CHINESE DUMPING
1.1 ) WHAT IS DUMPING DUMPING ? In economics, "dumping " is a kind of predatory predatory pricing, especially pricing, especially in the context of international international trade. It trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market or below its cost of production.
A standard technical definition of dumping is the act of charging a lower price for the like goods in a foreign market than one charges for the same good in a domestic market for consumption in the home market of the exporter. This is often referred to as selling at less than "normal value" on the same level of trade in the ordinary course of trade. Under the World the World Trade Organization (WTO) Agreement, dumping is condemned (but is not prohibited) if it causes or threatens to cause material injury to a domestic industry in the importing country. Exporting goods Exporting goods at prices at prices lower than the home-market prices. In price-to-price dumping, the exporter uses higher home prices to supplement to supplement the reduced revenue from lower export prices. export prices. In price-cost dumping, the exporter is subsidized by the local government with duty drawbacks, cash incentives, incentives, etc. Dumping is legal under GATT (now WTO) rules unless its injurious effect on the importing country's producers country's producers can be established. be established. If injury injury is established, GATT rules allow imposition of anti-dumping duty equal to the difference between the exporter's home-market price and the importer's FOB price.
Dumping is an informal name for the practice of selling a product in a foreign country for less than either
(a) the price in the domestic country, or or
(b) the cost of making the product. 1
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It is illegal in some countries to dump certain products into them, because they want to protect their own industries from such competition.
1.2 ) HISTORY OF DUMPING First Instances of the Practice of Dumping
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16th century – century – selling selling paper at loss in England to kill its paper industry
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17th century - Dutch accused of selling products at lower cost to drive out French from the Baltic areas
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1790s – 1790s – 1800s – 1800s – Americans Americans become wary of under und er - priced selling by competitors
It has long been customary to speak of one one market as a ‗dumping ground for the ―surplus products of another market when the producers of the latter for any reason sell their commodities in the former at unusually low prices. From this usage it was a natural outcome to speak of selling in a distant market at reduced prices as ―dumping, ―dumping, but the word used in this sense appeared not to have entered into the literature of economics until the first years of the twentieth century. In 1903 and 1904, the tariff question was the dominant political issue in Great Britain, and in a huge output of polemical literature which marked the tariff controversy. The term became well established and appeared with or without apologetic quotation marks in book after book. The term ―dumping ―dumping has since found its way into the economic terminology of the French, German, Italian and probably other languages. Initially, it had a vague and uncertain meaning, and is still used indiscriminately for such diverse price‐ practices practices such as severe competition,
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It is illegal in some countries to dump certain products into them, because they want to protect their own industries from such competition.
1.2 ) HISTORY OF DUMPING First Instances of the Practice of Dumping
•
16th century – century – selling selling paper at loss in England to kill its paper industry
•
17th century - Dutch accused of selling products at lower cost to drive out French from the Baltic areas
•
1790s – 1790s – 1800s – 1800s – Americans Americans become wary of under und er - priced selling by competitors
It has long been customary to speak of one one market as a ‗dumping ground for the ―surplus products of another market when the producers of the latter for any reason sell their commodities in the former at unusually low prices. From this usage it was a natural outcome to speak of selling in a distant market at reduced prices as ―dumping, ―dumping, but the word used in this sense appeared not to have entered into the literature of economics until the first years of the twentieth century. In 1903 and 1904, the tariff question was the dominant political issue in Great Britain, and in a huge output of polemical literature which marked the tariff controversy. The term became well established and appeared with or without apologetic quotation marks in book after book. The term ―dumping ―dumping has since found its way into the economic terminology of the French, German, Italian and probably other languages. Initially, it had a vague and uncertain meaning, and is still used indiscriminately for such diverse price‐ practices practices such as severe competition,
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customs undervaluation, ―bargain, ―sacrifice or ―slaughter sales, local price ‐cutting and selling in one national market at a lower price than in another. In recent years, however, the increased use of the term by academic economists with their creditable tendency towards the exact establishment of terminology and of the development of legislation dealing with dumping and allied price‐ practices, practices, which made necessary some measure of precision in the differentiation between various price practices, have both contributed to the consistency of the usage. Extensive variations in the use of the term both as to gist and implication are nevertheless still present. According to Dale, the origin of the the word ―dump is ―dump is uncertain. Its usage by the early nineteenth century had come to mean the act of throwing down in a lump or mass, as with a load from a cart, and it was then a natural extension to apply the word to the disposal of refuse and to describe as a dumping ground, a market for the disposal of surplus stock. During this time, ―dumping was used in English language trade literature to illustrate loosely a situation in which goods were sold cheaply in foreign markets. Today, however, the term is used intentionally to signify the practice of price discrimination in international trade. The term was applied persuasively to describe almost any situation in which goods were sold abroad at cheap prices, irrespective of the cause of the cheapness, the insinuation being that the goods were unwanted in their country of derivation and were exported only to get rid of them. Economists have always defined dumping as transnational price discrimination where prices vary between national markets. Although economists still object in principle, they now accept that dumping may also be defined as transnational sale below costs. Deardoff admits this new ―definition : ―The definition has broadened over the years; some now consider dumping
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including ‗sales below costs„, at least presumptively….this alternative criteria for dumping have gradually acquired elevated status of an alternative definition‖. However, there is no correlation between price discrimination and sales below cost. Sales below cost may occur with or without discrimination and yet, on the other hand discrimination may take place without selling below costs. The term dumping is employed most often, even in careless business language to signify selling the same commodities at different prices in different markets. Commercially, the term is often uncritically extended to cover various types of sales at prices lower than those generally current, even if the prices are uniform to all purchasers.
