How Efficient Anti-Dumping Legislation will Work

The Government of Georgia has already approved anti-dumping legislation, and the bill will come into force on January 1, 2020.

The goal of the legislation is to protect domestic entrepreneurs and industry from price dumping. To this end, we should identify the correlation between the dumping of imports and domestic industrial losses. If the research reveals such a relationship between these two factors, anti-dumping measures will be carried out against the offending foreign companies.

“The new law will protect domestic production from dumping imports, and promote domestic business”, as noted by officials from the Economy Ministry. 

According to the bill, the Competition Agency will assume control of the field, and it will investigate each charge of dumping imports. At the same time, it is the government’s responsibility to take regarding anti-dumping measures based on the conclusions of the Competition Agency. The administration of tariffs as part of antidumping measures will be carried out by the Revenue Service. 

Under the law, bodies that dump imports in Georgia are obliged to remunerate losses to domestic industry, and this component will increase budget income. 

“The efficiency of the employment of antidumping legislation will depend on how the Competition Agency acts,” Levan Silagava, head of the Association of Entrepreneurs noted. Legislation alone cannot  bring benefits if the authorities do not show due readiness to enforce the legislation. 

This law raises many questions, namely regarding whether it will limit imports, Silagava said. 

“I would like to note that this is a high-level and high-quality law.  All business associations have participated in these discussions, and we have developed this law through our joint efforts,” Silagava noted. 

The law protects the rights and interests of both parties (importers and domestic businessmen). For example, it is necessary for the whole industry, not just one company, to apply to the Competition Agency to institute investigation. However, certain exceptions will work, anyway.

Namely, if one company with a significant market share is entitled to apply to the Competition Agency regarding dumping tariffs, he noted.

“The law has many procedures to protect importers. When the government sees that a specific field faces problems and specific fields submit the relevant applications, the government is entitled to take decision regarding the cessation of certain imports and launching an investigation. At the same time, the government is entitled to warn importers and set a certain equilibrium. If the investigation process does not provide justification for an anti-dumping tariff  , the importer will receive compensation,” Silagava said. 

In response to the question of how efficiently the Competition Agency will work, Silagava noted that this is a new law, and there are certain risks in terms of the efficiency of the investigation process. Therefore, before the law enforcement, the Competition Agency staff will be properly trained, he said. 

Will the antidumping law raise prices on Georgian products? Silagava explains that this may happen at the first stage, over a short-term period. 
As a reminder, the Parliament of Georgia finished working on a bill about the introduction of Anti-dumping Measures in Trade in 2015, but in that period, the process was halted. In 2017-2018, the government did not submit an antidumping bill to the Parliament. In that period, Zurab Uchumbegashvili told Kommersant that “the economic team of the previous authorities blocked anti-dumping legislation.” 

Amid the absence of antidumping legislation, specific companies or business bodies frequently talk about losses from the excessive inflow of low-quality and low-cost products. Sometimes, these losses lead companies to bankruptcy and so on. As a result, many citizens lose their work.

For example, at the end of 2018, the Rustavi Metallurgical Plant halted one furnace, and the plant plans to stop another furnace in July 2019 as a result of failed competition with dumping from Iran. The plant management has been talking about problems resulting from the dumping tariffs for several months. The authorities protract the problem’s resolution, and 2000 people may lose their jobs. 

HeidelbergCement has also talked about the necessity of introducing anti-dumping legislation. This company asserts that low-quality Iranian product penetrates Georgian market without a dumping tariffs.