Class

Notes 5
Takeaways
Momo Deretic
Sauder School of Business
 Main Points
Just clearing customs and paying standard du;es can
be confusing and costly.
Special import measures (SIMs) can be triggered as a
result of unfair trade prac;ces or sudden surges in
imports.
The world trading system has rules. The World Trade
Organiza;on (WTO) is the referee supervising
interna;onal trade.
Bilateral and regional agreements have proliferated
in recent years.
 Clearing Customs
Procedures:
Classica;on
Valua;on
Origin-na;on
Barriers
Standard du;es
Special Import Measures
Prohibi;ons
 Origin-na;on
Most-Favored Na;on (MFN) principle
Many Excep;ons:
General Preferen;al, Least Developed Countries
Free Trade Agreements, Customs Unions
To receive lower duty status, need
Cer;cate of origin
Proof of direct shipment
 Special Import Measures (SIMs)
An;dumping du;es
Pricing exports unfairly low
Causing injury to suppliers in impor;ng country.
Countervailing du;es
Producers receiving unfair assistance from government
Con;ngent on expor;ng, OR,
Specic to an industry AND injury-causing.
Safeguards
Temporary relief
Injury, compensa;on requirements
 An;dumping Du;es (ADD)
Dumping is dened as charging an export price
(Px) that is below the normal value (Pn)
The normal value is normally equal to the price
charged for comparable sales in the exporters
home market during the ordinary course of
trade.
Comparable dont mix wholesale w/ retail prices
Ordinary dont include prices below average cost
of produc;on
 Implementa;on of ADD
Import-compe;ng rms complain to their
government that imports are being dumped
Customs-related agency determines the normal price,
compares with export price.
If ordinary & comparable home sales are not
available, the normal price is calculated as
price charged to other (3rd country) markets
cost of produc;on + normal prot
 The Injury Determina;on
A`er dumping (or LTFV= less than fair value in
US) determina;on, impor;ng government
determines whether its dumped imports caused
material injury to domes;c industry.
Injury can be measured by loss of market share,
price suppression, falling prots, laid o workers,
etc.
Injury determina;on o`en nega5ve, then duty
deposits should be refunded (with interest).
How to respond to an An;-dumping case?

Exit market.
Agree on a price undertaking in exchange
for withdrawal of case.
Argue case before import tribunal. Points to
emphasize:
Home sales are not comparable to export sales
Dumped imports not cause of domes;c injury
 Prohibi;ons
Beef scares (hormones, BSE), Frankenfoods,
tuna, shrimp
WTO allows import restric;ons for health,
safety, public morals, and preserva;on of
natural resources.
But rules must be followed:
Scien;c risk analysis
Least restric;ve method to pursue goal
No protec;on in disguise