1.3 ) TYPES OF DUMPING 1. Sporadic Dumping:
Occasional sale of a commodity at below cost in order to unload an unforeseen and temporary surplus of the commodity such as cheese, milk, wheat etc. in the international market without reducing domestic prices.
2. Predatory Dumping:
Temporary sale of a commodity at below its average cost or a lower price abroad in order to derive foreign producers out of business, after which prices are raised to take advantage of the monopoly power abroad.
3. Persistent Dumping:
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Continuous tendency of a domestic monopolist to maximize total profits by selling the commodity at a higher price in the domestic market than internationally (to meet the competition of foreign rivals)
1.4 ) CAUSES OF DUMPING
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Producers in one country are trying to stay competitive with producers in another country.
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Producers in one country are trying to eliminate the producers in another country and gain a larger share of the world market
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Producers are trying to get rid of excess stuff that they cant sell in their own country
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Producers can make more profit by dividing sales into domestic and foreign markets, then charging each market whatever price the buyers are willing to pay.
1.5 ) CONSEQUENCES OF DUMPING
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Affects the financial viability of the domestic manufacturers• Job losses and unemployment in the long run
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Affects trade relations between countries
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Anti-Dumping rules and imposition of tariffs and quotas
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2.1 ) CHINESE ECONOMIC SITUATION
The dumping investigation essentially compares domestic prices of the accused dumping nation with prices of the imported product on the European market. However, several rules are applied to the data before the dumping margin is calculated. Most contentious is the concept of "analogue market". Some exporting nations are not granted "market economy status" by the EU: China is a prime example because its market status is considered "state-sponsored capitalism". In such cases, the DG Trade is prevented from using domestic prices as the fair measure of the domestic price. A particular exporting industry may also lose market status if the DG Trade concludes that this industry receives government assistance. Other tests applied include the application of international accounting standards and bankruptcy laws.
The consequences of not being granted market economy status have a big impact on the investigation. For example, if China is accused of dumping widgets, the basic approach is to consider the price of widgets in China against the price of Chinese widgets in Europe. But China does not have market economy status, so Chinese domestic prices can not be used as the reference. Instead, the DG Trade must decide upon an analogue market: a market which does have market economy status, and which is similar enough to China. Brazil and Mexico have been used, but the USA is a popular analogue market. In this case, the price of widgets in the USA is regarded as the substitute for the price of widgets in China. This process of choosing an analogue market is subject to the influence of the complainant, which has led to some criticism that it is an inherent bias in the process.
However, China is one of the countries that has the cheapest labourforce. Criticisms have argued that it is quite unreasonable to compare China's goods price to the USA's as analogue. China is 6
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now developing to a more free and open market, unlike its planned-economy in the early 60s, the market in China is more willing to embrace the global competition. It is thus required to improve its market regulations and conquer the free trade barriers to improve the situation and produce a properly judged pricing level to assess the "dumping" behaviour.
2.2 ) MADE IN CHINA PRODUCTS
Everytime You Buy A Product...
...make sure that you are not buying a product 'Made In China'. Many may wonder why one should not buy an affordable and attractive Chinese product which is easily available in any Indian shop. The reasons are many:
'One-hour technology' products from China started entering Indian households some years ago. Even though the majority of these products did not succeed in the Indian market due to their 'inferior' quality, the Chinese 'invasion' of our market is still continuing. The dumping of Chinese-made fans, locks, watches, bicycles, radios, batteries etc is slowly replacing our own products and has become a threat to Indian industry. China herself is one of the victims of the counterfeit products they produce; in the year 2001, fake and low-quality medicines produced in China killed about 192,000 people.
