Keywords

4.1 Introduction

Trade-war is the application of trade remedy measures (Anti-dumping, Countervailing, and Safeguard) to target the unfair imports growth of trading partners. Though gained momentum in recent years, it is not a novel phenomenon in international trade. Unarguably, Anti-dumping measures have remained the most popular trade remedies after the formalisation of the General Agreement on Tariffs and Trade in 1947. The promulgation of Anti-dumping as a legislation began with Canada in 1904. Later, New Zealand joined in 1905, Australia in 1906, the USA in 1916, and UK in 1921 Viner (1923). Due to the introduction of amendments to AD law in 1974 the USA, European Union, Australia, and Canada were the primary users of anti-dumping in the 1980–1990s with the USA only accounting for 28% of these cases Aggarwal (2003). The developing countries initiated only 11 cases of anti-dumping throughout the 1980s. The reason was that they maintained high levels of tariffs, quotas, and restrictive import licenses that made anti-dumping instrument superfluous. With the creation of the World Trade Organization in 1995 and subsequent trade liberalisation, the anti-dumping tool usage gained prominence amongst developing member countries to protect their domestic industries in the face of severe competition due to increased market access Moore & Zanardi (2009). The WTO provision on anti-dumping allows the member countries to protect their domestic industries from the injuries caused by foreign competitors by the virtue of the Article VI Bown (2008).As a result, the developing countries such as Brazil, China, and India have increasingly started to use these measures. India is the founding member of the General Agreement on Tariffs and Trade and the World Trade Organisation. It was neither a user of the anti-dumping mechanism nor affected by anti-dumping actions until the 1990s. However, after the liberalisation of the economy in 1991, India has become a significant user of the anti-dumping Raju(2008).

According to WTO reports (2015), India emerged as the most massive user of the anti-dumping tool against all its trading partners from the period of 1995–2015. From the inception of the WTO until 2016, India accounted for 839 of the anti-dumping initiations out of 5286, i.e., 16% of the total, and it leads the tally of the traditional users such as the USA (606) and European Union (493) as well as new users Argentina (403) and Brazil (383) in filling anti-dumping petitions Blonigen & Prusa (2016). Regarding the final measures, it also leads with the highest success rate, i.e., in 74% of anti-dumping cases, resulted in final duties.

Table 4.1 lists top 10 countries that were targets of the Indian anti-dumping cases in the period 1995–2015. Besides traditional users, India’s anti-dumping cases frequently targeted Asian region countries such as China, Republic of Korea, Taiwan, and ASEAN countries. Notably, India has imposed the highest no. of cases against China which is (23%) of the total Wu (2012). Other targets have been European Union (7.4%), Korea (7.4%), Taiwan (7.3%), USA (5.3%), Thailand (5.1%), and Japan (4.3%).

Table 4.1 India’s top 10 AD targets (1995–2015), World Trade Organisation (2016) AntiDumping Initiations and Measures by Member Countries 
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This article consists of six sections: Introduction is followed by literature review in Sect. 4.2. Section 4.3 presents objectives. Section 4.4 provides a historical overview of India ASEAN-6 trade. Section 4.5 examines the Indian AD case profile against ASEAN-6 industries. Data sources and methodology are discussed in Sect. 4.6. Section 4.7 discusses the empirical results. While, Sect. 4.8 presents conclusion.

4.2 Literature Review

Dumping of the goods denotes a situation when the product is sold in the exporting country at a price lower than its actual selling price in the home market of the exporter Viner (1923). Anti-dumping literature has been contributed by significant number of theoretical and empirical researches. The efficacy of anti-dumping on imports has been tested by analysing imports patterns over time on aggregated and disaggregated form of imports by dumping countries imports. Prusa (1996) examination of U.S. anti-dumping cases between 1980 and 1988 finds that trade destruction effect on named and non-named countries is equally significant for the withdrawn and terminated cases than cases which results in actual duty. Import diversion is substantial from the non-named countries only in cases with higher duties. On the other hand, Prusa (2001) re-examination of the trade effects of U.S. anti-dumping duties on value and quantities of imports for the period (1987–1997) finds that anti-dumping actions reduce the trade from named countries with little trade diversion.

