CHINESE DUMPING

1.1 ) WHAT IS DUMPING ?

In economics, "dumping" is a kind of predatory pricing, especially in the context of international

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 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 at prices

lower than the home-market prices. In price-to-price dumping, the exporter uses higher home-

prices to supplement the reduced revenue from lower export prices. In price-cost dumping, the

exporter is subsidized by the local government with duty drawbacks, cash incentives, etc.

Dumping is legal under GATT (now WTO) rules unless its injurious effect on the importing

country's producers can be established. If 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

(b) the cost of making the product.

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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 – 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 – 1800s – Americans become wary of under - priced selling by competitors

It has long been customary to speak of 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, 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 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 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, 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 word ―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

• Producers in one country are trying to stay competitive with producers in another country.

• Producers in one country are trying to eliminate the producers in another country and gain a

larger share of the world market

• Producers are trying to get rid of excess stuff that they cant sell in their own country

• 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

• Affects the financial viability of the domestic manufacturers• Job losses and unemployment

in the long run

• Affects trade relations between countries

• 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

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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

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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, information-

technology, 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% anti-

dumping 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.

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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 April-

June 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

• Resulted in closure of many businesses, which lead to unemployment, lower turnover.

• Outflow of capital

• 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.

• toxicity of goods.

• 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

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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 costs," 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) Before 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

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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 anti-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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