What are anti-dumping duties?

What are anti-dumping duties?
Marek Cieślak

Marek Cieślak

CEO CGO Finance

Anti-dumping duties are used to protect against unfair foreign competition. How do they work and how to calculate them? Learn from our article – we invite you to read.

What are anti-dumping duties?

It is a special charge imposed on imported goods sold below market value or production costs. Its main goal is to protect domestic producers from unfair foreign competition. Products imported from China are a good example. They are often subject to such actions in the European Union.

What is important is that anti-dumping duties are imposed for 5 years. Yet, there is a possibility of a later extension or the imposition of additional countervailing duties.

anti-dumping duties

How do anti-dumping duties work?

Anti-dumping duty is a protective measure. It is used when goods are sold at prices lower than production costs or market value in the exporting country. Producers can use dumping to gain market share abroad. This can potentially cause significant losses for domestic producers in the importing country.

The World Trade Organization (WTO) defines dumping as a practice where the export price of a product is lower than the price in the exporter’s domestic market.

Dumping can take various forms:

  • Price dumping (export price lower than domestic price)
  • Cost dumping (production cost exceeding the selling price)
anti-dumping duties

Procedure for Imposing Anti-dumping Duties

The process of imposing anti-dumping duty begins with an investigation. It determines whether dumping occurs and if it harms the domestic industry. The investigation is initiated by governments or industry organizations. They file a complaint with the appropriate authorities (e.g., the European Commission). The inquiry focuses on the analysis of data on prices, production costs, and the impact of imports on domestic producers.

How to Calculate Anti-dumping Duties?

Calculating anti-dumping duties involves determining the so-called dumping margin. This is the difference between the export price and the normal value of the product. It usually refers to the domestic market price of the exporter. The duty should cover this difference but not exceed it significantly. The European Union and WTO recommend carefully calculating the dumping margin to avoid excessive duties.

What are acts of unfair competition and how do you protect yourself from them? Find out from this article.

What is Countervailing Duty?

Countervailing duty is another type of charge. According to WTO rules, it is imposed in response to government subsidies given to producers in the exporting country. These subsidies can artificially lower production costs. This may give producers an unfair advantage in foreign markets. Countervailing duty aims to neutralize the effect of these subsidies. The mechanism is similar to the way anti-dumping duty counters the effects of dumping.

Examples of Goods Subject to Anti-dumping Duties

In the EU, there are many examples of goods from China subject to anti-dumping duties, such as:

GoodsAnti-dumping DutyAdditional Information
Aluminium foil35.6%Exceptions for some producers
Hand pallet trucks70.8%Lower rates for some companies
Glass fiber mats19.9%Exceptions for some producers
Electric bicycles62.1%Exceptions for some producers
Melamine415 EUR/1000 kgExceptions for some producers
Examples of goods subject to anti-dumping duties
anti-dumping duties

What is the Reason for Using Anti-dumping Duties?

Anti-dumping duties are used to protect domestic industry from unfair competition. It concerns foreign producers selling their products below production costs. Such practices can destabilize the market and reduce the profitability of domestic companies. In the long run, it can lead to job losses. Therefore, anti-dumping duties are an important trade policy mechanism. It helps to keep balance in the international market and prevents harm to domestic industry.

Anti-dumping Duties – Summary

Anti-dumping duties are a key mechanism in trade policy. It is a tool designed to protect domestic producers from unfair foreign competition. Through precise rules for calculating the dumping margin and imposing duties, the EU and other trade organizations can effectively protect their markets from dumping and subsidies. As a result, anti-dumping duties contribute to maintaining fair competition. This ensures economic stability in international markets.

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FAQ – Questions and Answers about Anti-dumping Duties

What is anti-dumping duty?

Anti-dumping duty is a special charge imposed on imported goods sold below their market value. It protects domestic producers from unfair competition.

What are the goals of anti-dumping duty?

The main goal is to protect domestic industry from harmful foreign pricing practices. Such actions can destabilize the market.

How is anti-dumping duty calculated?

It involves determining the difference between the export price and the normal value of the product. The imposed charge covers this difference.

What is the normal value of a product?

Typically it is the price at which the product is sold in the exporter’s domestic market.

How does anti-dumping duty differ from countervailing duty?

Anti-dumping duty counters the sale of goods below production costs. Countervailing duty neutralizes the effect of government subsidies given to producers in the exporting country.

When is anti-dumping duty applied?

Anti-dumping duty is applied after an investigation confirms dumping practices. It follows proving that there is a harmful impact on the domestic industry.

What are some examples of goods subject to anti-dumping duties?

Aluminium foil, hand pallet trucks, glass fibre mats, electric bicycles, and melamine.

How long does the process of imposing anti-dumping duty take?

The process can take several months. It includes investigation, market analysis, and assessment of the impact on domestic producers.

Can anti-dumping duty be lifted?

Yes. Anti-dumping duty can be lifted if it is proven that dumping conditions no longer exist or no longer cause harm.

What are the consequences of imposing anti-dumping duty?

Imposing anti-dumping duty can lead to higher prices for imported goods. This affects the competitiveness of products in the domestic market.

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Marek Cieślak

CEO CGO Finance