Safeguard trade remedies in Ukraine

Key words:

Unfair traded imports, Unfair competition,

Domestic producer, Foreign competitor, Injury proved,

Antidumping duty, Dumping, Normal price, Export price, Dumping margin,

Countervailing duty, Export subsidy,

Special duty, Large quantity of imports, Traders-violators, Discriminatory

and (or) the unfriendly actions of other states

The government can take additional remedies - safeguard trade remedies - to protect domestic producers against unfair competition on the domestic market.

These are Antidumping, Countervailing, and Special duties.

Common Procedure For Safeguard Trade Remedies is regulated by WTO rules and includes the following steps:

1. Application for investigation.

Import-competing companies complain to the government about injury caused by foreign competitors due to unfair competition (the convincing link between injury and unfair competition is cited as evidence)

2. Injury determination.

Proved injury is viewed as loss of market share, “price suppression”, falling profits, laid off workers.

3. Investigation

Government competent authorities investigate every case and make decision as to implementation of appropriate sanctions.

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ANTIDUMPING DUTIES may be imposed if the investigation concludes that dumped sales cause injury to the domestic industry (decline in sales, profit, productivity, market share, employment, wages).

Dumping — import of goods into the country at lower prices than the comparable prices for similar goods of exporting country, which causes damage to the national producer of similar goods.

Why dumping occurs?

Predatory dumping — temporary deliberate lowering export prices to drive out competitors from the market.

In practical terms the advantage of dumping is easy to prove. Assume that the company sells 1000 units at the domestic market for $20 per unit and exports 100 units for $15 per unit. The company considers promoting and increasing sales. Increasing sales by 1 unit requires a reduction in the price of goods by 1 cent both domestically and abroad.

Question:

What market – domestic or foreign – is more profitable for promoting sales?

Let’s compare revenue from each unit sold additionally both domestically and abroad:

Domestic market: _________________________________________________________________

__________________________________________________________________________________________________________________________________________

Foreign market:

_________________________________________________________________

__________________________________________________________________________________________________________________________________________

Answer:

_________________________________________________________________

__________________________________________________________________________________________________________________________________________

Price elasticity of demand measures the percentage change in quantity demanded caused by a percent change in price.

Example#1. There are 2 countries – A and B. For some product changing price by 1% causes changing quantity demanded by 2% in country A and 3% in country B. Please, compare the price elasticity of demand in countries A and B.

In country ___ domestic demand is more elastic to the price than in country __.

Thus, the necessary term for dumping is difference in the price elasticity of demand for the product in different countries: domestic demand is _______ (more, less) elastic to the price than demand abroad.

Дата добавления: 2015-11-14