The Indian toy industry has been more or less wiped out due to the dumping of cheap Chinese toys produced mainly by the Chinese Military Industrial Complex of the People's Liberation Army (PLA). In the last few years, many manufacturing units in India have been closed down due to this competition. Some companies have adopted the next best line of action by joining the enemy. Many Indian companies have already shifted their production bases from small Indian 7
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towns and villages to China. This has resulted in unemployment for lakhs of workers, pushing them to the brink of starvation. China's steady entry into our textile, food, informationtechnology, pharmaceutical, automobile and other sectors may result in the collapse of many Indian industries -- in both organised and unorganised sectors. 'Made In China' can be classified into three categories:
1. Products Made in Forced Labour Camps
2. Products Manufactured by the Chinese Military
3. Products Manufactured - by the Disenfranchised Labour Force.
It is also a well-known fact that the ironically named People's Liberation Army (PLA), party leaders and cadres own over 95% of the Chinese economy (directly or through a variety of proxies).
Business is everything! In 1998, the New York police busted a racket of some senior Chinese officials involved in the sale of the organs of executed prisoners for transplantation. It is estimated that more than one crore people work in thousands of forced labour camps across China. This includes a big majority of 'political' prisoners. China tops the world with more than 2,300 executions per year. Most of the executions take place in front of crowds inside sports stadiums or public squares in the most preferred way -- 'a bullet to the back of the head,' because it does not contaminate the prisoners' organs with poisonous chemicals, as lethal injections do. Remember that every time you buy a product 'Made In China,' you are funding and empowering a brutal regime. We request you to boycott Chinese goods to save and protect the Indian industry
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and also to help end injustice and oppression in Tibet. Spread the word. Take a pledge that you will not buy, use or sell any product 'Made In China'.
2.3 ) CASE STUDY :
1.
China Dumping Cotton In India
After dumping silk, man-made fibers and chemicals, Indian textile and apparel companies claim china is now dumping cotton voile fabric in India. The central government is looking into these complaints and will soon come up with its findings.
Indian textile and apparel companies have lodged formal complaints with the authorities over possible dumping of cotton in India. The complaint is that despite china being a net importer of cotton and having a good stock-to-use ratio, it is exporting cotton voile to India at prices way lower than the production cost. The ministry of textiles has taken up the matter and is carefully looking into the allegations.
"The Ministry is looking at the fact that China is a net importer and also has a good stock to use ratio within its country. We would certainly take it up as a part of our policy." This possible dumping of cotton fabric by Chinese firms has added to the problems of the Indian textile sector, which is already burdened by the recent increase in cotton prices. It remains to be seen whether the dumping claims will be proven and what formal action is initiated to prevent it.
2.
Mobile Phones
Media has recently highlighted the technical issues about the Chinese products.
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Eg. The continuous explosion in china phones , has resulted in the ban of Chinese phone retailing in Indian market. Can anyone guess which brand is this ? BLUEBERRY NOT BLACKBERRY ( same design , same colour shade , may be having
advanced freatures , very cheap )
(Same has been done to various products and brands eg. Apple iphone )
2.4 ) IS CHINA KILLING INDIAN MANUFACTURING SECTOR ?
Private sector manufacturing engineering in India is facing a stiff competition from neighbouring countries like China who is systematically killing Indian manufacturing sector and sought 25% anti-dumping duty on Chinese goods. China has a fixed currency. It is not a market economy like ours.
In India, we have taxes on goods manufactured locally, but none on imported products (from China). This is an unfair situation for Indian goods. This is why there should be 25% antidumping duty on Chinese products. The Indian power companies, especially those in the private sector, have placed huge orders for power plant equipment with China.
As of now China is only hitting our manufacturing sector because of variety of reasons .The need to tighten our belts as a nation and prepare our self for present challenge and many challenges awaiting us in IT/ BPO and other sectors.
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As on date sectors like Toys, Fancy Lighting, Electrical accessories are dominated by China and now we are facing immediate threat as far as energy sector is concerned, I foresee same for Automobile component manufacturers with in next 2-5 Years and IT/ BPO sectors.
This is right time we as GOI, Entrepreneurs and Employees must Tighten our belts and take all measures expected of us in order tp steer clear of any threat what so ever in the times to come.
2.5 ) MADE IN CHINA A THREAT TO INDIA
CHEAP Chinese goods are flooding the Indian markets and Indian industry is finally waking up to the flip side of globalisation.
As a wide range of cheap Chinese products flooded the Indian market, some local industries were adversely affected, while others benefited by using these products as raw materials
The Chinese are exporting to India a wide range of low-cost consumer goods that have a mass market in India such as kitchen-ware, textiles, electronic items, furniture, toys, cosmetics, footwear and accessories. In fact in the last four years, there has been a deluge of cheap imports from China tyres, bicycles, watches and clocks, toys, plastics and dyes, and bulk drugs.
