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What is Dumping
Dumping is a term for selling goods with a loss (below production costs) or for the cheaper sale of goods exported beyond than in the country of manufacture.

Dumping is a term for selling goods with a loss (below production costs) or for the cheaper sale of goods exported beyond than in the country of manufacture. From a macroeconomic perspective, the dumping is a side effect of overproduction, but it may be also caused by different production costs or different customs conditions, investment incentives or tax relief in different countries.
Dumping prices can also be used as an unfair business practice for the disposal of local companies (producer is able to cover the loss of other products or other location).

Dumping in practice: Long term dumped prices can have a negative impact by destroying local firms, which results, among others, in an increase in unemployment. Dumping in international trade is covered by legislation of the country (or union), which protects companies on its territory. Dumping is also treated with WTO rules (GATT). According to them, dumping is not an unfair business practice, until it does not cause harmful effects to local / domestic firms. If harm is determined, it is possible to apply an adequate anti-dumping policy.
States deal with anti-dumping protect of their own markets in different ways. Most states act against dumping practices in international trade and create anti-dumping measures and policies, such as customs duty or quotas to protect companies within the country (or union).

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Last update: 08.04.2016

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