MORALITY,SOCIAL WRONG,SOCIAL INEXPEDIENCY AND THE LAW.

 

Why States obey International Law?

It is a questionable attempt to try to define how many states follow and follow not the international law yet this law is at the centre of gravity that binds may laws.  Hart on his book How Nations Behave state clearly that:

   ‘Obedience to international rules as conforming or complying but never obeying’.

He also adds that, almost all nations observe principals and obligations almost all the time .Hence this  whole conception wrestles scholars on the view of theoretical versus practical approach . Hence it’s an impassive idea that most state truly follow these laws among exceptional cases where the state obedience is betrayed.

Primarily, the first reason is on state consent feature. The Latin clause Pacta sunt servanda and Opinio juris sive necessiatis poses that ‘treaties shall be complied with’ and ‘practice must be followed’ brings about the full idea of obedience to treaty based relations by which states enter into binding contracts which leads them to state responsibility to respect, follow and have coherenence to the general principles and rules thus giving out their potion of sovereignty. Some notable examples include the International criminal Courts (2002), World Trade Organizations (1995) for economic benefits and in the East African Region the Anti Terrorism Agreement on human rights. All this must meet the compliance by states.

Secondly, the obedience by way of a joint merger between realism, liberalism and constructivism  in the complete obedience to International relations. This ideology gives birth to key dynamics to the question on obedience of international law.

The focal contention of the realist is that national interests play a vital role hence states are obliged to obey. Liberals append  on their idea of realist by introducing the concept of mutual corporations other than self dependency, hereby states become the first class drivers in the road to guarantee interactions hence they are subjected to obey.

Constuctisim  brings about the idea of common history, ideas ,values cultures among ideological bonds. It is through such International relations theory is generates the basis why state’s obey International laws today.

other reason is consistency, by this I mean the steadfast adherence without deviation to the same principals, thus majority of this rules are followed to the latter. There are incidents where such laws are observed or rather obeyed and the later is opposite of dissimilar instances. Time and time again, there are reports of law breaking and the failures of international law such as invasion of the Afghanistan, Iraq, and Lebanon in pursuit of the hands of the Iraqis. Hence for this exceptional case, the functions and operations of International Law run smoothly. The watchdog is even in circumstances where the state overlooks at its treaty where it’s a party too are just but a few cases because the law is followed. State responsibilities, the law of Diplomatic Immunity and the law of treaties.

Another focal point why most state obey such laws have rapidly evolved over a period of 400 years .The extent to which international responsibilities are followed is no doubt to the question of success development. Over the periodical years the treaty of Westphalia (1648) marked the progress of 30 years of war and the United Nation Charter (1945) which blossomed the International integration framework which acts of sovereignty and non-intervention by Wesllsely. To draw my conclusion on this point, is that states are obliged to obey International law  to maintain a peace and order to progress  and to prevent of an outcry of another war.

Another reason is the principle of fairness, the basic principal of reciprocate that is in simple terms doing good to others so that it may be reversed back, hence states honour their obligations because they expect other state to honour theirs. Herein mutual reliance is relevant. Thomas M Franck in his book Fairness in International Institution, positions that ‘the main reason of state of reliance is the benefits of compelling exceeds the cost’ hence states will obey deep reason why cause obedience is is a result of discourse, reasoning and negotiations.

Finally, states  equals sovereign equals. However much, states are not compatible to same in terms of capacity, wealth, power and fame. This can cause frictions of which states will act differently against a common treaty For example, In Ottawa, Canada a total of 161 states have ratified a treaty against land mining, however Russia, U S and China have polluted this agreement by releasing omissions. Yet they are not partly to the treaty yet it affects them compared to other states. The question of Justice and Fairness has risen as just but exceptional cases.

In summary as stated earlier by Hart that state may conform but not obey is just a theoretical versus practical approach, however still the obedience to International Law carries the weight of the mass. One main point to add is that when states obey there is a solid reason to believe that they have solidarity, communitalisim and above most they feel as if they belong to members of a club.

