The problem of dumping in world trade and measures that are taken to Dissertation

The problem of dumping in world trade and measures that are taken to stop it - Dissertation Example Measures that have been taken to stop dumping have always been and are still used as most significant devices by countries as a protection against imports. Measures to stop dumping tend to be supported over other trade remedies because unlike safeguard measures, they provide the opportunity for a selective approach. According to, the process used in anti-dumping legislations can give rise to increased dumping margins and actions unrelated to the actual market condition. This paper explains the concept of export dumping as well as the various forms it takes in the global trade. The paper details how Anti- Dumping (AD) legislations come into been and their relationship to article VI of the General Agreement on Tariffs and Trade (GATT). The paper will further discuss WTO anti-dumping measures together with the procedural issues in anti-dumping cases. Additionally, it will elucidate the reason behind the practices of export dumping. Moreover, the paper gives the reasons why civilized and uncivilized nations have special interests in the AD processes especially in the global trade. Finally, the paper will provide an explanation as to why AD legislation is perceived as a problem in the global trade. Introduction Definition of dumping In the global market arena export dumping can be regarded as selling of products/goods at price which is less than the domestic price normally as exports in the world trade.2 Similarly, the practice of selling at value below cost used to produce them is also referred to as dumping. Usually, primary reason behind export dumping is to drive out competitors from the market. Additionally, 3purports that dumping is also done to get rid of the surplus of local trade. Some traders also resort to dumping when their products are unacceptable for the local market. In economic perspective, dumping is viewed as a form of predatory pricing whereby the term is frequently used in the context of global trade legislations.4 Under this backdrop, dumping i s regarded as an act whereby a manufacturer in a given country exports goods to an overseas country or countries at price below the one charges at its domestic market for similar product/s. Dumping huge amount of goods or products into a market will significantly reduce price of goods that are priced at the market place as it introduces goods priced below the market price. Supporters of free market implicate it negatively as they perceive it as a form of protectionism. Overall, dumping has various definitions from various contexts but it is widely defined as selling of products in a foreign market at a price below the one a given country charges for the same products in the home market.5 In other words, it is the selling at lower than fair value. According to,6 WTO and the GATT condemn the practice of export dumping at situations where it effects injures the economy of a country into which the goods are dumped although it does not prohibit it. Some countries take control of specific technology or method of production in the world trade. As a consequence, these countries monopolize these products or technologies. Such kinds of monopolies are also referred to as international dumping. In order to capture foreign markets for their goods or technologies, such countries sell their goods at foreign markets at a price below the one they charge in their domestic market. This act is normally adopted by producers who have monopolies in their local markets whereby the need for their goods is less elastic than in world trade.7 Types of Dumping In the world trade, there are generally three forms of dumping