Dumping

In economics, "dumping" can refer to any kind of predatory pricing, and is by most definitions a form of price discrimination. However, the word is now generally used only in the context of international trade law, where dumping is defined as the act of a manufacturer in one country exporting a product to another country at what some perceive as an unreasonably low price, usually meaning below the costs of production. The term has a negative connotation, but advocates of free markets see "dumping" as beneficial for consumers and believe that protectionism to prevent it would have net negative consequences. Advocates for workers and laborers however, believe that safeguarding businesses against predatory practices, such as dumping, help alleviate some of the harsher consequences of free trade between economies at different stages of development (see protectionism). The Bolkestein directive, for example, was accused in Europe of being a form of "social dumping," as it favored competition between workers, as exemplified by the Polish Plumber stereotype.

A standard technical definition of dumping is the act of charging a lower price for a good in a foreign market than one charges for the same good in a domestic market, such that the foreign market is "injured". This is often referred to as selling at less than "fair value." True dumping (by a technical definition) is actually very difficult under free trade, and is condemned (but not prohibited) [1] by the WTO.

In the United States, domestic firms can file an antidumping petition under the regulations determined by the Department of Commerce, which determines "less than fair value" and the International Trade Commission, which determined "injury". These proceedings operate on a timetable governed by U.S. law. The Department of Commerce has regularly found that products have been sold at less than fair value in U.S. markets. If the domestic industry is able to establish that it is being injured by the dumping, then antidumping duties are imposed on goods imported from the dumpers' country at a percentage rate calculated to counteract the dumping margin.

Related to antidumping duties are "countervailing duties." Like antidumping duties, countervailing duties attach to imported goods that are being sold at unreasonably low prices. The difference is that countervailing duties seek to "countervail" subsidies being granted in the exporting country rather than simply goods being sold by the foreign sellers at less than fair value.

Some commentators have noted that domestic protectionsim and lack of knowledge regarding foreign cost of production, lead to the unpredictable institutional process surrounding investigation. Members of the World Trade Organization can file complaints against anti-dumping measures.