Trending: Call for Papers Volume 4 | Issue 4: International Journal of Advanced Legal Research [ISSN: 2582-7340]



Dumping can be explicated as exporting goods at lower prices than that of the domestic market prices. In the process of dumping the exporter dumps its product in the domestic industry and sells such product at a cheaper price than that of the similar products[1]. dumping is a business practice with an unfair act because products with the same quality should be sold with the equal price wherever they are selling, however, it would be unusual if the prices are quoted same everywhere. In this world, most of the countries are tightly committed to the principle of free and fair trade between nations, which is the very foundation of the multilateral trade order established by World Trade Organization. While a remarkable step has been initiated by most of the countries especially developing country like India towards setting up a free trade mechanism a long with the elimination of Quantitative Barriers on imports as practice of fair trade needs to be made certain. Owing to the need, countervailing of anti- subsidy, anti-dumping and related preventive measures have been initiated in the past.

All these measures fall under the category of trade remedies, which the indigenous organization could benefit from provided the basic criteria is fulfilled under law. The Indian government has requiredinstitutional and legal regime for governing these steps. However, different functional aspects including legalthat were included in these schemes had to be understood in the right view point.Unanticipated safeguard steps fall under categories of antidumping, countervailing and safeguard measures.

This can be evidenced by the advantage theory proposed by the famous economist David Ricardo. This is a famous economic theory primarily focused on the possible and important gains from trade for individuals, firms, or nations with different factors process. With respect to this theory in an economic model, an industry or a country usually has a comparative benefit over another industry or country while producing a particular good and in case a country is capable of producing that particular good at relatively a lower price, that is at a relative lower marginal price before trading, it is a good opportunity. When the theory of comparative benefit is considered, it is obtained that under a trade free from barriers; the country shall produce more goods and consume little of the same kind, which has a comparative advantage for the country[2].

The comparative advantage theory was advanced by David Ricardo in the year 1817. The primary objective as why this theory was formulated in order to explain how the countries are engaged in international trade, even though that country is good and efficient in producing the same or similar kind of product at domestic level at cheaper rate than that of which imported from another country.

According to David Ricardo that if two countries capable of producing the same products and when they engage in free trade, then both of the countries will increase its overall usage and utilization of the product by exporting the goods for which it has a comparative benefit over the product while importing the different product[3]. The classical theory of comparative benefit was evolved by David Ricardo and it is regarded as one of the most influential theory in the stream of international trade and economics, Ricardo’s theory shows that comparative advantage rather than absolute advantage is main cause for much of international trade.

The concept of free trade has originated mainly from the period of industrialization. Industrialization is the phase of social and economic reorientation that transformed a human being from an agrarian society into an industrial one. It is a part of an extensive modernization process, where economic development and social change are related to technological creativity, in particular with the development and production   of   large-scale metallurgy    and    energy processes.    The    purpose of manufacturing is to intensify the organization of an economy. A change in terms of philosophy is observed where people develop a different attitude towards their perception about nature, and a process of universal sociological rationalization is brought about by Industrialization. A vital concept of Laissez-faire has been discovered during the evolving phase of industrialization. Laissez-faire has unfolded to be part of an economic environment in which the transactions by private firms or organizations are free from tariffs, subsidies, invasive restrictions imposed by the government, with effective rules and regulations to guard property rights[4]. The term laissez-faire is a French word and means ‘let them do’.

Laissez-faire as a system of thought rests on the following:

  • The basic unit of society is the individual.
  • Corporations are creatures of the State
  • Harmonious and self-regulating is the physical order of nature.
  • The individual has a natural right to freedom.

Thus, in one way we can say that industrialization has become first step initiated by the countries to promote industry-based living thereby promoting the economy of the country. But the initial actions of industrialization have only conferred to the developing countries which has led to the exploitation of underdeveloped and developing countries by the developed countries. In a broader way the concept of anti-dumping as a protective measure has got its importance by the New International Economic Order proposed by United Nations.

The New International Economic Order (NIEO) contained series of propositions that were presented by some developing countries during the 1970s via the United Nations Conference on Trade and Development to stimulate their interests by refining their terms of trade, escalating promotion assistance, reduction in tariff rates, and other means. It implied to be a emendation of the international economic system in the approbation of Third World countries, after taking the place of Bretton Woods system, and the countries that created it, especially the U.S. had been at an advantageous position.

The main principles of NIEO were:

  • The right to control and regulate the operations of multinational corporations to the developing countries must be provided that operate in their territory.
  • There must be freedom to nationalize or seize foreign property on the prerequisites that are in their favor.
  • There must be freedom to establish associations of primary commodities manufacturers that are close to OPEC. This right must be acknowledged by other states and must abstain from making military, economic, or political decisions.
  • International trade should be based on the need to ensure stable, equitable, and remunerative prices for raw material, generalized non-reciprocal and non- discriminatory tariff preferences, as well as transfer of technology to developing countries; and should provide economic and technical assistance without any strings attached.

This new International Economic order thus helped the countries especially the third world that is the then developing and underdeveloped countries to increase the productivity and to establish a stable economic position. Efficiency is a vital factor as it determines the production performance of firms and nations. Escalating national productivity can increase the standards of living as increased income develops people’s power to consume goods and services, recreate, progress in education and housing and endow to environmental and social programs. To be more profitable, productivity growth plays a vital role in business[5].

Currently the International Development Community (World Bank, Organization for Economic Co-Operation and Development (OECD), many United Nations departments, and some other organizations endorses development policies like Co-Operation amongst third world communities. A few members of the Economic communities don’t believe in recognizing that contemporary industrialization policies are sufficient to be of any advantage in the long term to the global south which implies to the Third World countries. The main myth is that only inefficient local industries would be created that would be incompetent in the free-trade commanding political order.

[1] Aradhna Aggarwal, “Anti-Dumping Law and Practice: An Indian Perspective”, Indian Council for Research on International Economic Relations, New Delhi April,2002,P.23.

[2] AvinashDixit& Victor Norman, “Theory of International Trade: A Dual, General EquilibriumApproach”,CambridgeUniversityPress,1980,p. 2.

[3] WilliamJ&Baumoland, “AlanS. Binder, ‘Economics: PrinciplesandPolicyCengageLearning”, CengageLearning 2011,p.50.

[4] GaspardToufick-A, “political Economy of Lebanon; The limits of Laissezfaire”, BostonBrillPublishers,2004.P.145.

[5] SheelaRai,“Anti-DumpingMeasuresUnderGATT/WTO”,EasternBook  India  Company,2004,P.129.