dumping

dumping, selling goods at less than the normal price, usually as exports in international trade. It may be done by a producer, a group of producers, or a nation. Dumping is usually done to drive competitors off the market and secure a monopoly, or to hinder foreign competition. To counterbalance international dumping, nations often resort to flexible tariffs. In international trade, acute competition from foreign producers often leads to charges of dumping. A policy of dumping depends for its effectiveness on the possibility of maintaining separate domestic and foreign markets, on monopolistic influences maintaining a high price in the home market, on export bounties, or on low import duties in the foreign market. Dumping disturbs those markets that receive dumped goods, and it may drive local producers out of business. Governments may condone, or even sponsor, dumping in other markets for either political reasons or to achieve a more favorable balance of payments. In the late 19th cent., dumping became part of the trade policy of great European cartels, especially German cartels. Britain, France, Japan, and the United States also have practiced dumping. Antidumping legislation was first passed (1904) by Canada. In the United States various tariff acts have been passed to deal with different types of dumping; in particular the 1921 Emergency Tariff Act imposed special duties on goods imported for sale at less than their fair value or cost of production. It was amended by the Customs Simplification Act of 1954. The General Agreement on Tariffs and Trade (GATT) prohibits dumping and provides for increased import duties to combat the practice.

The Columbia Electronic Encyclopedia, 6th ed. Copyright © 2007, Columbia University Press. All rights reserved.

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