Anti-Injurious Economic Practices
Our Goal…
Protecting Local Markets from Harmful Practices in International Trade
The Ministry of Economy addresses harmful practices in international trade such as dumped or subsidised imports, and takes protective and preventive measures against the increase in such imports. It confronts this challenge by relying on laws and legislations, studying issues and complaints related to all practices harmful to the country's economy, and providing data to ensure the protection of emerging industries.
Ministrial Directives
Why are…
Dumping and Subsidies Harmful to International Trade
Dumping and subsidies are classified as harmful and illegal as they are anti-competitive practices. Hence, anti-dumping duties and countervailing measures are imposed against subsidies in order to address and prevent unfair competition and establish a fair competition between imported products and national products. Preventive measures against the increase in imports are considered a harmless and legitimate practice. When large quantities of goods are imported, threatening to cause serious harm to the national industry, such preventive measures aim to provide opportunity and time for the national industry to restructure and develop its capabilities to become more competitive with imported products.
How Do We Determine
Dumping and its Harmful Effects on National Economy
Dumping is referred to the export of a product to the UAE market at an export price lower than the normal value of the product within the market of the exporting country. The occurrence of dumping is determined based on three main elements – the normal value, the export price and the margin of dumping, which are as follows:
The price of the product at issue, in the ordinary course of trade, when destined for consumption in the exporting country market. In certain circumstances, for example, when there are no sales in the domestic market, it may not be possible to determine normal value on this basis, if the following appears:
- There are no domestic sales of similar product intended for consumption in the local market of the export country.
- In the event of an association, partnership agreements, compensation or other relevant agreements between the parties.
- If the volume of domestic sales of similar product destined for consumption in the domestic market of the export country is less than five percent (5%) of the sales of the export of this product to the member states.
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In cases where the sales of similar products are not in the normal trade stream in the domestic market of the export country or where such sales do not allow for a valid comparison due to the status of the private market or the decrease in the volume of sales in the domestic market of the export country, the normal value is calculated according to the following alternative methods:
- The cost of production in the country of origin plus an appropriate amount of sales costs, administrative and general expenses and an appropriate profit margin, or
- The price of exporting a similar product in the normal course of trade to a suitable third country, with the appropriate price.
The amount paid or to be paid to the product when it is sold from the exporting country to the import country market. In cases where there is no price for exporting the product to the import country, or if the export price is not trusted because there is an association or cooperation agreement between the exporter and the importer or a third party, the export price may be calculated on the basis of the following alternative methods:
- The sale price of the product under investigation for the first independent buyer, or,
- If these products are not resold to an independent buyer or if they are not resold as they were supplied, the export price is determined on any other appropriate basis.
Margin of dumping is the amount determined by subtracting the weighted average export price of the goods from the weighted average normal value of the goods. It is calculated on the basis of a fair comparison between the export price and the normal value that takes place at the same level of trade, normally the ex-factory level, and is carried out for sales, made as close to the same time period as possible, taking into account the necessary adjustments made to the differences affecting the comparability of prices, including differences in the terms and method of sale, material specifications, supply fees, taxes, quantities, commercial level and any other differences required by the parties of interest or relationship and prove that they affect prices and price susceptibility.
The presence of the margin of dumping during the investigation period is usually determined on the basis of the following methods:
- Comparison between the weighted average normal value and the weighted average export price for all exports of the product under investigation towards the import country market, or
- Comparison between the normal value and export price on the basis of an individual business transaction versus another.
- Comparison between the normal value set on the basis of the weighted average price of individual exports towards the import country market, if it is confirmed that there is a model of export prices that varies considerably among different buyers, regions or time periods, and that an explanation for the adoption of the abovementioned methods cannot adequately reflect the total margin of dumping practised.
- The margin of dumping is determined on the basis of the amount of increase in normal value over the export price, and the dumping margin for each known source or product of the product under investigation must be calculated separately.
- If the margin of dumping is less than two percent (2%) of the export price, it is considered a low margin resulting in the immediate termination of the investigation without the imposition of anti-dumping duties.
It is not enough to prove the practice of dumping to impose an anti-dumping fee against dumped imports, but the investigation must prove that three fundamental conditions have been met:
- The practice of dumping.
- Material damage to the national industry, threat of it, or material delay in establishing a national industry.
- A causal relationship between the dumped imports and the material damage to the national industry.
Why are...
Subsidies Harmful to National Economy
Subsidies are usually a financial contribution from the government of the exporting country or from a public authority in it and results in a benefit to its recipients. Considering a subsidy to be a harmful practice for the UAE national economy is determined by the presence of three elements:
Government or Any Public Body Within the Territory of a Member
A government is the ruling authority of all public authorities in the state, and thus, it is represented in ministries, government departments, and government agencies and institutions.
Financial Contribution
Financial contribution takes many forms, the most important of which are:
- A direct or potential transfer of funds (e.g., grants, loans, equity injection or loan guarantees).
- Government revenues (which are otherwise due) foregone or not collected (e.g., tax credits).
- Government provision of goods and services (other than general infrastructure).
- Government purchase of goods.
- Payments made by financing or pledging to a private body.
Benefit
A benefit obtained by the recipient of government intervention support, which can be the difference between the financial obligations that the recipients would have incurred without the government intervention and the financial obligations they incur in real time with the government intervention. Therefore, loans provided by government banks are not considered a benefit, unless the loan interest paid by the recipients is lower than the amounts paid by them to repay loans issued by non-governmental banks.
The existence of the subsidy is not sufficient to impose compensatory measures; it must be in the form of the designated subsidy as follows:
- Support provided to a specific facility or group of establishments.
- Support provided to an industrial sector or a specific group of industrial sectors.
- Support provided to a specific group of establishments located in a specific geographical area.
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Prohibited support, which takes one of the following two forms:
- The subsidy that is legally or actually dependent on the level of export performance, whether this condition is singular or as one of several other conditions.
- The subsidy that depends on the use of local goods instead of imported ones, whether this condition is singular or within several conditions.
In order to target ad hoc support with compensatory measures, three essential conditions must be met:
- The support shall be an ad hoc support.
- Subsidised imports result in material damage to the national industry that produces goods similar to the imported products.
- The existence of a causal relation between the subsidised imports and the material damage to the national industry
Preventive Measures to Counter Increase in Imports
Preventive measures are imposed when a product is imported into the UAE market in large quantities, whether in absolute or relative terms, in relation to local production, in a way that causes serious harm or threats to the national industry that produces a similar or directly competitive product.
The conditions for imposing preventive measures against the increase in imports are:
- That there is an absolute and relative increase in imports in relation to national production: the increase in imports is estimated in absolute terms by following up on the imports of the product under investigation over a period of time. It generally ranges between three to five years prior to the date of the start of the investigation. The increase in imports is also estimated relatively in relation to the national production in the country of import by estimating the percentage. Imports of the product under investigation, in relation to the volume of production of the similar or directly competitive product during a period of time, generally range from three to five years and precede the date of the start of the investigation.
- The occurrence of a serious damage or the threat of its occurrence to the national industry, and the occurrence of serious damage to the national industry is determined through an objective research in all economic and financial indicators of the industry, including the actual or potential decline in sales, profits, production, market share, productivity or return on investment; or the energy utilised and the factors affecting prices in the national market, and the actual and potential negative effects on cash flow, inventory, employment, investment, wages, growth and the ability to increase capital.
- The existence of a causal relationship between the increase in imports and the serious damage: The causal relationship is to prove the existence of a correlation, cause and effect relationship between the increase in imports, and the serious damage to the national industry, so that imports are the main cause of harm to the national industry. Thus, it is ensured that the damages to the national industry are caused by the increase in imports and that they are not due to other causes.
