Imposition of Countervailing Duty (CVD) on Stainless Steel Imports

Aspirant IAS Academy
Context: 
  • The Prime Minister’s Office (PMO) has initiated discussions on the potential imposition of countervailing duty (CVD) on stainless steel.
What is Countervailing Duty?
  • Countervailing duty (CVD): These are tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country.
    • CVDs are meant to level the playing field between domestic producers of a product and foreign producers of the same product who can afford to sell it at a lower price because of the subsidy they receive from their government.
  • Provision in WTO: The World Trade Organization (WTO) permits the imposition of countervailing duty by its member countries.
    • Supplementary duty: CVD is imposed as an additional duty besides customs on imported products when such products are given tax concession in the country of their origin.
  • Recommendation: Countervailing measures in India are administered by the Directorate General of Trade Remedies (DGTR), in the Department of Commerce, Ministry of Commerce and Industry.
Directorate General of Trade Remedies (DGTR):
  • DGTR is an attached office of the Department of Commerce, Ministry of Commerce & Industry.
  • The DGTR is a quasi-judicial body that independently undertakes investigations before making its recommendations to the Central Government.
  • It is the single national authority for administering all trade remedial measures including anti-dumping, countervailing duties and safeguard measures.
  • Imposition: The department of commerce suggests anti-dumping duties. However, it is the department of revenue in the finance ministry that acts on the suggestion within three months and puts the duties in place.
Additional Information: Anti-dumping duty: 
  • Against dumping of foreign goods: The government imposes anti-dumping duty on foreign imports when it believes that the goods are being “dumped” through the low pricing in the domestic market.
    • It is imposed to protect local businesses and markets from unfair competition by foreign imports.
  • Exporter-specific and country-specific: The levy of anti-dumping duty is both exporter-specific and country-specific. It extends to the imports from only that country in respect of which dumping has been alleged and the complaint has been filed and duty recommended.
Safeguard Duty
  • It refers to the steps taken by the government of a nation to shield its domestic industries from unfair competition brought on by a surge in imports.
  • Sunset clauses: Safeguard duties must typically contain sunset clauses, and are usually imposed by an importing country against all other nations (as opposed to one specific member country).
 News Source: Live Mint
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