International law is also known as the law of the nations. As stated by Jeremy Bentham,  it is a collection of rules governing relations among the state .International relations.  International Relations is concerned with relations across boundaries of nation-states. It addresses international political economy, global governance, intercultural relations, national and ethnic identities, foreign policy analysis, development studies, environment, international security, diplomacy, terrorism, media, social movements and more. There are more than three theories that explain international relations this are Liberalism, realism, constitutionalism, Marxism, critical theory among many more.

We live in a international system characterised by liberal world. This idea was  built after the second world war (1939-1945) Liberals exist in the whole idea of anarchy meaning it based on existence of democracy and under this international law it focal points are the economic networks and how institution behaviours and economic connectors connect and to construct institutions that protect individual freedom by limiting and checking on political powers.

International law and agreements based on Daniel Dewdney on liberals ;that such agreements are backed up by international organizations who take a major role in order to create a working system, example the UN gives a voice to the international community both friends and allies and provides a channel of diplomacy.

Secondly International corporations formed by liberal states have which exposes the ‘economic regional communities’ free trade area which makes space for the rise of the International Monetary Fund, and the World Bank, International economic system (NAFTA). Such a situation ensures mutual reliance and coexistence .This builds up economic benefits and reduces state conflict and overshadows war to be at the back of our heads thus peaceful relations and Democratic peace and economic status.

A drawback in this theory is that it does not explain to the extent why it’s difficult to reach agreement on certain important issues such as free trade, environment, and usage of arms. A good example is the US government pulling out from the Paris agreement. The other main difference between this theory and realism theory in international Law is that recognition of states as rational actors and the latter is recognition as just rationales. This brings the whole idea of choice.

The liberals respect international norms which play a big percentage in nation relations among other key aspect such as rule of law, human rights and democracy subject to inconsistency will lead to immediate or direct trouble. Examples would be EU sale of arms to China which led to undue protests in 1989 and the UN move on Iraq. However it shares with constructivism on the question of norms. 

Finally, democratic peace and stability.  Kant states that liberals, that’s such states are less more likely to go into war with each other, he calls this kind of peace as Pacific Peace, Perpetual Peace and Institutional Peace.

Centralized Versus Decentralized Procurement

The concept of ‘centralized procurement’  

due to its topicality and relevance to the modern procurement law,  has become a byword that has fuelled the public and legal debate; this is in particular on the analysis of its merits and demerits  of centralized versus decentralized and the assessment over whether one of this system can prevail over the other are issues that may go beyond the scope of this blog.

The challenges posed by greater supplier competition, the ever-increasing need for transparency, the demand for faster turnaround times, all underpinned by robust legal oversight have made public procurement complex, high stakes field’. 

In the present blog discussion herein, we shall be focusing on some of the main advantages of centralized procurement, the key disadvantages, a comparison between centralized and decentralized procurement, case studies, recommendation then finally I will draw out my conclusion.

Definition 

Procurement originated from is the Latin word procurare, meaning to manage, obtain or recruit. Kennedy, Lysons and Farrington expresses that it is the management function that ensures identification, sourcing, access and management of external resources of an organization needs. The United Nations  Development Program Annual Report 2017 on Buying for a better future  view procurement as an ‘overall process of acquiring goods, civil works and services which includes the identification of needs, selection and solicitation of sources, preparation and award of contract’, and all phases of contract administration till the end of a services.  

The UNCITRAL Model law on Procurement, (article 2 (e, j)) aver that it’s the acquisition of goods, services or construction by a procuring entity that may be an agency, organ, or other unit.

Public procurement law is based on a body of International, Regional, National laws and directives of jurisprudence. In a simple definition, it sought to ask the prime question of :-

1. How to go about with contacts? 
2. How to deal with suppliers? 
3. How to award public contracts? 

The key objective here is to open a market for government assignments to be accessible to all providers and suppliers regardless their nationality. 