In the very near future Indian scooter and motorcycle manufacturers are going to face stiff competition from the Chinese. The sector that will be worst hit will be the small l scale sector. The Chinese export import corporations are financially stronger, have more fficient processes and turn out goods at extremely cheap prices. Armed with competitive advantage of low price
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the Chinese are moving in new markets at a feverish pace and Indian exports will also come under serious threat with the entry of China into the WTO.
The flood of Chinese imports has raised temperatures all around, questions have been asked in Parliament, and the many chambers of commerce have beseeched the government to protect Indian domestic industry from the new Chinese invasion.
In most cases Indian product's are better than their Chinese counterparts but as India is a price sensitive market, Chinese product's are sold more. Compare to India, China is the worlds factory floor and the worlds greatest market opportunity.
2.6 ) IMPACT OF CHINESE GOODS ON INDIAN ECONOMY
There seems to be no way to escape the DRAGON!!! They are using the big Indian market merely to dump their products and by doing so they are killing the Indian units.
For example last year during Diwali, China made crackers were sold in the Indian market. These crackers reportedly contained Sulphur. Sulphur is more harmful than Nitrate, which is used in India to make crackers. Since the Chinese crackers were cheaper than the Indian crackers, so they managed to attract innocent and largely illiterate Indian lot. As a result the Indian cracker industry saw a decline in the revenue.
Because of cheaper prices products made in China are becoming more popular among the Indian masses. This has had a very negative effect on our own manufacturing units and as a result many of them have had to shut shop. 12
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For instance, data reveals that 60 per cent of the industrial units in the industrial belts of Thane and Bhivandi near Mumbai have been closed down. ( Indian cottage industries i.e handicraft)
Due to its cheap labour, China offers low – priced imports such as textiles and clothing, electronic devices, machinery, etc .
According to official data, Chinese imports stood at $3I9 million (Rs 1,435 crore) during AprilJune this year as compared to $223 million (Rs 1000) crore during the corresponding period of the previous year. ( data source www.indiamart.com/new )
It has also affected Indian Export market,as china has replaced indian goods in the foreign market as being cheaply produced.
DRAGON‟s designs of capturing a major share … They are killing the economy of not only India but also the economy of the whole world very slowly. They are selling their cheap products on very cheap rates and we people are getting addicted of these cheap rated things and after few years there will come a time when you will see only the chinese goods in the markets because all the other manufacturers will become bankrupt and after that China will start to rise the rates of their products i.e. there will be complete monopoly of china on the goods market. Thats the policy on which china is working now a days.
Made in China, Sold in India
With the world turning into a global village and competition getting stiff, countries like China are ruling the roost in many a market in varied spheres. India is the hub of diverse business
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opportunities, and slowly yet steadily, Chinese products like electronics, crackers, idols, apparels etc. are predominating similar Indian products.
The festive season is the season of vocation especially filling the pockets of traders. But instead of the domestic welkin holding sway over the market, the opportunities are grabbed by Chinese manufacturers with their variety of exquisite products. Whether it is SMEs (Small and Medium Enterprises) or cottage industries, they are not able to provide a stiff competition to the cost effective offers provided by the Chinese. Due to these relentless imports of Chinese products, most Indian cottage industries have closed down, and the upcoming of the existing ones looks very bleak.
The Chinese entrepreneurs have infiltrated the market in a very systematic manner with their well-planned marketing strategies and day-and-night innovations.
They study the demand patterns and the market trends and work out the last price that they can offer to attract a colossal section of the consumers while still maintaining a profitable margin. As the Indian market is price-oriented, the domestic players are slowly losing their cope to the strategic Chinese entrepreneurs.
Chinese electronic goods like radio, torch, videodisc players, etc. are reigning supreme in the Indian market. Decorative items, fashion accessories like slippers, jewelries, hand bags, etc. father huge responses during festive seasons. This year, one saw the flooding of the Indian markets with Chinese made idols which were welcomed with open arms by the Indian consumers. Eg : This year, one saw the flooding of the Indian markets with Chinese made idols which were welcomed with open arms by the Indian consumers.
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2.7 ) PROS & CONS
+ Positive aspects
Relatively Cheaper than the regular/known brands.
Advanced Features
Affordability, common man can easily purchase.
Widely available
Higher profit margins for dealers.
- Negative aspects
•
•
Unsafe products Non Long-lasting
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Resulted in closure of many businesses, which lead to unemployment, lower turnover.
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Outflow of capital
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Increased in Imports & decrease in exports.
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3.1 ) CHEAP CHINESE PRODUCTS BOON OR BANE TO INDIA?
