Dumping & Countervailing Duties (CVDs) - Definition & Issues in News for UPSC

Dumping in economics is a type of predatory pricing talked about particularly in the international commerce space. Dumping is said to happen when manufacturers or marketers export a product to another nation at a price that is lesser than the home country price or lesser than the production cost. This is done with the intention of enhancing the market share in a foreign market or to remove competition.

Important for the IAS exam from the perspective of Indian Economics, this concept comes under UPSC GS Mains-III. This article will provide you with relevant facts about Dumping and Countervailing Duties for the civil services examination.

What are the countervailing duties (CVDs)?

Countervailing duties (CVDs) are trade import tariffs imposed to nullify the adverse effects of subsidies. They are imposed only under World Trade Organisation rules and are also called anti-subsidy duties. They are levied if a country investigates and finds out that a foreign country is subsidizing its imports to the home country thus harming domestic suppliers. Then, as per WTO rules, the country can charge additional duties in agreement with the GATT Agreement on Subsidies and Countervailing Measures and the GATT Article VI.

What is the difference between anti-dumping duty and countervailing duty CVD?

Anti-dumping duties are levied on goods that are imported at a substantially low price whereas countervailing duties are levied on subsidized products in the originating or exporting country.

Current Affairs related to dumping and CVDs:

1. 1. The government in 2018 imposed anti-dumping duty on Ofloxacin import from China.
      • The imposition is for three years (Until 2021).  Directorate General of Anti-Dumping and Allied Duties (DGAD) recommended the imposition of anti-dumping duty to protect domestic producers from below-cost shipments.

   2. Commerce ministry in March 2020 has put forward a recommendation to impose anti-dumping duty on Malaysian calculators

      • To guard domestic players against cheap imports

   3. DGTR, in January 2020 has proposed the imposition of anti-dumping duty on imports on Aluminium and Zinc coated products from China, Vietnam, and Korea.

What is the Countervailing Duty (CVD) rate?

The rate of Countervailing duty is equivalent to the rate of excise levied on such goods if it had been manufactured within the importing country.

Aspirants preparing for UPSC 2022 can check the linked articles below which are related to GS-III economics:

Dumping & Countervailing Duties (CVDs) – UPSC Notes:-Download PDF Here

UPSC Preparation Links: