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Saturday, 20th April 2024 |
| Have you been dumped on? |
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| Customs duties and barriers are coming down world-wide. These restriced trade but also offered protection against “dumping” of goods on the Irish market from outside the EU. Anti-dumping duties are a weapon that Irish businesses should now be familiar with. |
Protect yourself at all times
Dumping occurs when a company sells goods in one market (eg the EU) at a significantly lower price than that which it sells it on its home market. The effects of dumping can be very destructive. If a foreign business suddenly commences dumping into the Irish market, it can deprive long established Irish businesses of their market overnight, leading to substantial losses, and possibly temporary closure as well.
An affected industry is entitled to ask the European Union to apply anti-dumping duty on the relevant imports in such a case. If a business is to move fast in obtaining the application of anti-dumping duties, they must be familiar with them in advance. The requirements for application of the duties are quite technical. Often, the initiation of an investigation by the EU preparatory to imposing anti-dumping duties will prove sufficient to bring the problem to an end.
Any business person can request the EU to consider imposing anti-dumping duty. However the EU will act only if the request is supported by producers who together account for at least 50% of EU production of the product in question. Usually complaints are made through industry associations.
Industry-wide action
In order that duty be imposed it is necessary that it be proved that the dumping is causing real damage to the EU industry. This can be proved by demonstrating a significant rise in imports, or in the output of the foreign exporter, or a significant reduction in price levels for the product within the EU, or a build up of stocks of the product over-hanging the market. Action will be taken only if the imports amount to at least 3% of the EU market. It is also necessary to prove that the price on the home market is higher than the price at which the product is being dumped into the EU.
If the EU agrees to investigate the matter it will publish a notice in the Official Journal and issue detailed questionnaires to the industry in the EU, and the exporter against whom the complaint has been brought. It may also carry out inspection visits with all of the parties concerned. This will all happen within 30 days of receipt of a complaint (usually). If the complaint is upheld, the anti-dumping duties may be imposed. This cannot occur earlier than 60 days from the making of the complaint. The investigation has to be brought to a conclusion within nine months from the complaint.
The usual reaction by the exporter, where it seems that the complaint is going to be upheld, is to increase their price. In this way they will avoid having the dumping duties imposed. A price increase is more sensible (since it puts the money in their own pocket) rather than accepting the imposition of duties which puts money in the EU Commission’s pocket.
Act first and fast
The reduction in customs duties, which is an ongoing process, means that exporters in areas suffering localised depressions may be tempted to dump their surplus production capacity onto the EU market. EU industries need to be alert to this occurring. It is important that a complaint be made to the EU at the earliest possible date, given that duties will not be imposed for at least 60 days. An industry which “stays close to the market” may often be able to detect intended dumping before the product ever reaches Europe and may get the procedures under way at a very early stage. Familiarity with the procedures is essential at that point in order to get early action by the EU. |
Carol Lynch is Director, Indirect Taxes Department at KPMG.
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| Article appeared in the June 2000 issue.
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