The recent flooding of Chinese goods into the Indian market has raised a hue and cry, and the question whether we should accept this silently. From the narrow viewpoint of the average consumer, sufficiently satisfactory quality goods are available at roc k-bottom prices. For instance, the prices of China-made compact fluorescent lamps are less than the prices of lamps of well-established Indian brands, and of comparable quality.
With the tremendous explosion of communications technology, countries are finding it increasingly difficult to maintain closed-door policies. Consumers are becoming more aware of the availability of various technologies. The inefficiencies of companies are exposed to competition from efficient enterprises, and the market share of the laggards is diminishing rapidly.
Traditional manufacturing industries in India were reaping profits at the cost of both consumers and workers till the early 1960s. With the growth of socialism, the workers started asserting themselves under the banner of trade unions. Due to this pressure, public sector units registered tremendous growth and large private enterprises were also able to record higher profits.
In the early 1980s, with liberalisation, the majority of non-Left parties, in cooperation with various industry associations and some economists with `western outlook', started supporting the idea of globalisation at the cost of national interest.
One basic fact that cannot be ignored is India's large population of diverse culture and religion. Even China -- with its large area and population -- is not comparable. To keep the country
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together with a socially stable set-up, the Indian model of economic development has to be different from traditional Western models.
The right economic model should provide social stability in terms of gainful employment for the masses. But the new economic model, with the advent of information technology, has given rise to a new class of people whose salary levels, on the one hand, have risen to dizzying heights and, on the other, reduced the employment opportunities of the middle-classes.
Organised industry has resorted to employing labour contractors on a daily-wage basis, bypassing the statutory provisions of facilities and, in effect, reducing the wage levels for the majority. Even very profitable concerns have lured employees into voluntary retirement schemes. As a result, people below retirement age, who opt for superannuation, come back to the job market with the advantage of experience.
This process helped capitalists exploit the toiling millions. The NPAs stand testimony to how our nationalised banks are being systematically looted to promote a few while keeping the majority of the workers below the required wage levels.
The government's globalisation policy was welcomed initially by the industry associations for two reasons: To dismantle the last semblance of labour laws and to divest PSUs and nationalised banks with the supposed aim of increasing efficiency and removing NPAs from their books.
Now, when these industries face the onslaught of globalisation on home turf (in the form of cheaper Chinese products), they are again pleading that there is no labour law in China. This parochial campaign must be exposed. With the fruits of the increased sales by these industries
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failing to reach the common man, the availability of cheaper Chinese items definitely spells relief for him.
3.2 ) "CHINESE GOODS CHOKING THE INDIAN MARKET"
The various facts about Indian market as well as Chinese market, as also how China is invading the Indian market unchecked & thereby killing the Indian units. Some of the alarming facts in this regard are as follows:
Chinese government offers a lot of tax benefits & subsidies to the manufactures as compared to Indian government, which results in high taxes on raw materials in India as compared to imported Chinese goods & hence Chinese goods cost lesser as compared to finished goods made in India. As a result, Chinese goods are becoming popular in India.
Chinese businesses have penetrated deep inside the Indian markets and as result crippling the Indian economy and its self sustainability. The range of markets engulfed by China vary from low-priced toys to Linen fabrics, batteries, porcelain tiles, compact fluorescent lamps, machinery, tyres, penicillin, radio, torches and DVD players and so on. Moreover, the cheap Chinese goods lack in terms of quality too. Some of the disadvantages of Chinese goods are:
•
lack of durability.
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toxicity of goods.
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no guarantee or back service.
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Threats that Indian industries are facing & going to face in near future due to the inundating of Indian markets with Chinese goods are :-
1.
Industries related to Toys, Fancy Lighting, Electrical accessories which are almost completely overshadowed with Chinese brands.
2.
Now we are facing immediate threat as far as energy sector is concerned.
3.
IT/BPO and Automobile manufacturing companies are to face the challenge in next 2-5 years.
4.
80% of our dependence for power plant equipment is on China.
5.
China has captured anywhere between 60-90 per cent of India‟s $2.5-billion toy market.
Industries affected by invasion of chinese market in India:-
1.
60% of the industrial units in the industrial belts of Thane and Bhivandi near Mumbai have been closed down.
2.
The Small-Scale Industry (SSI) contributes 35-40 per cent to the total manufacturing in India and this is the most affected sector.
3.
Even a health giant like Wockhardt had to shut down its Rs 100-crore plant producing acetic acid for Vitamin C after a flood of Chinese imports.
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4.1 ) ANTI DUMPING
Dumping is said to occur when the goods are exported by a country to another country at a price lower than its normal value. This is an unfair trade practice which can have a distortive effect on international trade. Anti dumping is a measure to rectify the situation arising out of the dumping of goods and its trade distortive effect. Thus, the purpose of anti dumping duty is to rectify the trade distortive effect of dumping and re-establish fair trade. The use of anti dumping measure as an instrument of fair competition is permitted by the WTO. In fact, anti dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry. It provides relief to the domestic industry against the injury caused by dumping. Does dumping mean cheap or low priced imports ?
