Anti-dumping duty on viscose fibre from Indonesia

Note4Students

From UPSC perspective, the following things are important :

Prelims level : Anti-dumping duty

Mains level : Not Much

The Directorate General of Trade Remedies (DGTR) has recommended the levy of anti-dumping duty (ADD) on viscose staple fibre imported from Indonesia.

What is Dumping?

Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.
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.

An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
In order to protect their respective economy, many countries impose duties on products they believe are being dumped in their national market.
In fact, anti-dumping is an instrument for ensuring fair trade and is not a measure of protection per se for the domestic industry.
Such ‘dumped’ products have the potential to undercut local businesses and the local economy.
Anti-dumping duties provide relief to the domestic industry against the injury caused by dumping.

The Department of Commerce recommends the anti-dumping duty, provisional or final.
The Department of Revenue in Finance Ministry acts upon the recommendation within three months and imposes such duties.

The WTO operates a set of international trade rules, including the international regulation of anti-dumping measures.
It does NOT intervene in the activities of companies engaged in dumping.
Instead, it focuses on how governments can—or cannot—react to the practice of dumping.
In general, the WTO agreement permits governments to act against dumping if it causes or threatens material injury to an established domestic industry.

Anti-dumping duties have the potential to distort the market.
In a free market, governments cannot normally determine what constitutes a fair market price for any good or service.

Viscose is a type of rayon. Originally known as artificial silk, in the late 19th century, the term “rayon” came into effect in 1924.
The name “viscose” derived from the way this fibre is manufactured; a viscous organic liquid used to make both rayon and cellophane.
It is the generalised term for a regenerated manufactured fibre, made from cellulose, obtained by the viscose process.
As a manufactured regenerated cellulose fibre, it is neither truly natural (like cotton, wool or silk) nor truly synthetic (like nylon or polyester) – it falls somewhere in between.
Chemically, viscose resembles cotton, but it can also take on many different qualities depending on how it is manufactured.