What is the antidumping law?

An anti dumping law is any domestic law designed to prevent a country’s trading partners from “dumping” goods into domestic markets at any price that is less than fair. Anti dumping legislation proponents argue that these laws prevent injury to domestic industry by restricting the ability of foreign companies and countries to take advantage of unfair competitive practices.

Why is anti dumping important?

Anti dumping laws seek to recognize the reality that national economies, and the international markets in which they operate, are a mosaic of different rules, regulations, and laws. Companies in one nation may seek to exploit a domestic law, rule, or environment in order to flood a foreign market with goods sold at less than fair-market rates. This “dumping” of goods into the foreign market is sought to be prevented by anti dumping regulations, rules, and legislation.

Are antidumping laws effective?

The efficacy of anti dumping laws is hotly debated. One side of the debate argues that their primary effect is to distort the efficiency of the free market and artificially drive up the cost of goods. The other argues that anti dumping regulations prevent a significant problem arising from the interaction of two different legal and economic systems that occurs during international trade. Regardless of the truth of the matter, dumping and anti dumping in international trade law is likely to remain a hot topic for decades to come.

What is the result of the threat of antidumping action?

The threat of using anti dumping law has significant effects on the behavior of internationally-involved firms. They may be less willing, or entirely unwilling, to rely on aggressive price cutting as a sales strategy in a new foreign market. As a result, the consumers in those markets may pay a higher price than they otherwise would. Further, the competitiveness of the new foreign entrant into the market may be impeded.