Dumping & Anti-Dumping Duty Explained
Anti-dumping duty and the injury it can cause to Australia, is a stressful topic for many domestic importers. But what is dumping, who does it affect and how is anti-dumping duty regulated and calculated?
What is Dumping & Anti-dumping duty?
Dumping is when an exporter sells its goods to a foreign country well below the price they could sell it for in their own country. Overall, it is considered an international price discrimination. As dumping usually involves large volumes of a product, it can cause significant damage to the local manufacturing industry of the same or similar products. Consequently, when there is a causal link to the material injury caused to an Australian Industry, dumping can result in unfair trade competition and in oversupply of a good at lower unfair prices in the importers domestic country.
Dumping still can occur even where there is a Free Trade Agreement in place as the FTA only removes normal ad valorem duty protection.
In order to protect the domestic market and economy, governments impose significant anti-dumping duties on such imports.
Anti – dumping duty is a duty imposed by governments on imports priced well below the overseas markets normal value. The anti-dumping duty discourages importers and their suppliers from an unfair competitive advantage.
Who regulates the Anti-Dumping duty?
Applicants are responsible to provide evidence of how the claimed dumping activity affected the local industry. Governments are responsible for regulating companies found to be dumping their products in their domestic market. Nevertheless, it is the World Trade Organisation (WTO) that governs the framework used for anti-dumping measures exercised by the governments concerned. The Anti-Dumping Commission in Australia handles all anti-dumping and countervailing issues within Australia. While, the Australian Border Force collects anti-dumping and countervailing duties as part of the Border Clearance process.
Although dumping is not illegal, it can be counted by the imposition of anti-dumping and countervailing duty.
There are no breaches of any act if you import dumped goods. There is however severe penalties for anti-dumping duty evasion.
For a better understanding of the anti-dumping investigation process, kindly refer to the bellow snapshot from the Australian Anti-Dumping Commission website.
How is Anti-Dumping duty calculated?
The Anti-Dumping Commission is the organisation responsible for investigating any applications for Anti-Dumping Measures and for the review of measures as required. Once the ADC has been provided with evidence that imports of particular goods are having a detrimental effect on industry they will consider an application for measures.
Anti-Dumping duties may be fixed or variable depending on the circumstance of the market and industry involved.
In respect to variable anti-dumping, some methods to calculate whether goods have been dumped lightly or heavily include;
- Comparison of normal value & export price
- Calculation of exporters dumping margins
- Determination of injury & causal link
Here is an Anti-dumping Example;
As shown, there is a number of factors that affect whether goods are subject to anti-dumping measures.
Generally, import countries with smaller manufacturing sectors are more likely to instigate anti-dumping duty, as they can not compete with the goods being dumped into their country.
Overall anti-dumping duty protects local markets & prevents distortion in the international market competition.
For further information as to which goods are subject to anti-dumping measures, refer to the official Anti-Dumping Commission website.