Dumping occurs when a company sells a product abroad below its normal value or production cost.
In trade law, authorities usually compare the export price with a benchmark such as the product’s price in the exporter’s home market or a constructed cost-based value. A low export price alone does not automatically prove illegal dumping; investigators must apply the relevant legal methodology and establish material injury or a threat of injury to a domestic industry.
The World Trade Organization’s Anti-Dumping Agreement permits members to impose anti-dumping duties after a properly conducted investigation. These duties are intended to offset the price advantage attributed to dumping, not to serve as an automatic penalty for every inexpensive import.
Dumping is often confused with predatory pricing. Predatory pricing generally focuses on driving competitors out of a market, while trade-law dumping is a comparative pricing concept applied across borders. Anti-dumping cases commonly involve steel, chemicals and manufactured goods.