Dumping in International Trade

Under WTO rules, dumping occurs when a product is exported at a price lower than its normal value in the exporting country. The difference between normal value and export price is the dumping margin, but dumping alone does not justify an anti-dumping duty.

Determining whether dumping exists

The WTO Agreement on Anti-Dumping requires a fair comparison between the export price and normal value, normally at the same level of trade and for sales made at comparable times.

• Normal value is ordinarily the comparable price of the like product when sold for consumption in the exporter's domestic market in the ordinary course of trade.
• If suitable domestic sales are unavailable, normal value may be based on a comparable third-country export price or on the cost of production plus reasonable administrative, selling and general costs and profits.
• If the export price is absent or unreliable because of an association or compensatory arrangement, it may be constructed from the price to the first independent buyer.
• Dumping exists where the properly determined export price is below normal value.

Conditions for imposing anti-dumping duty

An importing member may impose a duty only after an investigation establishes dumping, injury and a causal link on the basis of positive evidence and objective examination.

• Injury means material injury, threat of material injury, or material retardation of the establishment of a domestic industry.
• The investigation must examine the volume and price effects of dumped imports and their consequent impact on the domestic industry.
• Injury caused by other known factors must not be attributed to dumped imports.
• Any anti-dumping duty cannot exceed the established margin of dumping; imposing a lower duty is desirable where it is sufficient to remove injury.

Thresholds and duration

• An investigation must normally terminate where the dumping margin is less than 2 per cent of the export price.
• Imports from a country are normally negligible if they account for less than 3 per cent of total imports, unless such countries collectively exceed 7 per cent.
• A definitive duty normally expires within five years, unless a review finds that ending it would likely lead to continuation or recurrence of dumping and injury.

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