 

Constitution of Kenya on (article 227)

Matters procurement law are governed by the Constitution of Kenya on (article 227)  Procurement of goods and services by the state affirm that it should abide with the following system; fairness (article 10-National Values), equity and equitable distribution (article 27), transparent and competitive and cost-effective system, affirmative action (article 55 and 56) and principles of public finance (article 201).

 

Public Procurement Asset and Disposal Act No 33 of 2015

In addition, the Public Procurement Asset and Disposal Act No 33 of 2015, ensures that (article 227, (2) on allocation of contracts and the protection of persons, groups from unfair competition and discrimination. The Leadership and Integrity Act No 19 of 201-(section 3) on Guiding values and principles are adhered to. The Public Finance Management Act (section 30) 

Centralization  

Is derived from the word ‘central’, means midpoint or focus point. It is a situation in procurement when all rights, powers, duties and authority is vested in a central procurement authority's central authority delegates some of these powers to others. The central authority delegates some of this power to others with the status of its public figure. This process is governed by a regulatory legal framework.

Decentralization  

Occurs when procurement personnel's or bodies from other functional areas can decide unilaterally on sources of supply or negotiate with suppliers directly, thus localized in other words the activities done by office or department, managers or divisions, contracting agencies, or bodies that are guided by a relevant authority

In Kenya, we are guided by the Centralized system of procurement. The Public Procurement and Disposal Act cap 412C (section 8) establishes a Public Procurement Oversight Authority to monitor, assess and review the public procurement and Asset Disposal system to ensure they respect the National values and other provisions including Article 227 of the constitution on public procurement.Paul Ogemba,Tricks State officers, cartels use to loot billions in the name of tenders,(2018)

https://www.standardmedia.co.ke/business/article/2001290487/revealed-inside-the-dark-world-of-tender-cartels

Why a central procurement is the best.

1.Cost reduction through ‘Economies of scales’

Impact to the Market 

Centralized procurement or purchasing, enables an organization to leverage its high purchasing power, that is the centralized agency procuring products and services in large quantitates volumes. Competition is intensified among the firms bidding an put the agency in a better position for price negotiations.A case example the Kenya-Chinese SGR project railway government to government project,

financed by loans and grants from foreign investors.

This type of centralization affects the market dynamics  and structure, the firm selected as the winner of a public tender, will have a legal duty to supply products, services or deliverables  to the government agencies, which may be duo beneficial, to the person in term of business growth and profit margins and to even to the country's economic growth. Another case example was the Kenya Primary School Laptop Project which the president declared that the procurement will be rigorous, cost effective, and accountable in his agenda to realize a digital literacy-based curriculum.

Impact on price

Economic capability in the price market may rise in the following ways; It may reflect reduction in prices of goods and services at lower cost, secondly it ensures a proper layout when it comes to the purchase of  quantities of an item needed by the government, costs and the specific period, thus the purchasing power. in KEMSA case, county governments were facing delay of procurement of drugs since the . In.In return this has contributed greatly to the basic for negotiations, rebates and drawing out of the curves of economic potentials in terms of growth and the reductions.

Human Resource Specialization/Professionals

Finally, it permits the employment of professionals in a way that can be locally listed who can be an expert in the procurement of special classes of materials or products, in addition the costs of training of employees is leverage thus better use of human resource. Small-scale public bodies may adversely follow the market trends and the development to ensure a reliable and economic supply sources or of import and export procedures where there is substantial global sourcing.

2.Central coordination of activity

The aspect of central purchasing has a greater strategic focus than divisionalization procurement due to the availability of key decision makers in Kenya. Once there is a central unit, this accumulates certain benefits such as Budget control. Objectives hereby are set and monitored, evaluated, compared and the actual results are realized and with quality and predetermined standards. Example the function of the Kenya procurement authority is encapsulated under (section 9)

Uniform policies and prices obtained by centralized purchasing are adopted as a single procurement. The competitiveness and buying between other bodies for example in the case for decentralization is eliminated completely thus promoting a transparent network. Example is the ICT Ministry made a move to centralize government procurement to handle all goods and services within its ministry to avoid duplication of ICT projects and wastage of resources and more likely to promote technical standardization.

