Dumping
Dumping refers to the practice of selling goods in a foreign market at a price lower than the domestic market price or the cost of production. This can harm domestic industries by undercutting their prices and creating unfair competition. Dumping is often regulated by trade laws and can lead to trade disputes between countries.
6 Key excerpts on "Dumping"
- Amitrajeet A Batabyal, Hamid Beladi(Authors)
- 2001(Publication Date)
- CRC Press(Publisher)
...This is considered to be a practice of unfair trade. Thus, the term “ecological Dumping” is often used in the public discussion to paraphrase the phenomenon. This catchphrase will be taken up for the following investigation. It should be kept in mind, however, that, in contrast to normal Dumping, ecological Dumping is an activity performed by the government and not by an individual firm. Moreover, it does not affect the price of a tradable commodity, but that of a factor of products which is internationally immobile: nature’s capability to provide environmental resources. This chapter is an attempt to cast some light on the issue of ecological Dumping. First, a sensible definition of the subject is sought. What is ecological Dumping and how can it be measured? We shall then try to identify economic motives underlying a government’s decision to engage in ecological Dumping. It will be assumed that the government follows a rational strategy, i.e., it maximizes national welfare or another objective function. Firstly, the terms-of-trade argument will be addressed. It will be seen that the terms of trade of a country are not in general improved by lax environmental policies. Thus, two alternative approaches to explaining ecological Dumping are presented. One of them is strategic trade policy: lax environmental standards may be used to improve the market position of a domestic oligopolist and to shift profits from abroad to the domestic economy. The other approach is to model the impact of domestic exporters’ lobbies on the political decision-making process. Some final remarks conclude the chapter. Finally, it may be useful to say what is missing in this chapter. The theoretical framework of the analysis is an international-trade model in which the production of traded commodities harms the environment...
- Jean-Frederic Morin, Amandine Orsini, Jean-Frederic Morin, Amandine Orsini(Authors)
- 2020(Publication Date)
- Routledge(Publisher)
...Dumping Josué Mathieu Université libre de Bruxelles, Belgium Environmental Dumping (or eco-Dumping) is defined as the use of lax environmental standards or poorly enforced regulations to export goods at a cost advantage or to attract foreign investments (Rauscher 1994). Critics of the effects of trade liberalization use the concept to highlight that a comparative advantage generated by a low level of environmental protection is unfair, as industries located in “pollution havens” do not bear the cost of environmental externalities, contrary to high-standards abiding industries (Hamilton 2001). This definition of environmental Dumping must be distinguished from Dumping as merely price discrimination—selling “below cost”—and from Dumping as the export of hazardous wastes (see also Rotterdam Convention). Concerns over environmental Dumping often lead to calls for imposing countervailing or antiDumping duties (labeled “environmental tariffs,” “green tariffs,” or “eco-tariffs”). Proponents consider that environmental tariffs are necessary not only to offset unfair competitive advantages (Hudec 1996), but also to induce responsible behavior in countries with low environmental standards. Opponents argue that upward harmonization of environmental standards can happen without any external imposition of standards on foreign countries (see Policy diffusion). Environmental Dumping is increasingly discussed in relation to carbon leakage—where efforts to reduce emissions in one jurisdiction are offset by resulting increased emissions in another. In this context, environmental Dumping is said to occur because some countries and their industries free-ride efforts to mitigate climate change in order to attract foreign direct investments, benefit from industry relocations, and gain market shares thanks to comparatively lower production costs (Janzen 2008)...
eBook - ePub- Belay Seyoum(Author)
- 2021(Publication Date)
- Routledge(Publisher)
...In the case of an antiDumping or countervailing duty petition, for example, domestic authorities are required to make an initial determination within twenty days after the petition is filed. Similar time limits are imposed on the determination of injury. The U.S. Court of International Trade has taken the position that the WTO panel rulings do not have a binding effect (and are merely persuasive) on U.S. court decisions on such matters (Folsom, Gordon, and Spinogle, 2005). AntiDumping or countervailing duties are statutory remedies that cannot be vetoed by the president except by negotiation of an international trade agreement. Such an agreement may, for example, take the form of voluntary export restraints to restrain the flow of the offending goods to the U.S. market. It is important to describe the terms that are often used in the analysis of unfair trade practices, that is, Dumping, subsidies, and material injury. Dumping Dumping is defined as selling a product in the United States at a price that is lower than the price for which it is sold in the home market in the ordinary course of trade (certain adjustments are made for differences in the merchandise, quantity purchased, or circumstances of sale). In the absence of sales or sufficient sales of a like product in the domestic market of the exporting country, Dumping may be measured by comparison 1) with a comparable price of a like product sold in a third country or 2) with the cost of production in the country of origin plus a reasonable amount for administrative, selling, and other costs and for profits (constructed value). Selection of a third country is often based on the similarity of merchandise to the one exported to the United States, volume of sales (the country with the largest volume of sales), and similarity of market in terms of organization and development to that of the United States...
