Antidumping is one of the controversial subjects that are involved in the foreign trade. United States is now using antidumping legislations to importing companies. "Critics also say that antidumping laws create impediments to free trade, which results in misallocation of global resources and the disregard of comparative advantages."
Since the 19th century United States has been concerned about unfair competition. Some of the major antitrust legislation passed by the government to ensure fair competition within the U.S. are; Sherman Act, the Clayton Act, and the Robinson-Patman Act. However, as years passed by more and more acts were being passed especially when fair competition was threatened by foreign companies. "Article VI of the General Agreement on Tariffs and Trade (GATT), formulated in 1947, describes antidumping rules and procedures."
According to the article VI of the GATT, dumping involves the following:
-The export price of a product is lower than its normal value;
-The product substantially harms the industry of the importing country; and
-There are cause-and-effect linkages between dumping and the substantive harm.
The United Sates uses a two-step process to enforce antidumping laws. This process involves four separate agencies, the U.S. Department of Commerce, the Administrative Agency, the International Trade Commission, and the Independent Federal Agency.
In order to attain a final outcome on dumping cases, Commerce has to come up with a fair market value. They do this by comparing the selling price of the product to the United States to the "normal value" which is the foreign or home market price. "in most industry, the "normal value" is the average price for sales of a product in the home market during a specific period of time, usually six months or a year.
Key Concept: Dumping, and antidumping legislations and the laws that were passes.