Price undertaking is an agreement wherein the exporter voluntarily undertakes to revise its prices or to cease exports to the area in question at dumped prices so that the authorities are satisfied that the injurious effect of the dumping is eliminated. The Authority may accept the undertaking after considering the feasibility; resulting in suspension or termination of anti-dumping proceedings.

Benefit of price undertaking lies in the fact that injury caused by dumping to the domestic industry is mitigated at an early stage. At the same time it gives advantage to the exporter to avoid payment of anti-dumping duty as well as to fix price at a reasonable level so as to earn better export realization. Further, the importers and consumers are also saved from uncertainty of the outcome of the proceedings as the import price is fixed. The investigating authorities are also relieved as acceptance of price undertaking shortens the time required for completion of concerned investigations.

However, the authorities can make an offer for price undertaking only after preliminary determination of dumping margin has been made and before the final determination. The authority is able to assess the quantum of dumping and subsequent injury caused only after the final determination. This helps the authority in assessing the price to be offered for undertaking to the exporter. Similarly, the exporter also comes to know the level of dumping and may decide to accept the undertaking offered on this basis. The price undertaking can be offered by the importing authority or responding/participating exporter or a non-participating exporter or importer & consumer. If an investigation results in a negative determination of dumping or injury, the undertaking shall automatically lapse.

Price undertaking is not binding on the exporter. At the same time, the Authorities in the importing country may also reject the offer by exporter if it finds the acceptance impractical. However, the authority has to provide the exporter the reason for rejection of price undertaking.

Shortcomings of Price Undertaking and Remedies – Price undertakings may not be effective in case of rising inflation or differences in exchange rates where currency in the exporting country differs from the tradable currency such as US dollar or Euro. Further, the effect of
undertaking on the on-going transactions or contracts at the time undertaking is being framed cannot be ruled out. The exporter would press for exclusion of such future exports,whereas the authority of the importing country would not agree for such exclusion.

The best way to overcome the above shortcomings is to review the price undertakings onregular intervals and consider average for shorter periods in case of exchange ratefluctuations.

About Author:
CMA Rajkumari Gurubaxani
Senior advisor (Costing)
TPM Consultants Pvt Ltd