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Anti-dumping duties

07.07.2025

 

Anti-dumping duties

 

Context :

China has imposed anti-dumping duties on European brandy, mainly French cognac, in response to EU’s probe into Chinese EV subsidies, escalating trade tensions.

 

About :

  • New Duties: China placed 27.7%–34.9% duties on EU brandy.
  • Duration: Measures will last five years, starting July 6, 2025.
  • Target Product: Aimed mainly at French cognac, part of EU luxury exports.
  • Triggered By: Linked to the EU’s investigation into Chinese electric vehicle subsidies.
     

Characteristics / Provisions :

  • Trade Protection Tool: Anti-dumping duty protects against unfairly priced foreign imports.
     
  • WTO Compliance: Allowed under Article VI of GATT 1994 and the Anti-Dumping Agreement.
     
  • Chinese Action: Follows a formal investigation into EU brandy pricing.
     
  • Retaliatory Sign: Seen as economic retaliation by China against the EU.
     
  • Wider Scope: Reflects a broader China-West trade conflict, beyond a single product.
     
  • Legal Backing: Based on findings of unfair trade practices hurting local producers.
     

 

Anti-Dumping Duty (ADD)

Anti-Dumping Duty is a tariff imposed by a country to protect its domestic industry from unfairly cheap imports, which are sold below their normal market value.

  • Dumping happens when a product is exported at a lower price than it is sold domestically.
     Example: Selling Chinese tiles in India at ₹20/sq.ft, while ₹35/sq.ft in China.
     
  • Dumping harms domestic industries by undercutting local prices and reducing competitiveness in the home market.
     Example: Indian paper mills facing losses due to low-cost Indonesian imports.
     
  • Anti-Dumping Duty helps neutralize the effect of dumping by increasing the price of such imports.
    In India, anti-dumping duties are imposed by the Ministry of Finance based on investigations and recommendations by the DGTR (Directorate General of Trade Remedies.).
     
  • The WTO permits the use of ADD under the Anti-Dumping Agreement, ensuring global trade remains fair.
     Countries must follow WTO procedures to impose ADD legally and proportionally.
     
  • ADD is different from Countervailing Duty, which targets imports subsidized by the exporting country's government.
     Example: CVD on Chinese solar panels that receive production incentives.

     
  • A ‘Sunset Review’ can extend ADD by another five years if dumping and injury risks are still present.
     Reviews are conducted based on evidence or requests from the domestic industry.
     
  • India uses ADD actively through the DGTR to protect sectors like steel, textiles, and chemicals.
     These actions help secure jobs, stabilize markets, and support Make in India goals.

 

 

Challenges :

  • Trade War Risks: Tensions may escalate, as seen in US-China tariff disputes.
  • Export Uncertainty: EU exporters like France may face sales decline in China.
  • Global Supply Impact: Such duties can disrupt trade flows and pricing globally.
  • WTO Strain: Retaliatory duties may weaken multilateral trade dispute norms.
     

Way Forward :

  • Diplomatic Talks: EU-China should use WTO consultation platforms to resolve issues.
  • Diversify Markets: Affected EU exporters should explore India, ASEAN as alternative markets.
  • Monitor Spillover: India must track such disputes to adjust trade policy strategies.
  • Strengthen DGTR: India’s DGTR should enhance capacity to address dumping cases efficiently.
     

Conclusion :

China’s anti-dumping duties mark a rising phase of global trade tensions. While legal under WTO, these actions highlight the need for dialogue, rule-based order, and market diversification.

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