What is dumping?

Dumping is the export of goods from a country at lower prices than domestic prices, carried out to crowd out competitors and capture foreign markets. Dumping can be carried out both at the expense of the exporting company, and at the expense of the state through subsidizing exports from the state budget.

Dumping is also understood as the non-tariff trade policy method of international marketing, which consists in promoting goods to the foreign market by reducing export prices below the level existing in the country of the exporter.

Dumping is a type of unfair competition. Its immediate goals are to increase sales and market share, eliminate competitors and strengthen market control, free from surplus inventory. In addition, dumping can also be carried out for political purposes, when an economically powerful country resorts to dumping in trade with less developed countries, trying to suppress commodity producers in these countries and thereby establish economic control over them.

Losses from the sale of goods at dumping (reduced) prices can be covered in different ways: the sale at higher prices of other goods that do not have serious competitors; selling similar goods at high prices after crowding out a competitor from the market; receiving subsidies from the state, thus stimulating export. In the latter case, lower prices for exported goods are offset by higher prices in the domestic market, and taxpayers compensate for losses from dumping prices.

In the modern world there are two types of dumping: price and cost. Price dumping is the sale of goods on the export market at a price lower than its average price on the domestic market. Cost dumping is the sale of goods on the export market at a price lower than the cost of the goods.

To prevent dumping, the state uses various tools, for example, voluntary restriction of imports, reduction in supply to this market. The main tool to combat dumping is considered anti-dumping duties. They are a type of indirect tax that increases the burden on the import price. Antidumping duties complement the usual customs duties and are countervailing, i.e. correspond to the difference between normal and dumping prices.