3.Financial Independence of the Authority

Another reason to count on this central system is already a provision for incentive prescribed by the authority administrative work and all undertakings. Under the Public Procurement and Assets Disposal Act, (section 18(5a-d)) money is appropriated by the parliament for running the authority.Other incentives and receivables in terms of loans and grants, revenue and fees collected, and the capacity building levy.

4.Litigation Benefits

Significantly, another benefits that litigations may be limited in a number of courts. Public Procurement Review Board establish under (section 27) of the Act and grounds for appeal to the High Court under (section 100.Penalties and sanctions are found under (section 45) of the Anti-Corruption and Economic Crimes Act which criminalizes all breaches related to public procurement.

5.Sustainable Procurement 

‘Green procurement’ is the purchasing of products or services which have a lower impact on the environment over their whole life cycle than the standard equivalent. It involves the integration of environmental issues into purchasing decisions based on price, performance and quality. According to CIPS (2011), Sustainable procurement isn’t simply about being “green” but it’s also about; stakeholders acting socially and ethically responsible purchasing, minimizing environmental impact through the supply chain. A recent example is the Plastic Paper ban from procurement suppliers in order to accommodate green procurement.

On the centralization of purchases of a green procurement strategy, the reason why it’s the best it’s because the authority has due-diligence in ensuring the large-scale purchase of environmentally friendly sustainable items. Certain laws are put into place such as The Constitution of Kenya 2010, The Environmental Management and Coordination Act (EMCA) 2012 Cap 387, Kenya Solid Waste Management Strategy, The Factories Act (Cap 514 of the Laws of Kenya).

Limitation of centralized procurement

Corruption and Fraud in award of tenders,

In Kenya loses 30 Billion out of 124 Billion which is the budgetary allocation of procurement in a year. Asides,30% are also the grabbed stakes by the procurement officers all his has burgeoned out of the transparency gaps. Corruption activities include the process of awarding public contracts, bidding, and tendering. The NYS Saga marks the procurement where 791 million were stolen out of procuring youth due to procurement. In Vulcan Lab Equipment Limited v School Equipment Production Unit& another, The plaintiff was awarded a tender of ksh .261,326,532 from the Ministry of Education for the purpose of procuring science equipment for schools, the plaintiff and the  defendant entered into a contract for supply of the said equipment and that the defendant made a prepayment of kshs.75,086,880/=.and pocketed the rest, It was positioned that  the plaintiff from the unlawful acts and was punitively punished and was accorded a punitive fine.

Fraud is the next growing economic crime in Kenya: One in every three companies reports experience fraud in procurement during the past two years. Disposal Act, Ethics and Anti-Corruption Act (article 45 2b), and Anti-Corruption and Economic Crimes Act prohibits corruption under and they may face disqualification. This can only be corrected if the principles of a good public procurement are accorded such as transparency and feasibility. Disposal Act, Ethics and Anti-Corruption Act (article 45 2b), and Anti-Corruption and Economic Crimes Act prohibits corruption under and they may face disqualification. This can only be corrected if the principles of a good public procurement are accorded such as transparency and fishability.

Differences between centralized & decentralized procurement

Generally, the advantages of one approach is the disadvantage of another approach, notwithstanding there is an existence of a hybrid approach of both.

Autonomy

Under the decentralization method, procurement will tend to report at a much lower level hence complete decentralization will allow full autonomy of each unit.

For centralization there is complete avoidance of price anomalies between the group units and competition between then for materials in short supply. In the contrary, decentralization may at points record double or multiple transaction at each stage reason based on its divisions.

Reduced leverage

This exists with the consultation of services; the cost of procurement is relatively high. Best overall stock management and material utilization. However, the considerable advantage of centralizing procurement is dependent on the executive authority to have that ability of being entrusted with his work to produce the most effective results. Thisan effective flow of information, communication both external and internal to enable the principle objectives are met.an effective flow of information, communication both external and internal to enable the principle objectives are met.

