Unfairly Traded Imports

1. Antidumping Actions

The WTO’s Antidumping Agreement governs the application of antidumping (AD) mea­sures by WTO member countries. A product is considered to be “dumped” if it is exported to another country at a price below the normal price for a like product in the exporting country. Antidumping measures (the imposition of antidumping duties on the product in question) are unilateral remedies that the government of the importing country may apply after a thor­ough investigation has determined that the product is, in fact, being dumped and that sales of the dumped product are causing material injury to a domestic industry that produces a like product. Its substantive requirements provide for the calculation of the export price and normal value as a basis for establishing dumping margins (the difference between export price and normal value). Export price is considered to be the price of the product when it is sold to unrelated buyers in the importing country without including shipping charges. If the product is exported from a nonmarket economy country, the agreement provides for the use of “constructed price.”

The WTO agreement also sets forth rules for determining whether dumped imports are causing injury to a domestic industry that produces a like product. Injury is defined to mean material injury itself, the threat of material injury, or material retardation in the establish­ment of a domestic industry. It is important to establish that the dumped imports are a cause of injury to domestic industry. The WTO provides rules and procedures for initiating an antidumping investigation. Dumping disputes may be submitted to the WTO dispute settlement body (DSB) for resolution. It may also review the final antidumping order of administrative agencies for consistency with the agreement. Antidumping duties are applied on all imports of the subject merchandise as long as necessary to counteract dumping that is causing the injury.

2. Countervailing Duty Actions

The WTO’s Subsidies Agreement provides rules for the use of government subsidies and for the application of remedies to address subsidized trade that has harmful commercial ef­fects. These remedies can be pursued through the WTO’s dispute settlement procedures or through a countervailing duty (CVD) investigation, which can be undertaken unilaterally by any WTO member government. A subsidy is a benefit by a government to a domestic firm in the form of direct transfer of funds (potential transfer such as a loan guarantee), foregone government revenue such as a tax credit, or the purchase or provision of goods. The WTO allows certain types of government subsidies such as domestic subsidies used to fund social programs, finance R&D, and support firms in meeting one-time costs of environmental re­quirements. A subsidy granted by a WTO member government is prohibited by the Subsidies Agreement if it is contingent on export performance or on the use of domestic over imported goods. These prohibited subsidies are commonly referred to as export subsidies and import substitution subsidies (Czako, Human, and Miranda, 2003).

A subsidy granted by a WTO member government is “actionable” under the agreement (again, certain exceptions are made for agricultural subsidies) if it “injures” the domestic industry of another country or if it causes “serious prejudice” to the interests of another country. Serious prejudice can arise in cases where a subsidy impedes or displaces another’s country’s exports or increases the market share of the subsidizing country. Every WTO mem­ber is required to notify the WTO Subsidies Committee each year of any subsidy (as defined by the Subsidies Agreement) that it is granting or maintaining within its territory.

Source: Seyoum Belay (2014), Export-import theory, practices, and procedures, Routledge; 3rd edition.