Dumping is understood as the deliberate lowering of prices below the average market to displace competitors. Meanwhile, anti-dumping is a strategy to counter dumping which is used to prevent unscrupulous participants from concluding a state contract (Blonigen & Prusa, 2019). If the participant greatly reduces the price, this does not mean unfair intent and does not require a penalty (Hill, 2021). Sometimes companies deliberately lower the cost and even work at a loss to get a state contract in the portfolio and enter the market.
The ideas of antidumping policies are seen in the article posted in The Economic Times about duties imposed by India on ursodiol. It is a secondary bile acid produced in people and other species as a result of the metabolism of intestinal bacteria. This acid is used for making pills for treating cholesterol, gallstones, gastritis with bile reflux, and other ailments. Typically, this drug is imported from South Korea and China (Thaker, 2022). Arch Pharma Labs used to be India’s only producer and supplier of ursodiol; thus, the competition level was absent. However, with the emergence of importing manufacturers, the situation became worse. The competitors began lowering prices making the local producer lose its position. Dumping a particular chemical significantly affected the domestic industry (Thaker, 2022). In addition, the petitioner claimed that the company’s performance was seriously affected by low production volumes, sales, and monetary losses, as well as negative return on capital used.
As a result, Arch Pharma Labs has filed an application requesting an antidumping investigation into ursodiol imports from China and South Korea. The applicant’s products make up the majority, that is, more than 80 percent of the total production in India (Thaker, 2022). By introducing new manufacturers, the Indian ones became less significant, which negatively impacted the medical industry.
The chosen article is directly related to the week’s readings since it describes the situation where the trade policy should have been implemented to create equal conditions for producers. The introduction of antidumping duties is allowed by the regime of the World Trade Organization (WTO) (Thaker, 2022). India and China belong to the Geneva-based organization, which creates, regulates, and issues international trade-related laws (Thaker, 2022). The agency thinks that the introduction of antidumping duty is necessary to compensate for dumping and subsequent damage to the domestic industry.
Dumping brings unconditional harm to both contractors and customers. According to the developers of the antidumping policy, preventive measures will deter unscrupulous contractors even before the start of the tender or auction (Blonigen & Prusa, 2019). Hill (2021) states that there are tariffs on imported goods (those of China and South Korea). However, even the taxes could not stop countries-importers from dumping prices.
If the participant greatly reduces the price, this does not mean unfair intent and does not require a penalty. Sometimes companies deliberately lower the cost and even work at a loss to get a state contract in the portfolio and enter the market. Nonetheless, the World Trade Organization allows anti-dumping policies imposition in case the local manufacturer suffers (Hill, 2021). As a result, India’s Arch Pharma Labs should restore its market presence, and the issue must be solved in favor of the local manufacturer. The assessment is yet to come; however, India is to be guaranteed market safety.
References
Blonigen, B., & Prusa, J. (2019). Dumping and antidumping trade protection. Edward Elgar Publishing.
Hill, C. (2021). International business (13th Ed.). McGraw Hill.
Thaker, T. (2022). India imposes anti-dumping duty on ursodiol. The Economic Times.