Recommendation

In order to make centralized procurement more efficient, in the long run, public tenders should be awarded more periodically and natural persons or corporations should avoid double or multiple application to such tenders, creating more chances for others to apply and avoid monopoly. States authorities should ensure that public procurement should be insulated from political interests and private interests. Improvements such as timely internal and external communication between the Ministry of planning, Budget and management should be a widely consulted in order to avoid certain delays in public tenders.

Conclusion

In summary, to centralize or decentralize depends on many variables in an organization or a country, some organization may adopt a hybrid system that combines both the two systems, but the bottom-line is that centralized procurement is very suitable in large organization which have wide contracts that cuts the current sphere.

Status of Legitimacy of Children

How are Dispute Settled in the WTO?

Dispute in Latin is called disputatione meaning debate. Resolution on the other end means resolvere meaning settle. That being so, dispute resolution is a procedure of which the disputants agree to end the arguments through a third party, the primary role of the third party here is to remain neutral while still facilitating the disputants.

The World Trading System today consists of National laws, plurilateral and bilateral agreements which are recognised under International law and together they govern and provide for a case in the cross border conduct of states when it comes to the exchange of goods and services.

The Uruguay Round marked the completion of multi-national trade negotiations which embarked on a new trade revolution and an International Institution based of what is called today the World Trade Organisation. This institution works on trade and trade related areas of the global policy making and more so it has fostered avenues for integration and the development status of the global economy today.

The WTO dispute settlement is the most active and adjudicative in the world today. However  WTO it is not part of the United Nations(UN), neither a part of the Economic Social and Cultural council (ECOSOC) it has continuously maintained strong relations with the UN and its agencies ever since its establishment. The UN-WTO relations are regulated by the agreement on Arrangements for Effective Cooperation with other Intergovernmental Organization signed on the 15th November 1995 and the ECOSOC-WTO relationship occupy a special status and participate and cooperate in the UNCTAD towards the trade-related Millennium Goals and rules of trade participate in contribution of the ECOSOC.

Dumping and Anti-Dumping

Dumping and Anti-Dumping 

The anti-dumping rules and provisions on subsidies have enabled contracting countries trade effectively especially with regards to exports and imports of sub-standard market products/goods while on the other hand ensuring that high utility goods are availed at a considerable price. This blog gives a basis for the rules in GATT and its effect on key areas of production among the contracting member states.

Reasons for Dumping

• One of them is in a bid to find a market for the products; this especially happens when the monopolist industry is trying to establish itself in the foreign market. Due to competition, it opts to sell its products at a lower price, so that the demand of its products may increase.

• The second reason is the expansion of the industry. This is especially aimed at the sale of surplus products at the foreign market. By selling the products at a low price in the foreign market, the monopolist earns profits

• The third reason is to find new trade relations. This is by virtue of its products being bought at the foreign market. Thus, it cannot export its products and then sell them at a high price, because that would only result to it incurring loss as a result of its products not being bought.

Before we get into the details regarding the various anti-dumping rules and provisions, envisaged by Article VI of the General Agreement on Trade and Tariffs, (hereinafter referred to as GATT), we shall define the various terms used in our question for a better understanding.

• Dumping as described by Article 2(1) of the Anti-dumping agreement refers to a situation whereby, a product is charged less when exported to another country, as compared to its price in the market of the exporting country.
• Anti-dumping on the other hand, refers to the various measures imposed by a government, with the aim of removing the injury caused to the domestic injury.
• A subsidy is defined by Article 1 of the Agreement on Subsidies and Countervailing Measures as to exist when there is: a financial contribution by the government or public body within the territory of a member; this can be through non-collection or foregoing of the taxes due, any form of income or price support and a benefit is conferred by that financial contribution.

