Anti-Dumping actions are the remedy most commonly used by the members of the WTO (World Trade Organization) to deal with
unfair trade practices being carried out by their trading partners.
“Dumping” refers to the export of goods at prices below the prices at which the exporters from any country sell those same goods in their domestic market. Dumping is a form of price discrimination that hurts
consumers adversely.
Producers engage in selling below the cost of production in order to drive out competing producers. After domestic producers are driven out of business, the exporters may use their monoply power to extract higher prices from the consumers.
Governments rely on anti-dumping measures to protect them from the political backlash against free trade, when domestic industry is unable to compete against imports. Either because it is uncompetitive or because there is global overcapacity. In other words, anti-dumping duties act as a barrier against greater market access.
The use of anti-dumping duties originated in the earlier twentieth century, much before WTO and GATT (General Agreement on Tarriffs and Trade). GATT made it an integral part of international trade. However, a WTO member may request a ruling by a WTO panel to determine whether the anti-dumping duties imposed by another member nation are consistent with the Agreement.
Anti-Dumping is a double edged sword – it is a weapon against unfair trade, but one that makes goods used by domestic consumers more costly. Some experts believe that the manner in which anti-dumping laws are implemented shows that it is really a barrier to free and fair trade.
The picture is further complicated by the fact that Anti-dumping duties on industrial goods can sometimes be counter-productive, as they tend to render the domestic industries (which they are supposed to protect) uncompetitive in their export markets.
But whatever the merits of anti-dumping as a remedy for unfair trade, many nations (India included) continue to take their national interest into account before levying these duties.