International Trade Meaning and Definition of Dumping
Meaning of Dumping
Exporting/Importing merchandise into a country below the costs incurred in production and shipment.
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Dumping in Historical Law
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Dumping in Law Enforcement
Main Entry: Law Enforcement in the Legal Dictionary. This section provides, in the context of Law Enforcement, a partial definition of dumping.
Legal English Vocabulary: Dumping in Spanish
Related to the Legal Thesaurus
- Law Enforcement Officer
- Law Enforcement Agency
- dumping in A Dictionary of Law Enforcement (Oxford University Press)
- dumping in the Encyclopedia of Law Enforcement
- A Treatise on the Police of the Metropolis
English Legal System: Dumping
In the context of the English law, A Dictionary of Law provides the following legal concept of Dumping :
The sale of goods abroad at prices below their normal value. Within the EU dumping regulations prohibit the sale of goods at below normal value. Countervailing (or antidumping) duties may be ordered on certain imported goods to prevent dumping.
Dumping in Global Commerce Policy
In this regard, dumping is: occurs when goods are exported at a price less than their normal value, generally meaning they are exported for less than they are sold in the domestic market or third-country markets, or at less than production cost. GATT Article VI, which deals with anti-dumping and countervailing duties, does not actually prohibit dumping. The entries on trade policy are here. It merely says that GATT parties recognize that dumping is to be condemned if it causes or threatens material injury to an established industry or retards the establishment of a domestic industry in the territory of another member. The entries on trade policy are here. If enquiries in the importing country show that dumping is taking place and causing material injury to an industry, governments may take anti-dumping measures. The basis of comparison is usually the ex-factory price in the exporting country and the transaction price of the goods at the border of the importing country, less transport and other costs incurred after the good has left the factory. The entries on trade policy are here. It appears, however, that some equate sales below the domestic price with sales below cost. This interpretation is strictly speaking incorrect. Dumping has on occasion been confused with the import of products benefiting from the payment of subsidies. The entries on trade policy are here. In trade policy, dumping refers to the conduct of individual firms that see some advantage in discriminatory pricing arrangements and that finance these from their own resources. Subsidies, on the other hand, are paid, directly or indirectly, to industries by governments. The effect of subsidized and dumped products on the importing market can of course be the same. Commentators are wont to point out that the apparently simple concept of dumping has led to innumerable disputes over its application in practice. The entries on trade policy are here. A simple comparison between the two prices may be impossible when the pricing and accounting mechanism of a firm is so opaque as to prevent any meaningful insight into its cost structure. The entries on trade policy are here. At other times, comparisons may be inappropriate because the exported product is not sold on the home market at all or only in small quantities. The entries on trade policy are here. In any case, few other trade policy topics are surrounded as much by emotion as they are by rational analysis. The literature on this subject is accordingly voluminous. Dumping as a perceived trade problem has been around for a long time, but it only turned into a major trade policy issue after World War I and particularly during the Great Depression of the 1930s. The entries on trade policy are here. At the time of the negotiations leading to the Havana Charter, participants identified four categories of dumping: (a) price dumping for which the rules ultimately appearing in GATT Article VI were made; (b) service dumping, where a price advantage for a product comes about because dumping occurs in the provision of shipping services; (c) exchange dumping, based on manipulation of the exchange rate to achieve a competitive edge; and (d) social dumping, caused by the import at low prices of goods made by prison or sweated labour. No rules were made for latter three categories. Sometimes, a firm may be able to sell at a higher price abroad, a condition called reverse dumping. Much effort has gone into investigations of the reasons for dumping. Three examples of motivational classifications will suffice. The entries on trade policy are here. In 1923 Jacob Viner devised a classification according to motive and to continuity in his Dumping: A Problem in International Trade. First, sporadic dumping disposes of surplus stocks and is unintentional. The entries on trade policy are here. At any rate, most businesses would use it at some time. Second, short-run or intermittent dumping arises when a firm is meeting temporary low prices in existing markets, is attempting to develop new markets, forestalls competition and retaliates against dumping in the reverse