GATT and the U.S. Congress have both defined "dumping." What is the difference in their definitions? Why is dumping a major issue in global marketing?

Question

What will be an ideal response?

Answer 1

GATT defined dumping as the sale of an imported product at a price lower than that normally charged in a domestic market or country of origin. The U.S. Congress has defined dumping as an unfair trade practice that results in "injury, destruction, or prevention of the establishment of American industry." This definition is very broad and can be interpreted in different ways. Dumping is an important global pricing strategy issue. Dumping occurs when imports sold in the U.S. market are priced either at levels that represent less than the cost of production plus an 8% profit margin or at levels below those prevailing in the producing country. The U.S. Commerce Department is responsible for determining whether products are being dumped in the United States. The International Trade Commission (ITC) then determines whether the dumping has resulted in injury to U.S. firms. Many of the dumping cases in the United States involve manufactured goods from Asia and frequently target a single or very narrowly defined group of products. U.S. companies that claim to be materially damaged by the low-priced imports often initiate such cases. The Byrd Amendment calls for antidumping revenues to be paid to U.S. companies harmed by imported goods sold at below-market prices. For positive proof that dumping has occurred in the United States, both price discrimination and injury must be demonstrated.