- The concept of dumping in International Trade
In the context of international trade, dumping refers to the situation whereby a company or a country exports goods and sells them in another country at a lower price in the “buying” country. In dumping, the importing country’s price is usually lower than the actual price of the products in the exporting country/company. For example, when a Chinese company exports steel from china targeting a market in Europe and sells its products in the European market at a lower price than the actual price of the steel Products in the Chinese market, then China will be “dumping” its steel products to the European market. Dumping products fetch lower prices to thrive the stiff competition in the market and dispose off the excess goods manufactured. Dumping is one way of penetrating a new and competitive market. If the foreign market is less elastic, the dumping country/company benefits.
Antidumping measures are the tariffs imposed by a domestic government, especially the importing country on goods and products from foreign markets, which are believed to be underpriced or sold below the market fair price. A country is supposed to impose antidumping measures when the dumping margin is significant. The corresponding prices should determine a product’s normal price in the importing country in the exporting market. If there is a substantial disparity in prices between importing and exporting markets, importing country will impose an antidumping measure. In addition, unreliable export prices can lead to the imposition of antidumping measures. When the export prices are unreliable, the importing authorities may instruct strict selling of the products to specific buyers, or set another price for the imported goods, depending on price disparity between the two trading countries.
- Explain the U.S.’ non-preferential rules of origin.’
Preferential rules of origin are the set standards that imported goods and commodities must meet for them to be considered legit and originating from the territory of the trade contract. In America, the Non-preferential rules of origin uphold the “wholly obtained” approach for the imported products, which are entirely manufactured, grown, or produced in a specific country. The U.S. coding system is contemporarily used to determine the origin of imported goods. The latter replaced the Tariff Schedules of the U.S., Which had been in place since 1963. On the other hand, Rules of Origin, under article 1 of the agreement, are defined as the administrative laws and regulations used to determine the mother country (origin) of the imported goods. However, the rules of origin do not determine the country granting distinct tariff preferences.
- When a product is imported, for customs purposes, how is the country of origin determined under ‘rules of origin’? Provide an example of your own for each criterion
The “wholly obtained” criterion and “substantial or “sufficient transformation” criterion are the approaches used to determine the country of origin under the ‘rules of origin.” The wholly obtained criterion determines the country of origin focusing on the elementary areas of origin approach; if the product occurs naturally, if the good is a plant grown and harvested or if the good emanates from an animal born and bred from the initial country of export, then the products originate from that specific country. Under the substantial transformation approach of determining the country of origin, the country of origin becomes the specific country in which the last substantial process of manufacturing took place. The substantial process is the important aspect of the production process, which gives a product its essential/identifiable trait. For instance, if Germany buys spare parts and assembles them to make automobiles, despite importing spare parts from different countries, the last substantial manufacturing process took place in Germany; hence Germany becomes the country of origin under the ‘rules of origin.’
- The U.S. preferential rules of origin and types
Preferential origin is granted on imports from specific territories and countries upon fulfilling a particular criterion, which allows preferential duty rates to be claimed. For instance, only goods from European Market are allowed to enter the U.S. free from custom tax. The U.S. preferential rules allow goods from specific countries to enter the American domestic market at preferential tariffs. The two main types of rules of origin in the U.S. re the preferential and the Non-preferential rules of origin.
Non-preferential rules of origin are only applicable to imports from developed territories and attract a normal tariff treatment, or have normal trade relations. Non-preferential rules are put in place to curtail dumping and for the calculation of antidumping and the corresponding countervailing duties as well as enforcing embargoes and quotas. Preferential rules of origin, on the other hand, are imposed on goods traded within a free market area and in customs unions, goods and products imported from countries who have a special tariff treatment based on the trade agreement between the trading countries or on goods and products imported under preferred trade programs like for developing countries. Developed countries engage in non-preferential trade. For instance, America can only engage in on-preferential trade with Europe and China due to their normal trade relations. Besides, the rules must be upheld to ensure healthy competition in the market and curb dumping. Contrary, trade between a developed country and a developing country may follow preferential trade rules. For instance, the U.S. exporting human aid to struggling countries like India will engage in preferential rules based on the trade relations between the two trading countries. Countries receiving foreign aid are entitled to special tariff treatment like the WTO agreement on government procurement.