Increasing Surge in Dumping Worldwide

29 Apr 2009

Dumping occurs when goods are exported to Australia at a price that is lower than the price charged in the home market of the exporter. There are remedies under Australian legislation where the dumping of imported products causes or threatens to cause material injury to an Australian Industry.

The World Trade Organisation (WTO) Secretariat recently reported a sharp increase in the number of new anti-dumping investigations in the first half of 2008. The increase was 39% compared with the same period in 2007. Prior to this, the WTO reported continuous declines in new anti-dumping cases and in new anti-dumping measures going back to 2002.

The most frequently investigated products in this recent escalation are base metals, textiles and chemicals, however steel and plastics are also commonly targeted. Ironically, developing countries are themselves frequent users of anti-dumping measures with India, Brazil and China being the most prominent. To date, there has not been a comparable escalation in anti-dumping investigations by the Australian Customs Service.

You do not have to look far to discover the reason for the escalation in new anti-dumping cases. The global economic crisis has caused rapid decreases in markets. With contracting sales, producers with heavy capital investment in production facilities look to cover their fixed costs and suffer the pain in their variable costs.

“Dumping” is therefore a deliberate strategy to keep capital equipment in operation producing goods in order to retain customers and markets.

Traditionally, up to 75% of all anti-dumping cases have targeted products out of developing countries in which China has been the most significant target with 40% of cases concerning its imports. Australia has extensive trade with China and other East Asian producers as well as those in South East Asia.

What does this mean for Australian manufacturers?

For the present, the decline in value of the dollar against our major suppliers’ currencies has made imported goods more expensive and reduces the likelihood of a resurgence of dumped goods into Australia. Australian manufacturers should not rely on any currency buffer and should carefully monitor the price levels of imported competitive products with a view to assessing if they are being dumped into Australia.

Author:  David Boyall