Public interest and balance in anti-dumping measures

By Sanjay Notani, Mrugank Kamdar and Tanaya Sethi, Economic Laws Practice
0
2004

Anti-dumping measures are imposed to protect the domestic industry from dumped imports. Therefore, the adoption of anti-dumping legislation reflects a public interest consideration in favour of the home market. However, anti-dumping measures may have an adverse impact on other interested parties, as well as the interests of the importing country as a whole.

Sanjay Notani
Sanjay Notani

The World Trade Organization’s (WTO) Anti-Dumping Agreement (ADA) neither endorses nor prohibits the consideration of public interest. Hence, by default, the ADA allows the usage of the public interest analysis in domestic anti-dumping laws and practices.

During the Uruguay Round, members extensively discussed the inclusion of a public interest clause into the ADA. However, such a clause was not incorporated into the final draft of the agreement for lack of consensus.

Article 9.1 of the ADA confers on members the discretion to decide whether to impose an anti-dumping duty in cases where dumping, injury and causation have been found. It also remains at the discretion of WTO members whether the amount of duty should be to the full extent of dumping or less.

Article 9.1 clarifies that it is “desirable that the imposition be permissive in the territory of all members”. A number of WTO members (e.g. Ukraine) have used regulatory latitude provided by this provision to implement the public interest clause into their regulations.

The public interest test, as applied, can be restricted to an analysis of the economic impact of anti-dumping measures, or it can take non-economic considerations into account. The EU, which mandatorily applies the public interest test in each anti-dumping investigation, defines the test as “an appreciation of all the various interests in the union taken as a whole by analysing the likely economic impact of the imposition or non-imposition of measures on economic operators in the union”. According to the wording of this test, the public interest analysis in the EU is restricted to economic factors.

The discretion contemplated in article 9.1 of the ADA is guided by factors developed by different member countries.

Some of the factors used by the EU and Canada are identified below:

1. Effect on competition: The Canadian Authority recommended the reduction of anti-dumping duties from 181% to 35% on stainless steel wire because such imposition would lessen competition.

2. Interests of domestic and upstream industries: These are necessary to consider where market conditions do not allow domestic producers to benefit from the measures imposed. Therefore, the European Commission (EC) in the Ferro-Silicon case did not recommend levy of duties; and

3. Interests of consumers (including industrial users): Considered on the basis of prices and consumer choice. While consumer interests are recognized by both the EU and Canada, in practice the non-application of measures due to such concerns is exceptional.

Mrugank Kamdar
Mrugank Kamdar

While the antitrust law in India has always provided a public interest requirement, our anti-dumping law does not require an equivalent analysis. The Supreme Court, in the case of Haridas Exports v All India Float Glass Manufacturers Association, observed that, “Import of material at prices lower than prevailing in India cannot per se be regarded as being prejudicial to the public interest”.

However, in practice, the Ministry of Finance, which has powers to accept or reject the recommendation of the Directorate General of Anti-dumping and Allied Duties (DGAD) and impose duties, chose not to impose anti-dumping duties recommended by the DGAD in the recent investigations concerning Penicillin-G potassium from China and solar cells/modules from Malaysia, China, Taiwan and the US.

Anti-dumping measures have the tendency to continue for long periods of time. In doing so, they make consumers pay the price for the unfair trade alleged by the domestic industry. The public interest test reflects the principle of proportionality in balancing competing interests.

While the non-imposition or elimination of anti-dumping measures due to the public interest concerns is rare, it is not an indication of the ineffectiveness of the test. The scarce use of the test merely suggests that the non-imposition of anti-dumping duty on public interest grounds is an exception. However, the need for its application has to be weighed from time to time based on market conditions pertaining to the product under consideration.

A balance between the affected domestic industry and the consuming industry must be established, taking into perspective economic, financial and geopolitical issues of all stakeholders.

Sanjay Notani is a partner, Mrugank Kamdar is a senior associate and Tanaya Sethi is an associate at Economic Laws Practice. This article is intended for informational purposes and does not constitute a legal opinion or advice.

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