Brenton's (2001) examination of EU anti-dumping cases finds the weak trade diversion. In contrast, Konings et al. (2001) study for EU anti-dumping cases for 1985–1990 finds significant import diversion from domestic EU market. In contrast to previous studies, his results underestimate the impact of EU anti-dumping. Many studies examine the use of developing countries anti-dumping policy. Some of these studies are noteworthy.

An important study by Kim and Kang (2017) empirically estimates the effect of anti-dumping duties levied by ASEAN countries for the period 2000–2010 using the ordinary least square regression. The regression estimates indicates that duties depress the trade from named and non-named countries but remain ambiguous about trade diversion from non-named countries. Although India has been the highest user of anti-dumping duties, there are very few empirical studies on India‘s anti-dumping policy.

Ganguli (2008) estimates the effects of Indian anti-dumping duties on all its trading partners for the entire period of (1992–2002). The study finds that AD duties distort the trade equivalently from the named as well as non-named countries. Concerning the impact of duties on non-named countries the study results claims insignificant trade diversion. Overall, his study finds the smaller trade effects due to the biased estimation procedure.

Aggarwal (2010) analysis of Indian anti-dumping cases for the period (1994–2001) finds that anti-dumping duties reduce the imports (value and volume) from named as well as non-named countries followed by an increase in the domestic prices. The study also finds weak evidence for trade diversion from non-named countries. The study further analysed the differential trade effects of anti-dumping duty on developed and developing countries and for market vs. non-market economies. The specification results point out that trade destruction is more severe for developing countries imports than developed countries. The result follows due to the insignificant decline in imports value and volume from both named and non-named developed countries in comparison to the developing countries.

Vandenbussche and Viegelahn (2013) examines the impact of Indian anti-dumping measures against Chinese imports during the great recession 2009–2010 by examining 13 anti-dumping cases. The study finds significant trade depressing effect of duties on imports from China. All of the studies find significant trade diversion due to the anti-dumping policy which makes anti-dumping policy highly successful in protecting domestic industries.

While enormous academic literature is existent that examine the trade effects of the anti-dumping on imports from all the countries, relatively few studies estimated the trade effects of anti-dumping actions against ASEAN Countries. Mah (1999) analysis of the U.S. anti-dumping cases against imports from six ASEAN countries briefly examines the trade pattern from the selected ASEAN countries and highlights the significance of trade balance and prominent industry role in initiating the anti-dumping cases. The study finds that U.S. ITC dumping margin criteria leads to the imposition of the highest number of duties against these countries. Cuyvers and Dumont (2005) empirical estimation for the impact of 12 EU anti-dumping cases on ASEAN countries imports value and volume for 1991–2001. The regression estimates point the significant effect of duties in reducing the trade and significant trade diversion from EU imports than non-EU imports. Despite the existence of vast literature on the trade effect of anti-dumping duties, the impact of developing countries anti-dumping measures on imports from ASEAN countries is less studied. The present study attempts to counter this limitation by examining the effect of anti-dumping measures on the fourth largest trade partner of India, i.e., ASEAN countries.

The lack of current academic literature concerning the broad effect of these anti-dumping measures on India‘s trade potential with this region has driven present empirical analysis. Notably, India has initiated 133 cases against these six countries which are 18% of the total cases. Further, this study also aims to examine the trade diversion from the countries not named.

4.3 Objective

The present study aims for empirical examination of India’s Anti-dumping cases on ASEAN-6 imports for the period 1995–2015.

4.4 India-ASEAN trade

The Association of South East Asian Nation (ASEAN) is a regional inter-governmental organization, created on eighth August 1967 by the five countries Indonesia, Malaysia, Philippines, Singapore, and Thailand who signed the ASEAN declaration. Three Members such as Brunei (1985), Vietnam (1995), and Laos and Myanmar (1997) joined lately. ASEAN region has been an important trading partner after the adoption of the “Look East Policy” by India in 1991 Ahmed (2010). Formerly, India and ASEAN signed a framework Agreement—the Comprehensive Economic Cooperation Agreement (CECA)—on 8 October 2003. Finally, India and ASEAN signed the regional trade agreement in goods called the ASEAN–India Free Trade Area (AIFTA) on January 2010 to facilitate the free trade in goods Ministry of Commerce and Industry of India (2018(c)). India‘s partnership with ASEAN-4, i.e., Indonesia, Malaysia, Singapore, and Thailand are more significant than other countries from the ASEAN region. With the implementation of the Free trade area, these countries benefitted from the tariff concessions in large import categories.