Often, dumping is mistaken and simplified to mean cheap or low priced imports. However, it is a misunderstanding of the term. On the other hand, dumping, in its legal sense, means export of goods by a country to another country at a price lower than its normal value. Thus, dumping implies low priced imports only in the relative sense (relative to the normal value), and not in absolute sense. Import of cheap products through illegal trade channels like smuggling do not fall within the purview of anti-dumping measures. Is anti dumping a measure of protection for domestic industry?
Anti dumping, in common parlance, is understood as a measure of protection for domestic industry. However, anti dumping measures do not provide protection per se to the domestic industry. It only serves the purpose of providing remedy to the domestic industry against the 20
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injury caused by the unfair trade practice of dumping. In fact, anti dumping is a trade remedial measure to counteract the trade distortion caused by dumping and the consequential injury to the domestic industry. Only in this sense, it can be seen as a protective measure. It can never be regarded as a protectionist measure. There are number of cases in which anti dumping duty is imposed on imports of goods from China. Does India specifically target China for application of anti dumping measures? Is it due to China’s non-membership of WTO that India has so many anti
dumping cases against China?
The anti-dumping investigations in India are conducted under the national law as enshrined in the Customs Tariff Amendment Act, 1975, as amended in 1995, which is in consonance with the provisions of WTO. These measures are country neutral and the rules apply uniformly to China as to any other country. There is no intention on the part of DGAD or the Government of India to specifically target China for application of anti-dumping measures. The principles and procedures prescribed under the law are fully complied with in the cases involving China as in the cases involving other countries. The number of cases against China has got nothing to do with its not being a member of WTO. The anti-dumping action initiated by the Authority is governed by our national law and rules framed there under. India has extended Most Favoured Nation (MFN) treatment to China, which enjoins upon India the obligation of non-discriminatory treatment of China vis-à-vis other trading partners including WTO members. Thus the question of discriminating against China does not arise so .
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4.2 ) INDIA CAN INITIATE ACTION AGAINST DUMPING OF GOODS BY CHINA The Government can initiate action against dumping of goods by nations like China if a complaint is made with documentary proof that such imports were hurting domestic industry, the Rajya Sabha was informed today. Replying to supplementaries during Question Hour, Minister of State for Commerce and Industry D Purandareswari said as a signatory of the World Trade Organisation, India can resort to anti-dumping actions, anti-subsidies and countervailing measures and emergency protection from imports. But "there a complaint needs to be lodged with proof that industry has been affected," she said. Under the three agreements, action can be taken against dumping (selling at an unfairly low price), subsidies and special countervailing duties to offset the subsidies and emergency measures to limit imports temporarily to safeguard domestic industries. "There are provisions available for action to be initiated against dumping," she said. "Since 2009, adverse effect of large imports from China on domestic industry has been established in two cases of rubber related products/inputs based on investigation and safeguard duty imposed," she said. Purandareswari said while IIP, the index that measures industrial growth, had been fluctuating over the past few years because of global economic slowdown, it has bounced back with 8.2 per cent growth in October.
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Textiles, wearing apparel, rubber and plastic products, electrical machinery and apparatus and furniture all record positive growth in October, she said. The sectors had posted negative growth rate in 2011-12. "The reasons for decline in the growth can be attributed to both domestic as well as international factors which include Eurozone crisis and decline in external demand moderation in domestic demand, hardening of interest rates, inflationary pressure and rising input co sts," she said. The Minister said National Manufacturing Policy, unveiled in November last year, aims to raise contribution of manufacturing in the GDP to 25 per cent besides making domestic industry globally competitive. She said state governments should cooperate in helping revive manufacturing sectors as land acquisition, power and other clearances "act as a drag".