eBook - ePubFree Trade under Fire
Fifth Edition
- Douglas A. Irwin(Author)
- 2020(Publication Date)
- Princeton University Press(Publisher)
...The number of Dumping cases swamps those of other trade remedies: in recent years, roughly five antiDumping cases have been initiated for every CVD case. As of mid-2019, the United States had countervailing duties in place on 125 products but maintained antiDumping duties on 369 products. 3 This emphasis on antiDumping instead of countervailing duties exists around the world as well. In 2017, WTO members initiated 41 new countervailing duty investigations and 249 new antiDumping investigations. As of mid-2018, 45 leading members of the WTO had 1,854 antiDumping measures (definitive duties and undertakings) in force, up from 1,675 the previous year. 4 What exactly is going on here? Dumping has been deemed an unfair trade practice by country authorities and world trade agreements, and the antiDumping law is intended to combat it. Yet the gap between the rhetoric and the reality of antiDumping trade policy is enormous. Dumping sounds awful, as though foreign goods were being unloaded on America’s docks and priced below cost to force domestic firms out of business. But under the law, Dumping simply means that a foreign exporter charges a lower price in the U.S. market than it does in its home market. This is nothing more than price discrimination. But if the foreign exporter is found guilty, the United States can impose import duties to offset the difference. Figure 5.1 shows the annual number of U.S. antiDumping investigations since 1970. As is evident, the number of investigations is quite cyclical...
eBook - ePub- Bonnie Nguyen, Andrew Wait(Authors)
- 2015(Publication Date)
- Routledge(Publisher)
...Despite this, several arguments are often made against free trade. Infant industries. It is sometimes argued that protection is necessary in the short term to help a domestic industry develop. Once the industry has had a chance to establish itself, the barriers to trade can be removed allowing the industry to successfully compete on the world market. However, evidence from real markets suggests that this strategy has not been successful; for example, tariffs on manufactured goods like cars remained in place for decades, often with limited success of generating an internationally competitive industry. Strategic trade policy. Another argument is that trade protection can allow a country to manipulate the international trading environment in its own interest. Realistically, however, most countries will not be large enough to unilaterally affect the world market. Second, in order to implement this strategy, governments would need to perfectly understand the behaviour of private market firms and other governments around the world, which is near impossible. Anti-Dumping measures. Dumping occurs when foreign firms sell their goods in a country at a price below cost, with the intent of forcing local producers out of business. This is done so that the foreign producer can capture all of the domestic market. In principle, certain types of trade protection may be effective at preventing foreign firms from Dumping goods into a country, either by restricting the quantity of imports or by setting a minimum price at which those goods can be sold. Environmental standards. Sometimes, it is contended that domestic firms face higher costs of production because they have to comply with higher environmental standards than do foreign firms. While this may be true, it is not clear that imposing trade barriers is the best way to deal with this issue, particularly when it is possible to address environmental externalities more directly. Employment protection...
eBook - ePubWorld Trade Organization (WTO)
Law, Economics, and Politics
- Bernard M. Hoekman, Petros C. Mavroidis(Authors)
- 2015(Publication Date)
- Routledge(Publisher)
...Indeed, the only permissible response to Dumping is, as per Art. 18.1 AD, the imposition of antiDumping duties. Moreover, it would be quite odd for the WTO to sanction Dumping, since the WTO is a government-to-government contract, whereas Dumping is a purely private practice. Logically, the WTO is concerned with the only government activity in this context, that is, the imposition of duties. 12 Some countries have legislation that limits AD duties to what is needed to offset the injury caused to domestic competitors. Estimated Dumping margins are often much higher than injury margins. 13 Antitrust analysis and practice (at least on both sides of the Atlantic) does not discipline price discrimination (“Dumping”) unless it constitutes predation—a deliberate strategy to price competitors out of the market with a view to recouping losses once all others have been forced to exit the market. Successful predation amounts to injury to competition and is thus subject to (illegal under) competition law, making AD redundant. 14 A third category, non-actionable subsidies, which comprised environmental, Research and Development, and regional subsidies lapsed in 2001 by virtue of Art. 31 SCM. 15 Assuming they prevail before the WTO adjudicating bodies, and they face a recalcitrant state, they will have to choose between CVDs and countermeasures, as noted above. 16 The title of Art. XXI GATT (Security Exception) leaves no room to doubt that the party invoking this provision has the burden of proving it. 17 The US invoked Art. XXI GATT to justify trade measures against Cuba under the Helms-Burton Act. Cuba did not formally request the establishment of a panel, but the EC did. The two WTO members settled the issue during consultations. 18 On the wider issue, why many developing countries lagged in integration, see Robert E...
