The General Agreement on Tariffs and Trade (GATT), now incorporated into the treaty creating the World Trade Organization (WTO), defines “dumping” as the sale of goods in an importing nation at a price below their “normal value.” Such conduct entails either price discrimination in favor of buyers in the importing nation or sales below (roughly) longrun average cost. Subsidization under GATT arises from a “bounty or subsidy bestowed, directly or indirectly, upon the manufacture, production or export of any merchandise.” GATT allows importing nations to counteract dumping and subsidization with import duties that would otherwise violate negotiated GATT tariff ceilings. In response to dumping by foreign firms, importing nations may impose an “antidumping duty not greater in amount than the margin of dumping” (i.e., the amount by which the price is less than “normal value”). In response to subsidization, a “countervailing duty” may be imposed on imported merchandise as long as it is not “in excess of an amount equal to the estimated bounty or subsidy determined to have been granted.” Before either an antidumping or countervailing duty may be imposed, however, GATT requires the importing nation to determine “that the effect of the dumping or subsidization, as the case may be, is such as to cause or threaten material injury to an established domestic industry, or is such as to retard materially the establishment of a domestic industry.” This requirement, known as the “injury test” or “material injury test,” is the subject of this chapter.