Essentially, there are three types of dumping;

1. Sporadic,
2. Persistent and
3. Predatory.

• Sporadic dumping is that which is unseen in that, it occurs as result of excess production of goods or unsold stock, even after there has been a sale. This happens especially when the producer is a monopoly at the domestic market of the exporting country. It is meant either to identify the product in a new market or to drive out a competitor in a foreign market.
• Persistent dumping, occurs when the monopolist industry continuously sells its product at a higher price in the domestic market of its country and at a lower price in the market of the importing country. This is usually motivated by the fact that this particular product has a higher demand in the importing country’s market, when compared to the exporting country’s market.
• Predatory dumping on the other hand occurs when the monopolist industry sells its commodity at an extremely low price in the importing country’s market, with the aim of driving out a competitor.

Determination for dumping 

There are various reasons why dumping occurs a vital question that arises with regards to this area is: how can one tell when there is dumping? Well, the Anti-dumping agreement provides for certain methods.

• Price of the product at the market of the exporter (normal value). When this price cannot be ascertained, then one can either use the price charged by the exporter in another country, or calculate the price based on the production cost, the expenses incurred and the normal profit margins of the product.
• The second method is based on the export price; the price charged on the product in the importing country. Similarly, when this price cannot be clearly ascertained, then one can use the constructed export price, which is basically determined from the price at which the imported products are resold to an independent buyer at first.

Before a state can impose anti-dumping measures on her imports, she has to satisfy the following criterion:

• A state has to show that indeed dumping is taking place, she has to calculate the level of dumping (this is usually done by determining how much lower the export price is, as compared to the exporter’s market price) and lastly, she has to show that the dumping is causing material injury or threatening to do so.
• However, the anti-dumping agreement requires that determination of material injury must be based on positive evidence and objective examination of both: the effect of the dumped products on the prices in the domestic market, as well as the impact of those products on the domestic producers of the like products. The word positive evidence means that the information used to determine material injury must be affirmative, credible and verifiable in nature.
• Material injury is inferred if there is price suppression in the domestic market of the importing country, or if there has been a change in the performance of the domestic industries; this could be from the reduction in the sales volume. This was affirmed by the Board on Tariffs and Trade in the case of Rhône Poulenc v Chairman of the Board, where they posited that price undercutting, price depression and decline in profits were the major determinants of injury in an anti-dumping investigation. Price undercutting in this context, refers to the fact of whether the dumped imports have caused the prices of products in the domestic market to decrease to a significant degree or they have prevented prices to increase, which would have occurred, to a significant degree.
• Additionally, injury can be construed from the increase in the dumped imports. This is done by considering if there has been a significant increase in these products, either in terms of their production or consumption in the domestic injury. Though the Anti-dumping Agreement does not specify how the investigating authorities are to evaluate the volume and prices of dumped products, 

Factors have to be developed to ascertain these factors, which should be in accordance with the circumstances of each given case.

• The investigating authorities must thus determine the impact of the dumping on the domestic industries. This was affirmed by the panel in the WTO Egypt-Steel Rebar Report where the panel stated that an investigating authority must not only gather data, but must also analyse and interpret it in a way that deals with determination of the impact of dumped products on the domestic industries.

In determination of this impact, several factors must be put into consideration. They include:

• the magnitude in the margin of dumping;
• actual and negative effects on employment,
• wages and ability to raise capital;
• actual and potential declines in sales, profits and productivity and other factors which are likely to affect domestic prices.

However, not all of the aforementioned factors are important in a given case. Thus, the investigating authorities must evaluate which factors are relevant in a particular set of circumstances.

