Dumping
Dumping is a form of predatory pricing and International trade violation in which a country or company exports a product at an unreasonably low price. Dumping is illegal in most industrialized countries because it gives foreign competitors an unfair advantage when selling goods in domestic markets. It also artificially lowers the price of the good and can force domestic manufacturers out of business.
The Price-Anderson Act is an example of an anti-dumping policy in the United States. This law requires all foreign manufacturers selling products in the United States to register with the Department of Commerce and comply with price regulations.
In the European Union, anti-dumping policies are established to ensure fair prices of imported products. These policies focus on removing the trade advantage producers from countries with lower wage costs, taxes and lower environmental standards. To do this, the EU has created laws and regulations which provide for duties and tariffs to be imposed on products which are being ‘dumped’ in its marketplaces.
In terms of the World Trade Organization (WTO), dumping occurs when the export price for a commodity is lower than the normal value, which is defined as the price for the same or a similar product sold on the home market of the exporting country, or as the cost of production plus a reasonable amount of profit. According to the WTO, dumping is illegal under the General Agreement on Tariffs and Trade (GATT) if it causes material injury to the importing country.
In order to protect domestic industries, countries have started to impose countermeasures such as imposing tariffs and quotas on the imported goods. These measures may also include the imposition of anti-dumping duties such as those used by the European Union. If a country suspects that another country is dumping products in its market, it may initiate an anti-dumping investigation and take appropriate actions, including the imposition of anti-dumping duties.
In addition, countries may also take measures to prevent further dumping. These measures can include the introduction of filing or reporting requirements for imports, setting of minimum prices for imported goods, or import monitoring and verification.
Dumping has been a major source of dispute between countries in the international trade arena. Governments disagree on what is considered dumping, and how much protection of domestic industry is acceptable. This has led to numerous trade disputes, including those between China and the European Union and the United States.
At the same time, dumping has led to lower product costs for consumers and to increased competition for producers in the domestic market. This has benefited consumers by providing them with access to a wider range of products and lower prices.
Overall, dumping is a complex issue and there is no one-size-fits-all solution. Governments must assess the potential impacts of dumping along with the benefits of international trade and competition, and then develop policies that allow the protection of domestic industries while maximizing the benefits of free trade.
