2DumpingSelling exports at a price that is “too low,” a price below “normal value” or “fair market value.”EitherThe export price is lower than the price charged for comparable domestic sales in the home market of the exporter.orThe export price is lower than the full unit cost (including a profit margin).
3Specific Types of Dumping A firm temporarily charges a low price in the foreign export country so as to access the market.Predatory DumpingDuring the part of the cycle when demand is low, a firm tends to lower its price to limit the decline in quantity sold.Cyclical Dumping
4A firm sell of excess inventories of product during the low season. Seasonal DumpingA firm with market power uses price discrimination between market to increase its total profit.Persistent Dumping
6Actual Anti-dumping Policies The importing- country’s government should examine each case and consider benefits and costs before imposing anti-dumping duties or restrictions on dumped imports.The WTO rules permit countries to retaliate against if the dumping injures domestic import-competing producers. If the government in the importing country finds both dumping and injury, then the government is permitted to impose an anti-dumping duty.
7Proposal for Reform on Anti-dumping Policies Anti-dumping actions could be limited to situation in which predatory dumping plausible.The injury standard could be expanded to require that weight be given to consumers and users of product.Anti-dumping policy could be replaced by more active use of safeguard policy*.*Safeguard policy is the use of temporary import protection when a sudden increase in imports causes injury to domestic producer
8Export Subsidies (Small Nation) Suppliers’ revenue with subsidy* Subsidy will increase the domestic price otherwise all products will be exported.Decreased Consumer surplusIncreased Producer surplusGovernment subsidy on exportDeadweight LossWorld PriceExport with subsidyExport without subsidy
9Export Subsidies (Large Nation) Suppliers’ revenue with subsidy* Subsidy will increase the domestic price otherwise all products will be exported.Decreased Consumer surplusIncreased Producer surplusGovernment subsidy on exportDeadweight LossInitial World PriceNew World PriceExport with subsidyExport without subsidy
10Switching an Importable Product into an Exportable Product Decreased Consumer surplusSuppliers’ revenue with subsidy* Subsidy will increase the domestic price otherwise all products will be exported.Increased Producer surplusGovernment subsidy on exportExport with subsidyImport
11Conclusion toward Subsidy An export subsidy can expands exports and production of subsidized product.An export subsidy can lowers the price paid by foreign buyers, relative to the price that local consumers pay for the product.The export subsidy reduces the net national well-being of the exporting contry.
12WTO Rules on SubsidiesSubsidies linked directly to export are prohibited, except export subsidies used by the lowest-income developing countries.Subsidies that are not linked directly to export but still have an impact on export are actionable.Some subsidies are non-actionable.
13Should the Importing Country Impose countervailing Duties ? Exporting country is a large nation.Importing countryDecreased Producer surplusIncreased Consumer surplusInitial world priceNew world price when exporting country offered subsidy to its exporters.If the importing country employ the countervailing duty, this is the extra benefit from such duty.