Although, ASEAN is an important trading partner for India. The six-member countries (Indonesia, Malaysia, Thailand, Singapore, Philippines, and Vietnam) from this region have experienced rapid economic growth and development. In the year 2015, ASEAN’s export to India remains 39100.8 million U.S. dollars and Imports at 19452.8 million U.S. dollars and total trade at 58553.5 million U.S. dollars. In terms of (percent share of total) exports from ASEAN stands at 3.3% and imports by ASEAN stands at 1.8% with positive trade balance of 2.8%. ASEAN India trade have grown steadily except east Asian crisis period. Surprisingly, ASEAN-6 accounts more than 90% of India‘s trade with ASEAN countries.

Figure 4.1 presents India‘s trade with ASEAN-6 countries. Thus, in the year 2015 these countries export share grown at 9.9% while import shares have grown at 8.9%. This pattern of increase in ASEAN-6 exports shares more than imports shares points the negative trade balance with these countries.

Fig. 4.1
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India’s export and import share with ASEAN-6 Ministry of Commerce & Industry of India (2018(b)) 

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4.5 Indian AD Cases Against ASEAN-6

India has strategically applied anti-dumping duties against four ASEAN countries aggressively. Although the Philippines and Vietnam have been relatively safer in comparison, they have become the target of India’s anti-dumping actions in recent years. Specifically, India has targeted Thailand and Indonesia with the highest number of anti-dumping cases initiated against them, followed by Malaysia in third place, and Singapore at the fourth place. The Indian anti-dumping measures against the ASEAN during the period 1995–2015 elaborate Indian AD policy features. Indian anti-dumping cases target those ASEAN countries which hold the more substantial trade surpluses with India.

Table 4.2 shows that how many of 133 cases initiated against ASEAN countries resulted in final duties and how many did not. In (86%) of cases duties were imposed, and (13%) did not. However, since the initiation of a case itself can influence the value and volume of imports from named countries, these cases are still included in the data for analysis.

Table 4.2 Summary of AD case against ASEAN-6 imports, Ministry of Commerce and Industry of India (2018(a))
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Figure 4.2 shows the time trend of India’s anti-dumping measures against six ASEAN countries. There is a rising stream of anti-dumping cases against Thailand and Indonesia from the 1995s, while against Singapore and Malaysia comparatively lesser no. of anti-dumping cases. From 1995 to 2000, the anti-dumping cases against ASEAN concentrated on three countries: Indonesia (07) followed by Thailand (06) and Malaysia (03). These three countries accounted for more than 90% share.

Fig. 4.2
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Trend of India‘s anti-dumping cases against ASEAN 6 imports

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While during 2000–2006, this trend shifted towards Singapore (20), Thailand (12), Indonesia (11), and Malaysia (08), respectively, Fig. 4.2. The number of anti-dumping initiations against ASEAN countries increased significantly during 2007–2015 following the global financial crisis in 2008 due to cases against the Philippines (2) and Vietnam (9). During this period India’s anti-dumping cases increasingly targeted Thailand (21), Malaysia (16), Indonesia (11), and Singapore (4).

During the same period 17 anti-dumping cases are initiated by these countries against India. Indonesia initiated 14 cases, Thailand initiated two cases, and Malaysia launched one case. While no case is initiated by the Philippines, Singapore, and Vietnam leaving no cause for India‘s retaliation against these countries.

In Table 4.3, I report the pattern of anti-dumping cases initiation by domestic Indian industries against ASEAN-6 imports. Clearly, Chemical industry leads with (37%) of the initiations, followed by Machinery and Mechanical appliances (19%), textiles (18%), Metals (13%), and Plastics (13%). In fact, out of these 133 cases initiated by India, 84% of cases have been filled by these five industries. This situation is closely related to the current world economic market structure where the Indian industries such as Chemicals, Plastics, and machinery have to compete with ever increasing imported products (Choi and Kim 2014).

