Anti-dumping duties

About the duty:

• An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below the price at which it is sold in the exporters domestic market.
• In order to protect their respective economy, many countries impose duties on products they believe are being dumped in their national market; this is done with the rationale that these products have the potential to undercut local businesses and the local economy.
• The World Trade Organization (WTO) operates a set of international trade rules for the  regulation of anti-dumping measures.
• In general, the WTO agreement permits governments to act against dumping "if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry.

Problems of Anti-dumping duties

• Anti-dumping duties have the potential to distort the market.
• While the intention of anti-dumping duties is to save domestic jobs, these tariffs can also lead to higher prices for domestic consumers.
• In the long-term, anti-dumping duties can reduce the international competition of domestic companies producing similar goods.

Prelims Question:

Consider the following statements regarding  Anti-dumping duty:
1.It is regulated by World Trade organization.
2.It is considered as a protectionist tariff.
Which of the statements given above is/are correct?
(a)1 only
(b)2 only
(c)Both 1 and 2
(d)Neither 1 nor 2

Answer to prelims question: C