Trade treaties might include mechanisms to alleviate problems related to dumping, such as countervailing duty penalties and anti-dumping statutes.
[5] Dumping is also prohibited when it causes "material retardation" in the establishment of an industry in the domestic market.
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.
Ron Chernow points to the example of regional oil monopolies in Titan: The Life of John D. Rockefeller, Sr. where oil in one market, Cincinnati, would be sold at or below cost to drive competition's profits down and force them to exit the market.
Opinions differ as to whether or not such practice constitutes unfair competition, but many governments take action against dumping to protect domestic industry.
(This focus only on the reaction to dumping contrasts with the approach of the subsidies and countervailing measures agreement.)
The legal definitions are more precise, but broadly speaking, the WTO agreement allows governments to act against dumping where there is genuine ("material") injury to the competing domestic industry.
While permitted by the WTO, General Agreement on Tariffs and Trade (GATT) (Article VI) allows countries the option of taking action against dumping.
The investigation must evaluate all relevant economic factors that have a bearing on the state of the industry in question; if it is revealed that dumping is taking place and hurting domestic industry, the exporting company can raise its price to an agreed level in order to avoid anti-dumping import duties.
[8] Detailed procedures are set out on how anti-dumping cases are to be initiated, how the investigations are to be conducted, and the conditions for ensuring that all interested parties are given an opportunity to present evidence.
If the foreign producer's export price is lower than the normal price and the investigating body proves a causal link between the alleged dumping and the injury suffered by the domestic industry, it comes to a conclusion that the foreign producer is dumping its products.
According to Article VI of GATT, dumping investigations shall, except in special circumstances, be concluded within one year, and in no case more than 18 months after initiation.
Anti-dumping investigations are to end immediately in cases where the authorities determine that the margin of dumping is, de minimis, or insignificantly small (defined as less than 2% of the export price of the product).
India and China have been alleged to have used Anti-dumping Duty (ADD) as a form of "safety valve" – to ease competitive pressure in domestic market.
Because of that Biden administration has introduced an anti-dumping measure of Armenian exporters being obliged to pay a deposit equal to 188.4% of the product value at the Customs.
Some commentators have noted that domestic protectionism, and lack of knowledge regarding foreign cost of production, lead to the unpredictable institutional process surrounding investigation.
[11] Section 1318 of the Omnibus Trade and Competitiveness Act of 1988 (PL 100-418) establishes procedures for US industries to petition the US Trade Representative to request a foreign government that is a signatory to the GATT Anti-Dumping Code to initiate an antidumping investigation on behalf of a US industry that claims it is being injured by dumping in that country's market.
[14] Later actions were governed by Council Regulation (EC) No 384/96 of 22 December 1995 on protection against dumped imports from countries not members of the European Community (as it then was),[15] and Council Regulation (EC) No 1225/2009 of 30 November 2009 on protection against dumped imports from countries not members of the European Community.
[17] The European Commission put forward a proposal in 2013 which would remove the "lesser duty rule" in some cases,[18] where circumvention of the rules, subsidies, or "structural raw material distortions" are in operation,[19] i.e. where states "interfere [with] trade of raw materials with a view to keeping raw materials in those countries for the benefit of domestic downstream users, for instance by imposing export taxes or operating dual pricing schemes".
[18]: Preamble 8 The European Parliament and the Council agreed in the modernisation of EU trade defence legislation that the rule would no longer apply in anti-subsidy proceedings from mid-2018.
As is implied by the criterion for beginning an investigation, EU anti-dumping actions are primarily considered part of a "trade defence" portfolio.
The Common Agricultural Policy of the European Union has often been accused of dumping despite significant reforms, as part of the Agreement on Agriculture at the Uruguay round of GATT negotiations in 1992 and in subsequent incremental reforms, notably the Luxembourg Agreement in 2003.
Furthermore, the payments are generally dependent on farmers fulfilling certain environmental or animal welfare requirements to encourage responsible, sustainable farming in what is termed "multifunctional" agricultural subsidies.
have argued that it is quite unreasonable to compare China's goods price to the United States as analogue.
The current set of anti-dumping laws in India is defined by Section 9A and 9B of Customs and Tariffs Act, 1975 (Amended 1995) and The Anti-dumping rules such as (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules of 1995, Section 9A of customs and tariffs Act 1975[24] states that "If any article is exported from any country or territory to India at less than its normal value, then, upon the importation of such article into India, the central government may by notification in the official gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article."
In January 2017, the Indian government imposed anti-dumping duty on colour coated steel products imported from the European Union and China for 6 months.
[27] This came after CEO and joint-Managing Director of Greenply Industries, Shobhan Mittal[28] filed an application for anti-dumping probe initiation.
[29] On 8 March 2017, the government of India imposed anti-dumping duty ranging from US$6.30 to US$351.72 per tonne on imports of jute and its products from Bangladesh and Nepal.
India has imposed anti-dumping duty on certain stainless steel products from the European Union and other nations including China and Korea, in order to protect the domestic industry from cheap imports.