Table 4.3 AD case by industries against ASEAN-6 (1995–2015)Ministry of Commerce and Industry of India (2018(a))
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Chemical industry initiated the highest no. of cases against Singapore followed by Thailand, Indonesia, and Malaysia. Machinery and mechanical industry launched the highest number of cases against Malaysia followed by Thailand, the Philippines, and Singapore.

Interestingly, More than 50 percent of antidumping cases against Indonesia and Malaysia concentrated in two industries: Chemicals, Machinery and mechanical. For Thailand, (40%) of the cases are from these two industries. While for Singapore, more than (70%) of the cases are from these two industries only. For the Philippines (30%) and Vietnam (50%) of the cases are from these two industries. Bagchi et al. (2015) that reported the direct relationship between the growth of the major manufacturing industry India and filling of anti-dumping cases by the respective industry groups.

4.6 Data

Global Anti-dumping Database of the WTO covers all the Anti-dumping cases initiated by India from 1992 to 2015. Further, Indian AD authority viz. Directorate general of trade remedies analysis on these cases serves to identify the cases outcomes. Imports volume based on International Trade Classification of the Harmonised System at the six-digit classification level has been used from United Nation Comtrade for the period 1995–2015.

4.6.1 Methodology

In order to estimate the trade effect of Anti-dumping measures on imports I specified an empirical model of the form

$$ \ln \left({x}_i,{t}_j\right)=\alpha +{\beta}_0\ln \left({x}_{i,t-1}\right)+{\beta}_1\ln \left({x}_{i,t-1}\right)/\ln \left({x}_{i,-2}\right)+{\beta}_2\ln \left({\mathrm{Duty}}_i\right)+{\beta}_3\left(\mathrm{Num}\ \mathrm{Named}\right)+{\beta}_4\left({td}_j\right)+{\beta}_5\left({td}_j\ast {\mathrm{dec}}_i\right)+{\varepsilon}_i. $$

The variable ln(xi, tj) denotes the volume of the imported good from named countries at time tj, where (j = −2, −1, 0, 1, 2, 3, 4, 5). ln(xi, t−1) is the volume of the imported good from named countries 1 year before anti-dumping case initiation. The ratio ln(xi, t−1)/ln(xi, t−2) specifies change in the volume of the imported good from named countries one and 2 years before the anti-dumping case initiation. Dutyi denotes the anti-dumping duty on each named country imports volume. Num Named is the dummy variable. It is one if the three or more countries are named in a particular case and zero, otherwise. tdj is a time dummy variable. It is one in the year, (j = 0) and zeroes in all other years. Dec is also a dummy variable. Its value is one if duty is positive and zero otherwise.

Similar model is employed to estimate the trade effect of anti-dumping measures for the imports volume from non-named countries which comprises all those countries that are not named in the particular cases (viz. remaining ASEAN and Non-ASEAN) countries. Finally, estimation for all trading countries overall is also estimated.

Each AD case initiated against the ASEAN-6 country’s imports for the 20-year period generated panel data. Information on India’s AD cases decision regarding affirmative, negative and withdrawn against ASEAN-6 is from Global Anti-dumping Database. Taking the log of the imports volume from named and non-named countries the estimation is performed using pooled OLS. Although it is not a best measure for the estimation but due to the lack of sufficient instruments and endogeneity problem in variables, I have chosen this method Woolridge (2002).

4.7 Empirical Results

Table 4.4 presents the empirical results and I to interpret the coefficients. The first column shows the impact on named ASEAN-6 countries imports in each case. The second column shows the impact on named non-named countries imports. And the third column shows the impact on overall countries imports due to Indian AD cases initiation on ASEAN imports.

Table 4.4 Results of AD cases against named ASEAN-6 imports vs. not-named ASEAN and other vs. all countries
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The coefficient for the one-year lagged import volume of imported good before the case initiation is positive and statistically significant (at 1% level) for named ASEAN countries as shown in first row Table 4.4. For non-named countries and overall the coefficient remains positive and insignificant.

