Instrument

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Instrument

Anti-dumping tariff

Description

Anti-dumping tariffs are charged on top of the regular tariffs applied and can be higher than bound tariffs. They are a reaction to unfair behaviour on the part of trading partners: ‘Dumping’ refers to the sale of export goods below domestic prices or below the cost of production. Where there are price differences between domestic and export markets, it should be ascertained whether these are cases of an anti-competitive behaviour in the form of dumping or business as usual.

To implement an anti-dumping measure, the importing country has to a) prove that dumping has taken place and that it is not simply business as usual, b) demonstrate that dumping has caused significant damage on the domestic market, and c) demonstrate a causal link between dumped imports and the damage caused to the domestic market. The WTO determines how dumping investigations should take place.

The scientific proof of the harmful effects on the sector presents a challenge to less developed countries in particular, since they often lack the data and scientific resources required. An alternative are safeguards, for which the burden of proof is less strict.

As dumping is practised by businesses and not countries or governments it falls outside the regulatory sphere of influence of the WTO, since businesses cannot appear before the WTO arbitration panel. However, the Anti-dumping Agreement permits measures that enable governments to take action against dumping.

Anti-dumping duties can help ensure the continued existence of domestic agricultural production and boost income and food and nutrition security in rural areas. However, it is not permitted to use anti-dumping tariffs as a protectionist trade instrument. Regular import tariffs do a better job in such cases.

Requirements

  • Compatible regional and world trade law (WTO conformity)
  • Constant market surveying and forecasting
  • Clear and coherent political strategy and targets for policy-makers and public authorities
  • Close cooperation and knowledge sharing with research institutions
  • Efficient customs administration
  • Market price information systems

Possible Negative Effects

  • Inefficient allocation of resources / market distortion
  • Higher prices for consumers (loss of consumer surplus) and the processing industry (usually short-term)
  • Prices of complementary products could rise
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This page was last edited on 24 October 2019 | 9:42 (CEST)
Implementation Level
  • National Government
Required Budget
medium ($$)
Impact Horizon
  • short
  • medium
Administrative Complexity
medium
Ministries Involved
  • Trade, Industry & Economic Development
  • Agriculture, Fisheries & Forests
  • Finance
Trade Impact
distorting
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