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Economics

Study Notes

Anti-Dumping Import Tariffs

Level:
AS, A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

The World Trade Organisation allows a government to act against dumping where there is genuine ‘material’ injury to the competing domestic industry

In 2019, the European Commission imposed anti-dumping duties on e-bikes imported from China. European producers had complained that Chinese manufacturers benefitted from unfair subsidies that allowed them to flood the EU market.

There are three main options when introducing an anti-dumping import duty

  1. An ad valorem duty – a % of the net EU frontier price. This is the most common form of import duty.
  2. A specific duty – a fixed value for a certain amount of goods, e.g. €100 per tonne of a product
  3. A variable duty – a minimum import price (MIP). Importers in the EU do not pay an anti-dumping duty if the foreign exporter’s export price to the EU is higher than the MIP
  4. The lesser-duty rule is that duties can’t exceed the level needed to repair the harm done to European industry by the unfair dumping practices – currently between 9-13% for a range of steel products imported into the EU from China

Evaluation on the Import Dumping Issue

If a company exports a product at a price lower than the price it normally charges on its domestic market, this is dumping.

There has been a sharp rise in the number of anti-dumping duties and investigations of dumping allegations

Evaluation:

  1. May be hard to measure the “normal” price at which a country produces and sells for their domestic market
  2. Price differences are often the result of factors such as lower unit labour costs or a more competitive exchange rate
  3. Issues such as labour standards in exporting country might also be considered as important as price variations
  4. Difficult to assess the scale of the “material injury” caused by import dumping into a market / industry.
  5. Anti-dumping import duties could hit many other related industries e.g. a tariff on steel increases costs for car makers

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