Dumping is said to have taken place when an exporter country sells a product to an importer country at a price which is less than the price prevailing in its domestic market.
However, it is not per se illegal as producers tend to sell their goods at different prices therefore from a view of anti-dumping practice there is nothing illegal about dumping.
However if dumping causes or threatens to cause material injury to the domestic industry of the importer country, the designated authorities can take actions for investigations and impose anti-dumping duties.
Legal framework for Dumping
Section 9a, 9b and 9c of the Custom Tariffs Acts 1975 as amended in 1995. These laws are based on the agreement of anti-dumping which is in pursuance of Article 6 of GATT 1994.
Injury to the domestic industry
The importer country must be able to show that the dumped goods are causing or threatening to cause material injury to its domestic market and it cannot be based on mere allegation.
Injury analysis can be broadly classified into two categories:
- Volume effect: how much dumped goods are there in the domestic market as compared to domestic goods
- Price effect: the price of dumped goods is affecting the domestic industry or not.
On August 29, 2013, an anti-dumping case involving South Korea began at the World Trade Organization over U.S. tariffs imposed on imported washing machines. South Korea exports around US$800 million–1 billion worth of washing machines to the United States per year. The machines are made in Mexico and South Korea. South Korea was notified by the WTO for consultations with the United States on anti-dumping and countervailing measures on South Korean “residential washers” by the US Department of Commerce. The case was brought by Whirlpool Corporation, one of the world’s biggest appliance makers. The U.S International Trade Commission ruled 6-0 in favor of Whirlpool, finding that the U.S washing machine industry was threatened by imports of residential washers from South Korea. Also, the commission stated South Korean producers, Daewoo, LG, and Samsung were dumping washing machines far below their market value.
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