Lesser duty rule
Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
The lesser duty rule sets a trade remedy duty at the lower of two margins:
- the dumping margin (for a countervailing duty, the subsidy margin);
- the injury margin, the duty just enough to remove the harm to domestic industry.
The aim is to remove the injury, not to punish the exporter. It keeps duties no higher than needed. India applies this rule.
Example
Say an imported chemical has a dumping margin of 30% but an injury margin of 18%. Under the lesser duty rule, India would impose an 18% anti-dumping duty, not 30%.
Don't confuse with
- Margin of dumping: this is the gap between normal value and export price. It sets the maximum anti-dumping duty. The lesser duty rule may lower the duty below that ceiling.
Related concepts
- Trade remedies
- Dumping
- Margin of dumping
- Anti-dumping duty
- Countervailing duty
- Safeguard duty
- Sunset review
- Export subsidies
- Fisheries subsidies