Extent of Protection via Anti-Dumping Law: A Case Study of the Vitamin C Industry in India
Journal of World Trade, Vol. 39, No. 5, 2005
Posted: 7 Aug 2008
Date Written: 2005
We look at the trade effects of antidumping (AD) policy in the Vitamin C industry in India. We find that AD is very effective in restricting imports from the countries that are named to be dumping. However, we also find a strong evidence of trade diversion: imports are diverted away from the named source country to the nonnamed countries. More over, after the imposition of AD duties on the named countries there is an influx of new entrants. Countries that were not supplying Vitamin C to India earlier now become an important source of imports. Our study highlights how the entry of alternate foreign suppliers (new entrants) significantly mitigates the restrictive effect of AD Law. It has been suggested in the literature (Prusa (1996)) that multiple petition filing or using the cumulation amendment is one way to curb import diversion. However, our study shows that the entry of new foreign suppliers could lend such a solution ineffective, as these foreign suppliers enter the market only after the petition has been filed. This case study also highlights the possibility of abuse of the AD law by the domestic industry. One way to mitigate abuse is for national authorities to incorporate the views of the importing industry in its decision making process.
Keywords: Antidumping, Import Diversion, India, Vitamin C
JEL Classification: F1
Suggested Citation: Suggested Citation