• It is important to note that, it is not only enough to establish that there is material injury, but also link the injury to the dumped imports. The reason why this is vital is other factors may be causing material injury, for example a decrease in the demand of the domestic products and developments in technology. As was held in US-Hot Rolled Steel, the investigating authorities must separate the injurious effects from the non-injurious effects, while ascertaining the causation element of dumped imports.
• This procedure is provided for by Article 5 of the Anti-Dumping Agreement. The first step is to submit a written application to the investigating authorities. The application is for requesting the investigating authorities to initiate an investigation regarding a claim of dumping. For this application to be said that it is written by on behalf of the domestic industry, it must be supported by domestic producers, whose output constitutes of more than fifty per cent of the total production of the like product in the domestic industry.
• Caution must be taken regarding this because, no investigation can be initiated, if the application is supported by domestic producers whose output constitutes of less than twenty-five per cent of total production. Still on the first step, the application must contain necessary information revealing the presence of dumping, injury and causation, for the initiation of the investigation to be justified.
• The next step is for the investigating authority to inform the exporting country about the initiation of investigations.The authority must also issue a public notice regarding this, for the process to be deemed transparent.
• After the investigation is conducted and a conclusion made that indeed there is dumping which causes or threatens to cause material injury, the importing country can proceed to impose the anti-dumping duties. 
• There is a general rule which states that, after the investigations have been initiated, they should be completed within one year and not more that eighteen months after initiation. 
• Before the anti-dumping duty is imposed, a price undertaking can be given to the exporters. This is usually on a voluntary basis and is meant for requesting them to either revise their prices or stop selling their products at dumped prices. It is entered into between the exporter and importer, after a preliminary and affirmative determination of dumping, injury and causation has been made. An exporter can also request for the investigation to be continued even after acceptance. However, the undertaking lapses after the conclusion of investigations and a final determination made that there is neither dumping nor injury nor causation found. Though it still exists if the determination was triggered by its existence in the first place.
• These are explicitly provided for under Article VI of the GATT. They are used by countries to protect their domestic industries from competitive imported goods. 

Before we discuss the various anti-dumping dumping rules, it is important to understand the difference between an anti-dumping duty and a countervailing duty.

An anti-dumping duty is a kind of tax that is imposed by the government upon the dumped imported goods. It is meant to cure the injury caused by the dumped goods if any.  Additionally, it takes the form of a customs duty. 

A countervailing duty on the other hand, is imposed upon subsidized imported goods and is meant to cure the negative impact caused by those goods.

