The mandatory application of Lesser Duty Rule debate in light of the India’s suggestion before WTO

The lesser duty principle provides that if the injury to the domestic industry can be offset by a duty which is less than the dumping margin then the same may be applied. For the purpose, injury margin is also calculated globally by those jurisdictions who have adopted lesser duty law. In India, injury margin is the difference between the non‐injurious price i.e. the price which the domestic industry is expected to have charged under the ordinary circumstances to earn reasonable profits and the landed value of the dumped imports in India. This article analyses the WTO Rule as it is in respect of lesser duty rule and the persisting communication by India for the mandatory application of this Rule at WTO.

Presently Lesser duty rule is an option for various WTO members and draws inference from Article 9.1 of the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (hereinafter referred to as Anti‐Dumping Agreement). Many jurisdictions have applied this even when it is not mandatory. India has requested its application in cases such as US‐India plate and has been in favour of this rule. In fact India circulated a proposal before the WTO for amendment of Article 9.1 to the extent that the ‘anti‐dumping duty shall not exceed the margin of dumping or injury margin whichever is lower.’

In response to the India’s communication on lesser duty rule, many other communications have flown between the members and the WTO. Significant among these are the USA’s communication and Brazil’s Communication. The USA Communication because it completely opposes application of the lesser duty rule and the Brazil’s Communication because it takes into consideration the concerns raised by the USA and countering them highlights the actual advantages of the lesser duty rule mandatory application.

Whatever the contrary views may be, it is evident that benefits of lesser duty rule far outweigh the drawbacks. The very fact that a majority of countries have readily accepted and are applying it for several years even when it’s not mandatory indicates the success of the provision.

About Author:
Ms. Hansa Sinha
Legal Associate, TPM Consultants