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ANTIDUMPINIG AND SAFEGUARDS (SAFEGUARDS (WTO sets TIME LIMITS on safeguard…
ANTIDUMPINIG AND SAFEGUARDS
DUMPING
INTRODUCTION of a product from one country into another at LESS THAN its NORMAL VALUE
NORMAL VALUE
COMPARABLE price for the product in ordinary trade in exporting country
may be COMPUTED using comparable price for product exported to third country
CONSTRUCTED by expenses, profits and cost of production --> CONSTRUCTED COST TEST
CONCEPT of "full cost": fixed and sunk cost for capital and margin for normal profit
catch you 50% of the time
IMPORTER - loss PS and gain CS --> NET GAIN unless it was predatory dumping
PRICE DISCRIMINATION
importer not necessarily lower in price
price in export home market is usually higher
CONSTRUCTED COST TEST NOT RELEVANT
CYCLICAL DUMPING
BIOLOGICAL cycle of animal industry
LOW prices - substantial excess production
attempt to MINIMIZE opportunity cost
STATE TRADING DUMPING
STATE-owned enterprises where currencies are not freely convertible
HOME market price can't compare with export price
EXPORT to acquire hand currency to import
benefit from import outweighs the loss of export goods
MARKET EXPANSION DUMPING
GET foot in the door and develop some sort of consumer loyalty
PREDATORY DUMPING
LOW price exporting to drive rivals out of business to obtain monopoly power in importing market
must be RECOUPED later at higher price
DIFFICULT to determine if pricing aggressively to compete or to drive out rivals
VICTIMS not being able to compete in the long run and exit industry
OTHER practices - foreclosure of required input
INEFFICIENT, must endure long periods of losses, can't prevent re-entry
MERGER and acquisition more efficient
ANTIDUMPING LAWS
INVESTIGATION
EVIDENCE that dumping exists
DUMPING MARGINS - between export and home price OR between export and constructed cost
MATERIAL INJURY test - dumped products causes or threatens to cause injury retards establishment of domestic industry
AGAINST foreign Firms NOT Government
COMPLAINT must have standing - fair share of industry and >50% of industry agree to complain
SAFEGUARDS
SURGE of imports
PROOF that it causes/ threatens to cause serious injury to domestic industry
NOBODY at fault
restrict imports of product TEMPORARILY if domestic industry injured or threatened with injury
INJURY standards higher than A/D and CVD
CANNOT target products from particular country
exporting country can seek COMPENSATION through consultation
WTO sets TIME LIMITS on safeguard actions
NO MORE than 4 years, can extend once to 8 years