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Submitted By: Haritha K Roll No: 4912 (Mcom 3 Semester) : Topic: Dumping

This document discusses the topic of dumping in international trade. It defines dumping as when a manufacturer lowers the price of a product entering a foreign market below the price charged domestically. There are different types of dumping including sporadic, predatory, and persistent dumping. Dumping allows companies to penetrate foreign markets but subsidies can become too costly over time. While dumping is legal under WTO rules, most countries view it as an unfair practice and impose tariffs and quotas to protect domestic industries. Real-world examples show countries upholding anti-dumping duties when foreign imports are found to be selling at unfairly low prices.

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185 views6 pages

Submitted By: Haritha K Roll No: 4912 (Mcom 3 Semester) : Topic: Dumping

This document discusses the topic of dumping in international trade. It defines dumping as when a manufacturer lowers the price of a product entering a foreign market below the price charged domestically. There are different types of dumping including sporadic, predatory, and persistent dumping. Dumping allows companies to penetrate foreign markets but subsidies can become too costly over time. While dumping is legal under WTO rules, most countries view it as an unfair practice and impose tariffs and quotas to protect domestic industries. Real-world examples show countries upholding anti-dumping duties when foreign imports are found to be selling at unfairly low prices.

Uploaded by

John Honnai
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Topic : Dumping

Submitted by: Haritha K


Roll no: 4912
(Mcom 3rd Semester)

Introduction
In the present era we are familiar with the word
'Dumping'. The term used in the context of
international trade. First of all we need to
understand what is dumping?. And then Let’s
discuss about it’s advantages and disadvantages.
Apart from these we should know what is the
international attitude on dumping…

Dumping
Dumping is considered a form of price
discrimination. It occurs when a manufacturer
lowers the price of an item entering a foreign
market to a level that is less than the price paid by
domestic customers in the originating country. The
practice is considered intentional with the goal of
obtaining a competitive advantage in the importing
market.
Types of dumping
• Sporadic dumping
• Predatory dumping (Intermittent dumping)
• Persistent dumping (Long period dumping)
• Reverse dumping
Objectives of dumping
• To Find a Place in the Foreign Market
• To Sell Surplus Commodity
• Expansion of Industry
• New Trade Relations

Advantages and Disadvantages of Dumping


The primary advantage of trade dumping is the
ability to permeate a market with product prices
that are often considered unfair. The exporting
country may offer the producer a subsidy to
counterbalance the losses incurred when the
products sell below their manufacturing cost. One
of the biggest disadvantages of trade dumping is
that subsidies can become too costly over time to
be sustainable. Additionally, trade partners who
wish to restrict this form of market activity may
increase restrictions on the good, which could result
in increased export costs to the affected country or
limits on the quantity a country will import.

International Attitude on Dumping


While the World Trade Organization (WTO)
reserves judgment on whether dumping is an unfair
competitive practice, most nations are not in favour
of dumping. Dumping is legal under WTO rules
unless the foreign country can reliably show the
negative effects the exporting firm has caused its
domestic producers. To counter dumping and
protect their domestic industries from predatory
pricing, most nations use tariffs and quotas.
Dumping is also prohibited when it causes “material
retardation” in the establishment of an industry in
the domestic market.
The majority of trade agreements include
restrictions on trade dumping. Violations of such
agreements may be difficult to prove and can be
cost-prohibitive to enforce fully. If two countries do
not have a trade agreement in place, then there is
no specific ban on trade dumping between them.

Real World Example


In January 2017, the International Trade
Association (ITA) decided that the anti-dumping
duty levied on silica fabric products from China the
previous year would remain in effect based on the
investigation by the Department of Commerce and
the International Trade Commission that showed
that the silica products from China were selling at
less than fair value in the United States. The ITA
ruling was based on the fact that there was a strong
likelihood that dumping would repeat if the tariff
was removed.
Conclusion
Dumping is not a longer problem in
international trade. Because , every country take
some anti-dumping measures to prevent such
dumping activities. Like Tariff Duty, Import
Embargo, Import Quota, Voluntary Export Restraint
etc. These are not at all a complete preventive
actions but it helps to reduce the dumping
activities.

*** *** ***

Reference:
https://www.yourarticlelibrary.com/economics/du
mping-meaning-types-price-determination-and-
effects-of-dumping/28863

https://www.investopedia.com/terms/d/dumping.a
sp#:~:text=Dumping%20is%20a%20term%20used,in
%20the%20exporter’s%20domestic%20market.

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