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.
D e f i n i t i o n
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.
Forms of 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.
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.
E f f e c t s
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.
Anti D u m p i n g
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.
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.
Investigation & Litigation
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.
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.
Although investigations can proceed if several countries, each supplying less than 3% of the imports, together account for 7% or more of total imports.
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.