D U M P I N G

International Price Discrimination - 1

Dumping
D e f i n i t i o n
Often, dumping is mistaken and simplified
to mean cheap or low priced imports.
However, it is a misunderstanding of the
term.

On the other hand, dumping, in its legal

sense, means export of goods by a country
to another country at a price lower than its
normal value.

International Price Discrimination - 2

Dumping
Forms of Dumping
Persistent Dumping - Dumping resulting
from international price discrimination.
Predatory Dumping - is the ‘temporary’
sale of a commodity at below cost or at a
lower price abroad in order to drive foreign
producers out of business, after which
prices are raised abroad to take advantage
of the newly acquired monopoly power.

International Price Discrimination - 3

Dumping
Sporadic Dumping – It is the ‘occasional’
sale of the commodity at below cost or at a
lower price abroad than domestically in
order to unload an unforeseen and
temporary surplus of a commodity without
having to reduce domestic prices.

International Price Discrimination - 4

Dumping
 E f f e c t s
Dumping can harm the domestic industry
by reducing its sales volume and market
shares, as well as its sales prices. This in
turn can result in decline in profitability,
job losses and, in the worst case, in the
domestic industry going out of business.

Anti dumping is a measure to rectify the

situation arising out of the dumping of
goods and its trade distortive effect.

International Price Discrimination - 5

Dumping
Anti D u m p i n g
The purpose of anti dumping duty is to rectify
the trade distortive effect of dumping and re-
establish fair trade. The use of anti dumping
measure as an instrument of fair competition
is permitted by the WTO.

So, anti dumping is an instrument for ensuring

fair trade and is not a measure of protection
for the domestic industry.

International Price Discrimination - 6

Dumping
If the domestic industry is able to establish
that it is being injured by the dumping, then
antidumping duties are imposed on goods
imported from the dumpers' country at a
percentage rate calculated to counteract the
dumping margin.
Advocates of free markets see "dumping" as
beneficial for consumers and believe that
protectionism to prevent it would have net
negative consequences.
International Price Discrimination - 7
Dumping
Investigation & Litigation
There are different ways of calculating whether
a particular product is being dumped heavily or
only lightly. The agreement narrows down the
range of possible options. It provides three
methods to calculate a product’s “normal
value”.

The main one is based on the price in the

exporter’s domestic market.

International Price Discrimination - 8

Dumping
When this cannot be used, two alternatives
are available — the price charged by the
exporter in another country,

Or a calculation based on the combination of

the exporter’s production costs, other
expenses and normal profit margins.

International Price Discrimination - 9

Dumping
Anti-dumping investigations are to end
immediately in cases where the authorities
determine that the margin of dumping is
insignificantly small (defined as less than 2%
of the export price of the product).
Other conditions are also set. For example,
the investigations also have to end if the
volume of dumped imports is negligible i.e. if
the volume from one country is less than 3%
of total imports of that product.

International Price Discrimination - 10

Dumping
Although investigations can proceed if
several countries, each supplying less than
3% of the imports, together account for
7% or more of total imports.

International Price Discrimination - 11

Dumping
E x a m p l e s
Japan was accused of dumping steel,
television sets, and computer chips in the
United States, and Europeans of dumping
cars, steel and other products.
Most industrial nations (especially those of
European union) have tendency of
persistently dumping surplus agricultural
commodities arising from their farm
support programs.
International Price Discrimination - 12
Dumping
Benefits of Dumping
 Low price goods
 Money saving
 Force foreign companies to become
more competitive
 Allow to sell waste products
 Higher pay for employees

International Price Discrimination - 13

Dumping
Negative effects of Dumping
 Can push local traders and
businessman out of business
 Debt for individuals and government
 Could endanger the political
consensus
 Less income to the employees of
dumping country

International Price Discrimination - 14

Dumping
Anti dumping

International Price Discrimination - 15

Dumping
International Price Discrimination - 16
Dumping
International Price Discrimination - 17
Dumping