties deter unfair trade and benefit consumers.[xiv] Monitoring petitioners deters abuse of anti-dumping measures, aligning competition authorities with trade and antitrust goals. Such protections hinder commerce, distort markets, and limit growth and jobs globally. Anti-trust oversight of trade remedies will eventually bring forth the salutary effect of forcing domestic producers to become more innovative
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[i] See more: Trade Remedies: A Tool Kit, Asian Development Bank, https://www.adb.org/sites/default/files/publication/27526/trade-remedies-toolkit.pdf
[ii] http://www.dgtr.gov.in/anti-dumping-cases provides a List of cases along with the details of the Product and Country.
[iii]P. J. Lloyd, Anti-Dumping and Competition Law, The World Trade Organization: Legal, Economic and Political Analysis 1666-1681 (2005).
[iv]See more: Aditya Bhattacharjea, Predatory Pricing and Anti-Dumping Revisited, 40 (5) Economic and Political Weekly 482-484 (Jan. 29 – Feb. 4, 2005).
[v]Sungjoon Cho, Anticompetitive Trade Remedies: How Antidumping Measures Obstruct Market Competition, 87 N.C. L. Rev. 357 (2009), available at: http://scholarship.kentlaw.iit.edu/fac_schol/734 .
[vi]Haridas Exports v. All India Float Glass Association, (2002) 6 SCC 600.
[vii] MRTP 1969 is the predecessor to the Competition act in India.
[viii]Nakgyoon Choi, Economic Effects of Anti-Dumping Duties: Protectionist Measures or Trade Remedies? KIEP Research Paper, Working Papers 16-13 (December 30, 2016).
[ix]See: N. Gregory Mankiw & Philip L. Swagel, Antidumping: The Third Rail of Trade Policy, 84 Foreign Aff. 107, 107 (2005).
[x]See: Agreement on Implementation of Article VI, International Trade Administration available at https://enforcement.trade.gov/regs/uraa/saa-ad.html.
[xi] According to OECD, Non-price predation is a form of strategic behaviour that involves raising rivals’ costs. It is potentially less costly and hence more profitable than predatory pricing. Typical methods include using government or legal processes to disadvantage a competitor.
[xii]Ian Wooton & CEPR Maurizio Zanardi, Trade and Competition Policy: Anti-Dumping versus Anti-Trust, GLA June 2002 (Revised October 2002), available at https://www.gla.ac.uk/media/Media_22263_smxx.pdf.
[xiii]Id.
[xiv] Read generally Sungjoon Cho, Anticompetitive Trade Remedies: How Antidumping Measures Obstruct Market Competition, 87 N.C. L. Rev. 357 (2009), available at: http://scholarship.kentlaw.iit.edu/fac_schol/734.