Free The Problem of Dumping in World Trade Essay Sample
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Chapter One: Introduction.
Dumping is the export of products at a price which is less than normal value, with the aim of disposing excess production, or gaining market share in a competitive trade environment. It has prompted GATT to sanction signatories to charge duties on such products, to neutralize dumping effects. Antidumping legislation started in 1904 when Canada first implemented its law, with United States adopting antidumping laws in 1921. Dumping discourages fair international trade.
There are three types of dumping namely; persistent dumping, sporadic dumping and predatory dumping to keep the competitors out of the market and eventually maximise profits in the long run. These three motivators of dumping make antidumping legislation be seen as a problem in the international trade. GATT and WTO approved anti-dumping legislation and procedures of solving disputes with firm emphasis on prompt settlement.
The WTO agreement permits actions in cases of genuine injury, to the importing country’s domestic industry. The agreement stresses that governments must calculate and prove the extent of dumping and injury before any dispute is confirmed . The approaches of anti-dumping measures employed with WTO are Subsidies and countervailing measures, and the safeguards measures .
Determination of dumping margin is done by calculating the normal value of the products, by considering the price offered in the exporter’s domestic market, price charged in the importing country and by calculating normal value with reference to exporters cost of production, extra expenses and normal return margins.
Dispute settlement at the WTO is done by a selected committee of anti-dumping which is usually drawn from the member states. It is the pillar of the multilateral trading system that ensures stability of the world economy. Dispute is solved under the rule of law in a manner that promotes equity and is mutually acceptable. This is done through several stages within specific period of time and the decisions made must be implemented or lead to more trade sanctions. Anti-dumping measures hurts domestic industry and producers, reduces sales volume, hurts the market shares, stimulates reduction of profitability and leads to job losses in the importing country. However, its advantages include; assisting to re-establish fair trade and competition, as well as providing protection to the domestic producers and the industry (WTO.org).
Dumping discourages fair international trade since it injures the domestic economy of importing countries. The anti-dumping measures put in place by the WTO and GATT should be adopted by all nations to eliminate dumping effects and to guide dispute resolution among states. This research proposal recommends full implementation of the WTO anti-dumping legislation to bring sanity into international trade .