Question

Q. Consider the following pairs.

List A	List B
1. Anti-dumping duty	To correct the negative impact of import subsidies.
2. Countervailing duty	To correct the imports that are priced below the fair market value.
3. Safeguard duty	To protect domestic industry from serious injury due to a surge in imports.

Which of the pairs given above is/are correct?

• A. 1 and 2 only
• B. 3 only
• C. 2 only
• D. 1, 2 and 3

Answer 1

The correct option is B 3 only

Explanation:

• Dumping happens when a country or a firm exports an item at a price lower than the price of that product in its domestic market. According to global trade norms, a country is allowed to impose tariffs on such dumped products to provide a level-playing field to domestic manufacturers. The use of anti-dumping measures as an instrument of fair competition is permitted by the WTO
• Countervailing duty (CVD) is a specific form of duty that the government imposes to protect domestic producers by countering the negative impact of import subsidies. This additional duty raises the market price of the imported products and brings them back to the true market price.
• The safeguard duties are used to protect the domestic industry from serious injury or threat of serious injury due to a surge in imports. While anti-dumping duty is imposed against a specific country if there is a sudden drop in the price of an imported item, safeguard duty is not country-specific, and a sudden surge in imports irrespective of a price drop is considered to be a fit case to safeguard interests of domestic industry.