4.3 ) CHINA’S RESPONSES TO ANTI -DUMPING CHALLENGES As the world‟s number one target of anti-dumping cases, China has responded increasingly actively to anti-dumping complaints in recent years. The importance of responding vigorously has been recognized by both the government and the enterprises, especially since China‟s accession to WTO. (A) Bef ore China’s accession to WTO
Recognize the large and growing number of anti-dumping cases against China‟s exports, the government promulgated Rules on Response to Anti-dumping Charges Raised by Foreign Countries against Chinese Export Commodities in early 1994.40 MOFTEC issued the Rules to provide a legal foundation for Chinese exporters when defending their legal rights and business 23
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interests when being charged with dumping. The 1994 Rules were the Chinese government‟s first legal rules related to responding to anti-dumping charges. According to the Rules, Chambers of Importers & Exporters and Associations of foreign invested enterprises shall organize and coordinate their efforts in response to anti-dumping charges, and designate individuals to the task. The chambers or the associations shall keep MOFTEC informed of the progresses of the legal process and of the problems that have arisen. When anti-dumping charges are filed against a certain product, the chambers or the associations shall promptly publish a notice on the International Business newspaper. The respondents shall immediately register with the local foreign trade commissions41 or relevant chambers or associations to begin the responding process. Respondents shall be subjected to the coordination of local foreign trade commissions, the chambers, or the associations during the legal proceedings. Despite the government‟s encouragement, Chinese firms rarely respond to anti-dumping investigations. One reason is that the Rules were rather general and lacked details. In some cases, the enterprises could not afford the high cost of hiring lawyers and thus forgo the chance of defending their interests through a legal proceeding. Often, even when an enterprise did respond to the legal challenges, it was unable to do it in a timely manner. The Chinese producers were not active in responding to anti-dumping actions due mainly to their lack of experience, Knowledge, and financial resources. Chinese enterprises were not well coordinated and thus ineffective in presenting their cases during the 1990s. Business associations, which are powerful and effective in industrial countries, did not exist previously for Chinese manufacturers to represent the industries‟ interests. Consequently, individual enterprises fought their own legal
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battles which were often unsuccessful. Indeed, a higher percentage of anti-dumping investigations on Chinese exports resulted in the application of an ti-dumping measures. (B) After China’s accession to WTO
China‟s responses to anti-dumping cases have become more active since its accession to WTO due to closer cooperation between the government, industrial organizations, and enterprises. Provisions on Responding to Actions of Anti-dumping of Export Products: Together with its accession to WTO, China‟s MOFTEC promulgated the Provisions on Responding to Actions of Anti-dumping of Export Products on October 11, 2001, which took effect on December 1, 2001. It is stated clearly in the Provisions that all Chinese enterprises involved in anti-dumping cases shall respond actively to protect their legal rights and business interests. The Provisions included a chapter with 5 articles specifying the units responsible for organizing and coordinating the responding efforts and their responsibilities. It stated that MOFTEC shall entrust the Chambers of Import & Export and the associations of foreign-funded enterprises with the organization and coordination of the affected enterprises in responding to anti-dumping actions. Under certain circumstances, MOFTEC may entrust other organizations or agencies with this task. Requirements for lawyers and the responsibilities of the the organizing units were also stated clearly in the Provisions, representing a significant improvement in the legal foundation in responding to anti-dumping cases. The responsibilities of the relevant units were further detailed especially in how they should assit the affected enterprises in their legal proceedings, including filling out the investigation questionnaires, conducting negotiations on price, and retaining lawyers. In addition, the units were required to establish statistic supervision systems for collecting data on the exporting products and to transmit such information to relevant enterprises
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and government departments as well as to detect early signs of possible anti-dumping investigations against Chinese exports.
4.4 ) CHALLENGES AND DIFFICULTIES:
Despite various efforts to respond to anti-dumping cases more actively, China is still facing numerous challenges and difficulties.
Often, Chinese enterprises lack experience and knowledge of the rules and legal frameworks governing international trade, as well as expertise in avoiding antidumping charges. While many do not recognize the importance of actively responding to anti-dumping charges, most of them also lack financial capabilities.
Moreover, Chinese manufacturers and exporters are highly vulnerable to the negative consequence of anti-dumping duties, due to their thin profit margins.
Consequently, in many cases, Chinese exports declined sharply following antidumping investigations or the imposition of anti-dumping duties.
Another important challenge facing Chinese firms is the daunting task of compiling and providing information required for anti-dumping investigations. Often, the accounting methods used by Chinese enterprises are not consistent with international standards, increasing the difficulties of providing reliable data requested by the investigators.
The challenges to responding to anti-dumping cases are particularly great since China accepted the non-market economies (NME) provision in its Protocol of Accession to WTO.
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5 ) CASE STUDY
INDIA LIFTS CHINESE TOY BAN, DEMANDS SAFETY GUARANTEES
India‟s government lifted a ban Monday on imports of Chinese toys that had stoked trade tensions between the world‟s two biggest emerging economies.
But it imposed strict demands for product safety guarantees.
India announced the six-month ban in January, prompting Beijing to warn that “bilateral trade relations could be seriously impacted”.
The Indian trade ministry, which had made the decision on the grounds of “public health and safety”, announced Chinese toys could be imported -- but needed to be certified as safe according to international standards.
Chinese toy imports “shall be permitted” if accompanied by certificates showing they “conform to standards prescribed” by safety bodies such as the International Organisation for Standardization (ISO) or the American Society for Testing and Materials (ASTM), the trade ministry said in a statement.
The imports will have to be accompanied by certificates from laboratories accredited to the International Laboratory Accreditation Cooperation, the ministry further stipulated.
Chinese toys such as dolls, cars, trains and puzzles make up more than 60% of India‟s $500 million toy market and the ban sent prices of toys soaring in local markets as imported supplies started running out.
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Some Indian analysts had seen the ban as a move to protect India‟s struggling toy industry, which employs some two million workers, and the media had dubbed the row the “toy trade war”.
The Indian toy sector said it had been pushing New Delhi for higher import tariffs on Chinese toys, which are cheaper than those made locally, but not a full-scale ban.China had warned India to take “cautious and prudent trade remedy measures” at a time when “the world economy faces grim challenges”. But India said the toy ban complied with World Trade Organisation rules and would not be lifted until the government was “satisfied” about the safety of the Chinese products. China‟s toy industry has come under close scrutiny since millions of goods were recalled globally last year amid fears they were made with toxic lead paints or had design flaws.
Thousands of Chinese toy factories have closed because of tighter safety restrictions and falling demand amid the widening global financial crisis.India‟s toy ban came amid mounting trade frictions between the Asian neighbours. China is India‟s largest trading partner while India is China‟s 10th biggest trading partner.
Aside from the toy ban, China‟s commerce ministry has complained that India has launched 17 trade investigations since October into Chinese products, including 10 anti-dumping probes, and curbed imports of iron and steel, chemicals and textiles from China.
Various countries have been moving to shield domestic industries against the worldwide slowdown but India‟s commerce minister Kamal Nath has insisted New Delhi opposes any form of trade protectionism.
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NOKIA TO DUMP INDIA FOR CHINA!
Finnish major Nokia, once a big seller of mobile phones in India, is probably going to shut down its manufacturing unit in Tamil Nadu. Tax dispute is the basic reason of this big step, as per the company.
According to the reports, Nokia said in an unofficial letter to the Ministry of Commerce and Industry that it would be more cost efficient for Nokia to have transferred the manufacture of mobile phones to China and to import them to Indian market rather than manufacture those in Chennai.”
However, as per the reports, Nokia wants to leave Indian market for two big reasons. First, the state of Tamil Nadu had agreed to give Nokia back the 4% value-added tax (VAT) that the company had paid on phones shipped from its factories in Finland. But the state government did not pay it back.
The second reason is the central government is seeking Rs 20.8 billion ($329 million) taxes on income from downloads on phones made in India. But Nokia pleads that a bilateral tax treaty between India and Finland, where it is headquartered, does not recommend any such payment of tax.
The manufacturing unit of Nokia in Tamil Nadu, which will be closed down soon, is one of its big factories with employee strength of 38,000. It was set up in 2006 and has produced about 800 million phones so far.
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Nokia has reportedly said in a general Press statement that “Taxation should not drive business decisions on locating operations, but current tax claims against Nokia and other multinational companies operating in India have too great an impact on the predictability and certainty of Indian business environment to be ignored…. The political risk of operating in India has therefore become suddenly substantially higher and may inevitably influence future decisions to develop one‟s operations in India.”
“Nokia is committed to India. The country is a priority market for us, and Chennai plays an integral part in our global manufacturing strategy. To date, Nokia has invested USD 285 million in its manufacturing operations in Chennai, providing direct and indirect benefits for tens of thousands of residents,” Nokia said.
Nokia was the largest-selling mobile phones in India for many years. Later, Samsung dominated the market.
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6 ) CONCLUSION
The term has a negative connotation, as advocates of competitive markets see "dumping" as a form of protectionism. Furthermore, advocates for workers and laborers believe that safeguarding businesses against predatory practices, such as dumping, help alleviate some of the harsher consequences of such practices between economies at different stages of development . Now after eyeing the impending disasters of this issue, the gathering was confronted with the following concerns
1. How can we stop invasion of chinese market?
2. Why are we unable to stop the invasion of chinese market?
China‟s importance for India as a trading partner has increased tremendously over the recent years. At the same time, China has become the main target of Indian antidumping measures with a number of measures that is unprecedented worldwide. This paper provides a detailed analysis of trade flows between the two emerging economies and investigates on which type of products and in which sectors the Indian government applies antidumping measures against China. Then this paper estimates the trade impact of those measures that were imposed during the Great Recession, using monthly data on exports from China to India.
The use of monthly data is relatively new to the literature and allows a detailed examination of the trade impact of antidumping measures and its dynamics. This paper finds that antidumping measures decrease the Chinese export value and quantity to India immediately and to a significant extent. The impact is quite stable over time.
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