Distortion of international trade by dumping

Nature

International trade may be distorted when an enterprise effectively reduces the foreign price of its product below that of the domestic price, where any such difference is not due to actual differences in the cost of selling, production, or transportation. The price reduction may be disguised by quality differentials, spurious quantity discounts, or favourable credit terms. Governments may support such forms of export through special export subsidies, tax rebates, or other special concessions.

Background

The distortion of international trade by dumping emerged as a significant concern in the early 20th century, notably following post-World War I economic disruptions. Its global relevance intensified with the expansion of multilateral trade, prompting the 1947 General Agreement on Tariffs and Trade (GATT) to address anti-dumping measures. Over subsequent decades, recurring disputes and high-profile cases, particularly in steel and agricultural sectors, underscored the persistent and evolving impact of dumping on global market stability.

Incidence

Distortion of international trade by dumping is a persistent issue affecting multiple sectors worldwide, particularly in industries such as steel, agriculture, and manufacturing. Numerous countries have reported significant economic disruption, job losses, and market instability due to the influx of underpriced foreign goods. The World Trade Organization regularly receives complaints and initiates investigations, highlighting the global scale and ongoing nature of the problem.
In 2023, the European Union imposed anti-dumping duties on Chinese electric bicycles after investigations revealed that Chinese manufacturers were selling products below market value, harming European producers. This case underscored the continuing prevalence and impact of dumping practices.