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6 - Antidumping: Overview of the Agreement

Published online by Cambridge University Press:  03 May 2010

By
Terence P. Stewart ,
Amy S. Dwyer ,
David A. Gantz  and
Thomas J. Prusa
Edited by
Kyle W. Bagwell ,
George A. Bermann  and
Petros C. Mavroidis
Kyle W. Bagwell
Affiliation:
Stanford University, California
George A. Bermann
Affiliation:
Columbia University, New York
Petros C. Mavroidis
Affiliation:
Columbia University, New York
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Summary

Background

Dumping is generally defined as the act of an exporter selling a product in an export market at a price below that which is charged for the same or comparable merchandise in the home market. Where dumping has the effect of causing injury to the domestic industry in the importing country, the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO) Antidumping Agreement permit antidumping measures, in the form of increased duties, to counteract or offset the dumping.

In fact, the Contracting Parties to the GATT, as well as the Members of the WTO, have recognized that injurious dumping is “to be condemned.” The reason for such strong language is that, although consumers of dumped products may benefit in the short term from lower prices, dumping sends false market signals about the underlying competitive positions of market participants. As U.S. Assistant Attorney General Samuel Graham put it in 1916:

[G]enerally accepted principles of political economy hold that it is not sound policy for any Government to permit the sale in its country by foreign citizens of material at a price below the cost of production at the place produced, for the reason that such a system, in its final analysis and on a sufficient scale, spells bankruptcy.

Hence, governments use antidumping measures to protect their domestic industries from injury caused by unfair international price discrimination.

Type
Chapter
Information
Law and Economics of Contingent Protection in International Trade , pp. 197 - 263
Publisher: Cambridge University Press
Print publication year: 2009

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