The ratio of one- and two-year lagged import volume before the AD case initiation is positive and statistically significant at (5% level) for named ASEAN countries Table 4.4. It implies that (10%) change in the past import volume increases the current import volume by more than (55%) during the investigation period. For non-named countries, this ratio explains large variations in current import volume. For overall countries, the coefficient is negative and insignificant which means a change in past import volume deters the volume of imported good from named and non-named countries.

The coefficient for duty is negative and significant (at 1% level). i.e., (10%) increase in duty cause the imports volume to decline by more than 2% for named ASEAN countries as shown in third row of Table 4.4. For non-named countries, the coefficient is negative and significant (at 1% level), i.e., duty also restricts the trade from the countries not named in the case. For overall countries, the coefficient is negative and significant. Moreover, the degree of impact is higher for non-named and overall countries than named countries.

  • The coefficient for the number of countries named is negative and significant as expected (at 5% level) for named ASEAN countries as shown in fourth row of Table 4.4. It implies that opening a case against more than one country deters the imports volume more than the number of the country named is one. On the other hand, for non-named countries and overall the coefficient is positive and significant (at 5% level), i.e., a persistent increase in the volume of imports from the non-named and overall.

  • The coefficients of the interactive time dummy and duty in the year 1, 2, and 3 are negative, while the coefficients of the year 0 and 4 are positive for named ASEAN countries as shown in (fifth, sixth, …, eighth, ninth) rows of Table 4.4. It implies that the volume of imports from named countries increases during initiation year then it falls continuously during 3 years with duty. The value is significant for the second year at (5% level) and insignificant for all the years. The effect of duty starts fading in the fourth year, and import value increases during the fourth year. For non-named ASEAN, the coefficients of the years (j = 0,1,3 and 4) are negative and insignificant except the year (j = 2). It implies that although, import volume from countries non-named decreases due to the duties but the decline in volume is insignificant Table 4.4. On comparing the extent of reduction in imports value from named which is (−0.040) and non-named (−0.016) in the year (j = 1). It is quite evident that named country imports mostly feel the impact of duties due to a more significant decline in their import volume in comparison to non-named import volume. For overall countries, the coefficients for all the year after the duty are negative and significant at (1% level). It is most significant in the first year which implies that imports volume decreases from named and non-named throughout and suggests the possibility of overall trade depression. From the above analysis, it is evident that duties reduce the trade from named ASEAN countries and non-named countries. However, a positive coefficient for imports volume from non-named countries after duty imposition suggests the possibility of trade diversion from non-named countries imports. The constant term is statistically significant (at 5% level) for the name as well as non-named and insignificant for overall.

4.8 Conclusion

This study examines the efficacy of India’s anti-dumping measures on trade flows from six ASEAN countries for the period 1995–2015. To investigate the impact of anti-dumping measures on import volume of six ASEAN countries the autoregressive model is estimated by regressing imports volume for the 5 years on its past two lagged import volume, size of duty, number of countries named in the cases, time and decision dummies. The paper’s empirical estimation results reveal that ASEAN countries imports volume declines with the usage of anti-dumping duties, and trade has reduced from the named ASEAN countries with insignificant trade diversion from non-named countries, which indicates that the anti-dumping policy has a substantial investigation effect on their imports. Besides, welfare effects of anti-dumping policy on consumers and the domestic industry have not been examined. It is quite apparent that the anti-dumping policy is successful in restricting imports. Indeed, the study gives positive and significant results of trade depression from overall countries. Findings validate that anti-dumping policy restricts the trade from all the countries other than named ASEAN after a lag of 2 years. Therefore, it can be concluded that the anti-dumping policy depresses the trade for all its trading partners per the previous research results. On the other hand, it is also crucial that FTA between India-ASEAN enacted the lesser duty rules and did not prohibit contracting countries to initiate anti-dumping duty (Article 3(8)) of the ASEAN-INDIA FREE TRADE AGREEMENT. This study points for the alternative policy in the place of anti-dumping duty in for improving the overall trade potential with ASEAN-6 region.