Managing Trade - Dumping and Subsidies

Managing Trade - Dumping and Subsidies - ManagingTrade...

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Managing Trade Dumping and Subsidies
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Dumping  When an exporter sells a good for a foreign market at a price which is below that in their home country (price- based) or at a price that is below their cost of production (cost-based) it is called dumping by the importing country. Kinds of Dumping: -Sporadic vs Seasonal vs Cyclical: When Dumping occurs once in a blue-moon vs at the end of seasons vs during recessions. -Persistent: It is a continued sale at a lower price. This may be because of price-discrimination by the producers. -Predatory: This is done to drive the competitors out of the market by charging artificially low prices so as to make future monopoly profits. This argument has logical limitations.
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Anti-Dumping Retaliation by the importing country government is called anti-dumping. (law suits, anti-dumping duties, VERs etc) Anti-dumping is the biggest growth area in trade policy for the world’s governments in the last 15-20 years. Economists believe that anti-dumping has been used as a protectionist policy for providing shelter to domestic producers that compete against imports. (Eg; US steel) Safeguard policies that provide temporary protection to domestic producers may be the most pragmatic solution to this worldwide disease called anti-dumping.
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Problem 11.2 Proposal to revise 
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