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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