The World Trade Organisation (“WTO”) has defined “dumping”, in the context of international trade, as a pricing strategy whereby manufacturers/producers export their products/produce to another country at a price lower than the price charged in their home market. It can be described as a form of price discrimination.
Why Dumping is an Issue
Dumping negatively impacts a foreign market when certain companies sell their products in the foreign market at prices which are lower than the prevailing prices than those in the local markets. As a result, dumping can have a grave impact on the local industry when international companies try to manipulate prices and quality of merchandise. In addition, dumping is also an issue due to the subsidy that governments give to their own products, a subsidy that is banned by the WTO.
Article 6 - The ‘Anti-Dumping Agreement’
Article 6 of the WTO’s General Agreement on Tariffs and Trade (“GATT”) sets out the Anti-Dumping Agreement. The Anti-Dumping Agreement allows countries to charge extra import duty on a particular product from a particular exporting country with the intention of making its price closer to the “normal value” or to remove the injury to domestic industry in the importing country.
The WTO’s agreement allows governments to act against dumping where there is genuine injury to the competing domestic industry. In order to act, the government must show that dumping is taking place; calculate the dumping (how much lower the export price is compared to the exporter’s home market price); and show that the dumping is causing damage or threatening to do so.
The WTO agreement provides different ways to calculate to what extent a particular product is being dumped. The agreement provides three methods to calculate a product’s “normal value”. The agreement also goes further to specify how a fair comparison can be made between the export price and what would be a normal price.
Impact on Oman
Dumping is of particular concern to Oman as the risks that are associated with it include the collapse of national industries and the prevention of the establishment of certain industries, which can create unfair and unhealthy competition with international products in the local market.
Recent Development in Oman
In a press release issued in February 2014, the Omani government confirmed that it is formulating law and regulations to combat dumping. The Government is also in the process of analysing key issues that should be covered under the proposed law. The Government is also actively discussing the need for a proposed legislation with WTO keeping in view the complaints received from local companies.
The Government has already initiated a few steps to prevent dumping. Oman has set up a special department (the “Department”) at the Ministry of Commerce and Industry to oversee the investigation of all dumping issues encountered by local industries. One of the fundamental aims of the Department is to raise awareness among Omani industrialists of dumping and subsidy issues in the future, a reason behind the media campaign they have launched on this matter.
The Department has been created under the Directorate-General of Organisations and Trade Relations after six claims were filed against Oman. These claims alleged that Oman was dumping petrochemicals, steel pipes and marble in the US and other markets. Oman has already received its first anti-dumping case against a foreign company which emphasises the evident need for the Department.
Oman’s main cement producer, Raysut Cement Company, was one of the local companies that urged the Government to enforce anti-dumping measures on cement producers from the UAE in order to be able to maintain prices in the domestic market.
The main aims of the Department include combating dumping charges faced by local industries; handling cases filed against local industries outside the country; promoting anti-dumping and protective procedures; raising awareness among local industry to enable them to address any future cases; and providing technical support to local industries facing such issues.
Oman’s approach has been to set up a specialised human resources team within the Department to develop a strategy and investigate dumping issues. The team is comprised of representatives from the Royal Oman Police (ROP), the Directorate-General of Customs, the Ministry of Agriculture and Fisheries, the Ministry of Legal Affairs, the National Centre for Statistics and Information, the Directorate General of Industry at the MOCI and the Directorate-General of Organisations and Trade Relations. In addition to these efforts and the increase of individuals involved in this work in Oman, coordination with the Geneva-based WTO agency and at Brussels-based organisation has been increased. Increased cooperation will enable selected Omani’s to undertake training programmes at these well-respected organisations.
Thursday, May 8, 2014