ANTIDUMPING DUTY Meaning and
Definition
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Antidumping duty refers to a tariff or tax imposed by a country on imported goods that are priced below their fair market value or sold at a lower price compared to domestic products. It is implemented to protect domestic industries from unfair trade practices and to ensure fair competition in the international market.
The purpose of antidumping duties is to prevent the harmful effects of dumping, which occurs when foreign producers export goods at a price lower than the cost of production. This practice can disrupt domestic markets, as it may lead to unfair competition and the erosion of local businesses. Antidumping duties act as a trade remedy, levying additional charges on imported products to level the playing field with domestic producers.
To impose an antidumping duty, the importing country must first conduct an investigation to determine if dumping is taking place and whether it is causing harm to its domestic industry. This examination involves comparing the export price of the imported goods with their normal value, which is the price in the exporting country or a comparable market. If evidence of dumping and damage is found, an antidumping duty is imposed on the targeted imports.
The antidumping duty rate is usually calculated based on the difference between the export price and the normal value. Its purpose is to offset the unfair advantage gained by the foreign producer and restore fair competition. Additionally, antidumping duties are subject to review and can be adjusted over time to reflect changes in market conditions.
Overall, the introduction of antidumping duties allows countries to protect their industries from unfair trade practices, maintain fair competition, and safeguard domestic jobs and economic factors.
Etymology of ANTIDUMPING DUTY
The word "antidumping duty" has a somewhat straightforward etymology based on the combination of two primary terms: "anti-" and "dumping duty".
1. "Dumping": In this context, "dumping" refers to the practice of exporting goods at a significantly lower price than their domestic production cost or their fair market value. This can be done to eliminate competition or gain market share in another country. The term "dumping" originated from the metaphorical sense of "dumping" goods onto a foreign market.
2. "Duty": In international trade, a "duty" refers to a tax or tariff imposed on imported goods. It is a form of duty levied by the importing country's government, usually as a means of protecting domestic industries and ensuring fair competition.