• Moving on to the rules, one of them is that, a contracting party may levy an anti-dumping duty on any dumped product, which should not be more than the margin of dumping. The margin of dumping is calculated as the difference between the price of the product at the domestic market of the exporter and its price at the market of the importer. For example, if country A is exporting bananas to country B and A is selling its bananas at sh. 100 in its domestic market and sh.50 at B’s market, the margin of dumping will be sh. 50. This means that if B decides to impose an anti-dumping duty upon the bananas of A, it should not be more than sh. 50.
• The second rule is that no countervailing duty shall be levied by an importing contracting party, on any product of an exporting contracting party, which is more than the amount of subsidy provided by the exporting country, either directly or indirectly, for the manufacture, production or export of a product. For example, using the hypothetical scenario given above, if country A provided a subsidy of let’s say sh. 100 to any of its citizens exporting the bananas to country B, then B should not tax this particular exporter more than sh. 100, which was the subsidy given by A. 
• The third rule is, no product of any exporting contracting party, shall be subject to anti-dumping or countervailing duty, reason being, that it has been exempted from being taxed the relevant tax levied upon its like products in its country of origin, or that there has been a tax refund. Like products in this context means that both products resemble each other, either in their physical characteristics or that they perform the same functions. Still using the case scenario given above, this rule states that country B should not impose an anti-dumping or countervailing duty upon the bananas from country A, because the bananas have not been taxed, just like other bananas in country A are taxed.
• The fourth rule is that, no imported product shall be charged either anti-dumping or countervailing duties, whose sole purpose is compensating the same situation of dumping or export subsidization. The latter word means a situation whereby, the exporting country encourages export of products, while discouraging the products being sold at its domestic market. One of the ways through which the situation is manifested, is the provision of tax reliefs to those individuals or corporations exporting products.
• Rule number five says, an antidumping or countervailing duty shall not be imposed upon the imported product, unless the importing country determines that the dumping causes or threatens to cause material injury to an established domestic industry, or that it slows down the establishment of a domestic industry.
• However, rule six is an exception to rule five in that, it allows the contracting parties to impose an anti-dumping or countervailing duty on the product, if they are able to determine that the subsidy or dumping is causing or threatening to cause material injury to the importing country’s industry.
• Rule seven is more of an enlightenment to determine when a product does not cause material injury. It states that, a product is presumed not to cause material injury to the imported country’s market, if there is a system to stabilize the domestic price such that, the product is not only sold at a lower price at the imported country, but also sold at a higher price in its domestic market.
• We interpreted key areas of production to mean various industries present in the contracting parties, such as manufacturing and production. We are going to use hypothetical case scenarios, in order to demonstrate our understanding on these effects.
• One positive effect caused is the development of local industries. This goes hand in hand with reduction of competition. It is derived from rule number five in that, if a country imposes an anti-dumping or countervailing duty upon an imported product which was slowing down the establishment of a local industry, the result will be that the imported product is probably going to be withdrawn from the market and thus local industries will be established. This is best understood in a case scenario. Take the example of country C and D. country C is exporting ‘Ankara’ to country D, at a low price. There is XYZ Company in country D, which is in the process of being incorporated to manufacture the same ‘Ankara’. Due to the fact that ‘Ankara’ from C have been brought to D, this slows down the incorporation of XYZ. If D imposes an anti-dumping duty on C’s ‘Ankara’ thereby driving them out of its market, then XYZ will be incorporated and it will also start manufacturing the ‘Ankara’.
• Another positive effect is that these rules discourage unfair trade practices. This is mainly through the elimination sub-standard market products which are dumped in other countries.  Using the case scenario above, if C was selling ‘Ankara’ of good quality in her domestic market while exporting the poor quality ‘Ankara’ to D, after the imposition of anti-dumping and countervailing duty upon the ‘Ankara’ by D, C will be discouraged from exporting her product to D. This in return ensures that the ‘Ankara’ being manufactured and sold at D is of a good quality, as the poor quality ‘Ankara’ will have been driven out of the market.
• A negative effect is that the rule limits excessive production of goods by the industries. As already discussed, one of the reasons why dumping occurs is as a result of unsold stock, which is then sold at a foreign market at a lower price. If C was exporting the ‘Ankara’ to D because it was left unsold, when the anti-dumping duty is imposed by D, it will discourage the manufacturing industry (ABC) at C from making excess ‘Ankara’. The reason why this is a disadvantage is that there will be loss of income on the side of ABC. They could have been generating additional income from the sale of their product to D, but now they are no longer generating income because they have been driven out of D’s market.
• Another negative effect is that the rules cause trade diversion. This in return results to the domestic market producers being driven out of the market and the people who had been employed by these producers losing their jobs. For example, still using the same scenario but now introducing country B into the picture. So now we have country B and C exporting ‘Ankara’ to country D, but B is selling the ‘Ankara’ at the same price at which it sells in its domestic market. The anti-dumping duty imposed by D is directed against the products of C. This will drive C out of the market, leaving B. The next result is that B will increase her exports to D and sell her product at a lower price maybe sh.45 compared to that which is sold by XYZ; sh. 50. The effect will be that B’s product will have a higher demand, causing XYZ to incur losses and probably shut down its operations and even fire its employees. 
• In conclusion, these rules have both positive and negative effects. It is therefore incumbent upon the governments to utilise them to their advantage. By this we mean that, even though they will be encouraging the growth of local industries on one hand, they should monitor these industries to ensure that they sell their products at affordable prices, so that at the end of it all, both the consumers and producers will benefit.
• As has earlier been noted, sometimes it is difficult to ascertain the price of a product both in its domestic market and at the market of the importing country. One of the reasons is if the product is not sold in the ordinary course of trade at its home country. This is usually because the product is not profitable. The other reason is if the product is imported and sold in a batter transaction, or the export price is unreliable as a result of a compensatory agreement between the exporter and importer. When this is the case, the alternative methods provided by the Anti-dumping agreement are used to determine the normal value and the export price.