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The Role Of Trade Remedies In Protection Of Indian Market From Abusive Trade Practices

The World Trade Organization (hereinafter referred as "WTO") established in the year 1995 is a premier organization for the governance of International Trade across the world. With over 164 member states the aim of WTO has been to supervise and liberalize trade and commercial transactions across nations. Since there isn't any uniformity in the governance of different countries and their rules with respect to trade transactions, WTO comes in as a middle ground where rules for governance can be created and adopted by the member states in tandem with their domestic laws.

The WTO performs several functions including Trade negotiations, implementation and monitoring, dispute settlement, building trade capacity etc. It means that they set certain standards and rules through their agreements for the international trading of goods and services. These agreements ensure that trade is done ethically and without causing any member state financial harm. Therefore, they have created trade remedies or defence mechanisms to protect countries' domestic markets from unfair practices like dumping of goods, import of prohibited and actionable subsidized goods, and they also provide Safeguards from import surges in the domestic market of a country.

India is long standing member of the WTO and hence has adopted to the use of these trade mechanisms for its benefit. In 1997 India formed the Directorate General of Anti-Dumping and Allied Duties (DGAD) and Directorate General of Safeguards. Both these bodies were being controlled separately by different ministries under the Indian Government up until the restructuring of the trade remedial ecosystem in India into a single national body. This article focuses on understanding these trade defence mechanisms and India's role, being a member of WTO, in the adoption and enforcement of these mechanisms to protect the interests of Indian Industries from abusive trade practices.

Trade Remedies

Trade remedies are the measures available to any member state which they can exercise if they have been subjected to abusive or anti-competitive trade practices or even if they face threat of such practices. These remedies are available in the form of Agreement on Anti-Dumping Measures and Agreement on Subsidies and Countervailing Measures and Agreement on Safeguards. The importance of these agreements is that they help protect the interest of the domestic nation from injury suffered due to dumping which means selling goods at an unfairly low rate, unfair subsidized imports and surges of imports in the local industry. The following agreements have been discussed below.
  1. What are Anti-Dumping Measures?

    In today's era where international trade is the norm, a duty has been assumed for every nation to protect its domestic markets from anti-competitive or unfairly competitive practices. Dumping is one such practice that needs to be tackled by a country to protect its financial interests. Dumping can be understood as an anti-competitive activity wherein a country exports a certain product at a price lower than the selling price of that product in the country so exporting. [1]This practice however isn't considered dumping in all situations. The country importing the goods has to prove material injury to their industry due to the dumped goods.[2] A mere bargain sale cannot be levelled to dumping of goods.

    Article VI of General Agreement on Tariffs and Trade (hereinafter referred as "GATT") has established the law with respect to dumping and anti-dumping measures. According to the said Article, upon investigation and finding of any financial injury due to dumped imports an anti-dumping duty can be imposed as a remedy against dumping.
  2. What are Subsidies and Countervailing Measures?

    The WTOs Agreement on Subsidies and Countervailing Measures help monitor the usage of subsidies and oversees the actions that countries can take (countervailing actions) to offset injury being caused due to subsidized imports.[3] It means that countervailing duties can be imposed by countries to balance out the negative impact of subsidies. While some subsidies can be good for businesses and are not prohibited or subjected to countervailing measures like Research and Development (R&D) subsidies, regional development and environmental conservation subsidies, other subsidies that cause serious prejudice to other countries meaning they cause an adverse injury can be subjected to countervailing duty post-investigations.

    Subsidies can be categorized into- 1. Prohibited subsidies and 2. Actionable subsidies. All specific types of subsidies fall into one of the above mentioned two categories. Prohibited subsidies as given under Article 3 of the Subsidies and Countervailing Agreement include export subsidies and local content subsidies. Both these subsidies are intended to directly affect trade and thus are prohibited.

    Actionable subsidies on the other hand are not prohibited per se. If in any case they cause an adverse effect to another member then these subsidies can be challenged through countervailing action or dispute settlement. Adverse effect in in terms of actionable subsidies include Injury caused due to subsidized imports to a domestic country, serious prejudice and nullification or impairment of benefits accruing under GATT 1994.
  3. What are safeguards?

    Safeguards or safeguard actions means that a country can as a trade remedy temporarily restrict the imports of a product on their land if there is a surge in imports that has caused or threaten to cause that country with injury. A surge of imports that can cause a country to take safeguard actions has to be serious and it can be a real increase in the imports of that product or relative increase. The agreement of WTO on Subsidies and Countervailing Measures has set certain guidelines for countries to conduct safeguard investigations and also the criteria to understand the factors to determine the impact of imports on a country and if serious injury that may require safeguard action has occurred or has been threatened or not.

The trade remedies or trade remedial measures as given by WTO through their agreements are highly effective for its member countries to ensure smooth and ethical trade between them and if any country faces an anti-trade practice, they may use such remedial measures against other member countries as a defence mechanism to protect its local industries. India is one such country that is a member of WTO and GATT and has adopted the WTO trade remedy mechanism to protect its trade interests.

These instruments have helped the Indian government in the last ten years to initiate and conduct 393 anti-dumping and countervailing duty cases against 41 countries and out of those investigations, measures have been taken in 282 cases against 33 countries.[4] It can easily be assessed from the given data that India is a major user of trade remedial instruments. The Indian government in 2018 created the Directorate General of Trade Remedies (DGTR) under the Ministry of Commerce and Industry as a single umbrella unit to perform all the functions related to WTO trade remedies.[5] The DGTR performs trade remedial functions in India related to Anti-Dumping, Countervailing Duty and Safeguard.

The adoption of these instruments under one umbrella entity has had a significant impact with regards to the improvement and effectiveness in investigations whereas earlier the investigations weren't that effective as they were being controlled by different entities. In my opinion, post restructuring the trade remedial agency in India has improved with creation of a unified body it has also created various wings like policy cell, training and development cell, litigation cell etc.[6] A helpdesk has also been created which is responsible to address the concerns raised by exporters/firms and other stakeholders. [7]

  1. Briefing note: Anti-dumping, subsidies and safeguards, WORLD TRADE ORGANIZATION (Nov. 2013),
  2. Id.
  3. Id.
  4. Directorate General of Trade Remedies, Limitations in earlier institutional arrangement and policy framework, GOVERNMENT OF INDIA (Jan 2021),
  5. Id.
  6. Directorate General of Trade Remedies, DEPARTMENT OF COMMERCE AND INDUSTRY,
  7. Id.

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