1. What is dumping?
In international trade, dumping is a phenomenon occurs when a commodity is exported at a price lower than the selling price of that item in the domestic market of the exporting country. Therefore, it is simple to understand that if the export price of a commodity is lower than its domestic prices, the product may be considered to be dumped.
2. Why is dumping?
There are many causes
of dumping in international trade. In fact, there are many cases that seller
deliberately dumping in order to achieve certain benefits such as: Dumping to
eliminate competitors in the import market to become monopoly and gain market share;
Selling at low price to acquire foreign currency… Sometimes, the dumping is
reluctant because the manufacturer and exporter cannot sell product, the
production is stalled then the long-term storage products could be corrupted…
Hence, they have to sell off to recover capital.
In international trade,
the anti-dumping tax may be imposed without regarding to the reason why the
manufacturers dumping. Dumped into foreign markets is often perceived as a
negative phenomenon because it reduces the competitiveness of prices and the
market share of domestic products of importing countries.
However, dumping can
have positive impacts on the economy: consumers benefit from low price goods;
if dumped goods are inputs of other manufacturing sector then the low raw material
prices can make certain growth of that industry… Therefore, not all acts of
dumping will be applying the anti-dumping measures.
As regulated by the
World Trade Organization (WTO), the anti-dumping
measures can only be applied in certain circumstances and must meet certain
conditions. Specifically, the anti-dumping measures are applied only when the
following three conditions are met: The imported goods are dumped; the
manufacturing sector of similar products of the importing countries is significantly
affected; there is a causal relationship between the dumping of imports goods
and losses mentioned above
3. The anti-dumping
tax?
The anti-dumping tax is
the additional taxes besides the normal import tax, which is imposed on foreign
products that are dumped into the importing country. This type of tax is to
prevent dumping and eliminate the damages caused by the dumping of imported
goods. In fact, the anti-dumping tax is used in many countries as a form of
“legal protection” for its domestic production. In order to prevent the abuse
of this measure, the WTO member countries have together agreed on the
provisions required to comply regarding the investigation and imposition of
anti-dumping tax, concentrated in an Agreement of the WTO on anti-dumping, which
is the ADA Agreement.
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