direction. Third, long-run or continuous dumping occurs when firms maintain full production without cutting domestic prices, when they wish to obtain economies of larger-scale production without cutting domestic prices, and when they do it for purely mercantilistic reasons. Greg Mastel (American Trade Policy After the Uruguay Round) divides motivations for dumping into overcapacity dumping (prevalent in industries that face longer-term reduced demand), government-supported dumping (firms are able to take advantage of below-cost inputs supported by governments), tactical dumping and discriminatory pricing (selling the same product in different markets at different prices, partly in order to meet the competition) and predatory dumping (undercutting the competition in order to drive it out of business). Robert Willig has devised one of the most useful approaches to the analysis of dumping, particularly because it provides some useful insights into the motivations for dumping, though his approach does not enjoy wholehearted support from the trade policy community. He divides the activity into non-monopolizing and monopolizing dumping. Non-monopolizing dumping includes market- expansion dumping (higher prices in the home market support lower prices in the export market), cyclical dumping (aimed at eliminating substantial excess production to a down-turn in demand) and state-trading dumping (practiced particularly by economies in which exchange rates have little meaning or price signals do not matter). Monopolizing dumping includes strategic dumping (injury caused in the importing market through an overall strategy or general anti-competitive circumstances prevailing in the exporting country) and predatory-pricing dumping (exporting at low prices aimed driving rivals out of business to achieve monopoly power in the importing country). These categories are not usually taken into account in national anti-dumping legislation. They should be seen mainly in the context of attempts to reform anti-dumping activities. For the trade policy community today, the main sub-categories of dumping are (a) hidden dumping, defined in an addendum to GATT Article VI as the sale by an importer at a price below that corresponding to the price invoiced by an exporter with whom the importer is associated, and also below the price in the exporting country, i.e. dumping is achieved through transfer pricing; (b) indirect dumping, where a product is imported via a third country where it would not be considered as having been dumped; and (c) secondary dumping which is the export of a product containing components imported at what would normally be considered dumped prices. K W Dam has drawn attention to an apparent contradiction in the dumping concept. He says that according to the rules, local firms suffer injury whenever the import price is the same or lower than the price they charge. Yet, he says, the injury is no greater when dumping is present than when the import price merely reflects the comparative advantage of the exporter. Professor Deardorff has pointed to the close connection between dumping and the degree of competition in the home market. He notes that if both the market and the firm are protected, they will almost certainly have to resort to selling at less than the domestic price if they are to make any export sales at all. Gabrielle Marceau (Anti-Dumping and Anti-Trust Issues in Free Trade Areas) sums it up well when she says that the origin of dumping remains the existence of different national economic and legal policies between two national markets. She adds that national differences are normal and reasonable unless internationally agreed standards exist. See also anti- circumvention, circumvention, competition policy and anti- dumping measures, de minimis dumping margins and persistent dumping clause.
Dumping: Further Information
Please, see the legal dictionary.
Notes and References
- Dictionary of Trade Policy, “Dumping” entry (OAS)
- International Trade
- Trade Regulation
- International Economic Law
- Export License
- International Trade Law
- Foreign Trade
Hierarchical Display of Dumping
Business And Competition > Competition > Restriction on competition
Economics > Economic policy > Economic support > State aid
Business And Competition > Competition > Restrictive trade practice > Horizontal agreement > Cartel
Business And Competition > Competition > Competition law > Anti-dumping legislation
Finance > Prices > Market prices > Export price
Trade > Trade policy > Export policy > Export financing
Meaning of Dumping
Overview and more information about Dumping
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Translation of Dumping
- Spanish: Dumping
- French: Dumping
- German: Dumping
- Italian: Dumping
- Portuguese: Dumping
- Polish: Dumping
Thesaurus of Dumping
Business And Competition > Competition > Restriction on competition > Dumping
Economics > Economic policy > Economic support > State aid > Dumping
Business And Competition > Competition > Restrictive trade practice > Horizontal agreement > Cartel > Dumping
Business And Competition > Competition > Competition law > Anti-dumping legislation > Dumping
Finance > Prices > Market prices > Export price > Dumping
Trade > Trade policy > Export policy > Export financing > Dumping