The Cabinet has approved the Safeguards, Anti-Dumping and Countervailing Bill clearing the way for it to be tabled in Parliament. The proposed legislation will allow the government to prevent dumping by imposing additional tariffs on foreign products that are being sold in the domestic market at less than their normal value.

According to the Ministry of Industry, Commerce and Supplies, the new act will also help prevent foreign companies from exporting obsolete and substandard products to the local market.

Nepal does not have legal provisions such as anti-dumping, countervailing or safeguard measures for contingency trade remedies. Countervailing duties are import duties imposed under the rules of the World Trade Organisation to nullify the negative effects of unfairly subsidised imported goods on domestic products. Under safeguard and anti-dumping measures, the country can restrict the import of substandard foreign goods.

Ministry spokesperson Navaraj Dhakal said the government had planned to launch anti-dumping measures as many foreign companies were found to be clearing their old stocks by selling them cheaply. “A number of companies are even selling new products for less than cost in a bid to get a foothold in the market,” said Dhakal. Fruit juices and energy drinks are among the products being sold cheaply to increase the market share, he added.

The new law envisions forming a separate panel to study the actual price of such items. It will assess how much lower prices of foreign products are compared to their prices in the home market. The government will then slap additional tariffs equivalent to the price differential. The anti-dumping duty may differ from one product to another depending upon its impact on domestic production and manufacturing.

As per World Trade Organisation provisions, a member country can impose anti-dumping measures if the imported goods are found to cause damage to domestic products. A country can impose anti-dumping duty only if the dumping margin is more than 2 percent of the actual price of the products.

The new law is expected to trim the country’s import bill for luxury items at a time when it is facing a widening trade deficit. According to Nepal Rastra Bank’s current macroeconomic report of six months, the country’s trade deficit has grown 32.1 percent to Rs678.53 billion. The country’s import bill surged 30.5 percent to Rs723.94 billion over the period.

According to the ministry, it has prepared a list of goods it has targeted for additional tariffs, and will seek the Cabinet’s approval to move ahead. “After the act gets Parliament’s approval, it will provide the legal framework to implement the initiative,” Dhakal said.

Domestic industries, particularly those producing snacks and edible oil, are being priced out of the market by cheap imported products. After the bill becomes law, Dhakal said the ministry would conduct a study of similar other fast selling imported items that are pushing domestic goods out of the market.