Legal Definitions - antidumping law

An antidumping law is a national statute designed to protect domestic industries from unfair competition caused by foreign companies selling their products in the country at an artificially low price. This practice, known as "dumping," occurs when a foreign company sells goods in an export market at a price significantly below what it charges in its home market, or below its cost of production. The purpose of these laws is to prevent such predatory pricing from harming local businesses, which might struggle to compete with these unfairly low prices.

Here are some examples illustrating how an antidumping law might apply:

• Example 1: Price Discrepancy Between Markets

  A major manufacturer of consumer electronics in Country X sells its popular smart televisions for $800 in its home market. However, it begins exporting the exact same model to Country Y for only $500. Domestic television manufacturers in Country Y, who typically sell comparable models for $750-$850, find their sales plummeting as consumers opt for the much cheaper imported televisions. This leads to significant financial losses for Country Y's manufacturers and threatens job security in their factories.

  Explanation: Country Y's antidumping law would allow its government, following a complaint from its domestic industry, to investigate whether the manufacturer from Country X is "dumping" by selling televisions in Country Y at a price significantly below what it charges in its own market. If confirmed, Country Y could impose special import duties (antidumping duties) on these televisions to raise their price, thereby neutralizing the unfair competitive advantage and protecting its local industry.

• Example 2: Selling Below Production Cost

  A foreign producer of industrial chemicals starts selling a specific type of solvent in the United States at $1.50 per liter. U.S. chemical companies, after analyzing market data and production costs, determine that the foreign company's actual cost to produce, package, and ship this solvent to the U.S. is at least $2.20 per liter. It appears the foreign company is intentionally selling below its cost to aggressively gain market share and drive U.S. competitors out of business.

  Explanation: Under U.S. antidumping law, domestic chemical producers could file a petition alleging that the foreign company is dumping the solvent by selling it below its cost of production. If an investigation confirms that dumping is occurring and is causing material injury to the U.S. industry, the U.S. government could impose antidumping duties on the imported solvent, making it more expensive and preventing the foreign company from unfairly undermining the domestic chemical industry.

• Example 3: Impact on a Niche Industry

  A small, specialized industry in Canada produces high-quality wooden furniture components. A competitor from Country Z begins exporting similar components to Canada at prices that are 25-30% lower than what Canadian manufacturers can offer. These imported components are often sold at prices that are even lower than the cost of the raw timber and labor required to produce them in Canada. Canadian furniture component manufacturers, many of which are family-owned businesses, report a sharp decline in orders and are struggling to cover their operational costs, putting their long-term viability at risk.

  Explanation: Canadian antidumping law would allow the Canadian government, prompted by a complaint from the affected domestic industry, to investigate whether the producer from Country Z is selling its wooden furniture components in Canada at "less than fair value." If the investigation concludes that dumping is occurring and is causing injury to the Canadian industry, Canada could impose specific tariffs (antidumping duties) on the imported components to offset the unfair price advantage and safeguard its domestic specialized furniture component industry.