Dumping and Subsidies in the WCO

Dumping allows a company, efficient or inefficient, to harm its competitors and gain ownership of the market, if it has enough capital to finance sales at a price that entails loss or no profits. Dumping also damages national economies in general, because it eliminates, unjustly in terms of competition, efficient companies that are the motor of employment and development.

To compensate for the distortions caused by dumping on competitive efficiency, several remedies have been created. In international commerce, Article VI under GATT regulates the use of an anti-dumping tariff. GATT does not punish dumping; instead, it tries to avoid the damage it causes. Because of this, the anti-dumping tariff cannot exceed the difference between the normal value in the market of origin, and the export price.

So that the anti-dumping tariff does not become a protectionist instrument, sanctioned companies can turn to their government, which deals with the respective authorities. 90% of the cases are solved at this stage. If an agreement is not reached, the party that is affected by the anti-dumping tariff can request arbitrary action by an expert panel of the World Commerce Organization (WCO).

In international commerce, subsidies cause effects that are similar to those caused by dumping, but more harmful. Subsidies can be neutralized with a Compensatory Right. Proof of subsidies is simpler than that related to dumping, because they are usually contained in the laws that regulate their concession, by the official entities that award them.