Prior to the 1980s, there were only a few countries who were relatively active
in pursuing antidumping actions. They are nowadays regarded as 5
traditional users, and these include Canada, the United States, the European
Union, Australia, and New Zealand. Today the situation changes a lot. More
than 75 countries (treating the EU as one) have adopted antidumping law
and the number of antidumping investigations has risen sharply during the
last two decades. The increasing use of antidumping policy has gained a lot
of attention from policy makers as well as academics.
According to the WTO rules, a firm is said to dump if it sells its product in
another country at a price less than the normal value. The normal value is
defined as the price it charges in its local country, or in a third country, or
the constructed price (the constructed price is calculated by the authority
concerned when the first two are unavailable). Therefore, it does not matter
whether a foreign firm sells at a higher or lower price than the domestic
ones; as long as the price charged in the domestic country is below that in its
own country, the firm can be found allegedly dumping.
Nevertheless, one may still believe that dumping is unfair because products
of the same quality should be priced equally wherever they are sold. But,
thinking about it more carefully, it is rather strange if the prices are identical
everywhere. There are so many factors that make price differ across
markets; tariff, market size, demand structure, and so on. Moreover,
dumping can be viewed as a sign of price discrimination. This common
business practice is acceptable domestically and there is no reason why it
cannot be done internationally. If it is good to sell concert tickets to school
students at a cheaper price than those for adults, why is it bad to sell
medicines in Uganda at a price less than in the United States?
GATT (Article 6) allows countries to take action against dumping. The AntiDumping Agreement clarifies and expands Article 6, and the two operate
together. They allow countries to act in a way that would normally break the
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dumping measures must expire five years after the date of imposition, unless
an investigation shows that ending the measure would lead to injury.
Anti-dumping investigations are to end immediately in cases where the
authorities determine that the margin of dumping is insignificantly small
(defined as less than 2% of the export price of the product). Other conditions
are also set. For example, the investigations also have to end if the volume
of dumped imports is negligible (i.e. if the volume from one country is less
than 3% of total imports of that product although investigations can
proceed if several countries, each supplying less than 3% of the imports,
together account for 7% or more of total imports). The agreement says
member countries must inform the Committee on Anti-Dumping Practices
about all preliminary and final anti-dumping actions, promptly and in detail.
They must also report on all investigations twice a year. When differences
arise, members are encouraged to consult each other. They can also use the
WTOs dispute settlement procedure.