Dumping
Dumping: occurs when goods are exported at a price less than their normal value, generally meaning they are exported for less than they are sold in the domestic market or third-country markets, or at less than production cost. GATT Article VI, which deals with anti-dumping and countervailing duties, does not actually prohibit dumping. It merely says that GATT parties recognize that dumping is to be condemned if it causes or threatens material injury to an established industry or retards the establishment of a domestic industry in the territory of another member. If enquiries in the importing country show that dumping is taking place and causing material injury to an industry, governments may take anti-dumping measures. The basis of comparison is usually the ex-factory price in the exporting country and the transaction price of the goods at the border of the importing country, less transport and other costs incurred after the good has left the factory. It appears, however, that some equate sales below the domestic price with sales below cost. This interpretation is strictly speaking incorrect. Dumping has on occasion been confused with the import of products benefiting from the payment of subsidies. In trade policy, dumping refers to the conduct of individual firms that see some advantage in discriminatory pricing arrangements and that finance these from their own resources. Subsidies, on the other hand, are paid, directly or indirectly, to
Source: http://ctrc.sice.oas.org/trc/WTO/Documents/Dictionary%20of%20trade%20%20policy%20terms.pdf
Web site to visit: http://ctrc.sice.oas.org
Author of the text: W. Goode
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