Despite the obviousness of the title of this note, it is worth providing some clarifications on the subject of dumping, since sometimes the complaints in this regard lack any real basis and are made by national companies that only seek to maintain a privileged position in the market.
Let us begin by considering that dumping occurs when goods are introduced into the customs territory at a price lower than their value in the country of origin. However, it is necessary to analyze the elements that make up the concept in order to arrive at the determination of the causality that the same rule expresses (General Agreement on Customs Tariffs – Law 24.425 and regulatory Decrees), namely:
a) Export Price: It is made up of the price of the product paid or payable, as a result of a sale and related to the introduction of said product into our customs territory. These prices must be compared at the same commercial level, taking into consideration the tax treatment, the exchange regime, the differences in quality, packaging and also the provision of guarantees and technical assistance.
b) Normal Value of the Product: With the above we arrive at this value, but only if it is merchandise with the same characteristics as the imported one, otherwise we would be comparing apples with oranges. And also, we must consider normal commercial operations.
c) Normal Business Operations: These transactions have certain characteristics related to sales, since if sales are made whose prices are affected by corporate relations between the seller and buyer company, said price cannot be taken into consideration because it is a transfer price, different from other independent buyers. And if the sales were made at a price below production costs, whether variable or fixed, the causal relationship of the expected damage could not be considered as an essential requirement for determining dumping.
The value reconstruction method must also be taken into account, for which the price must be taken on the basis of production costs, marketing and administration expenses, with a normal profit for the activity.
The mere concept of dumping is not sufficient for the application of measures against the importation of a certain product; a direct causal relationship between the imported product and the national production is required. According to the Antidumping Agreement and the Agreement on Subsidies and Countervailing Measures, not any injury is sufficient; there must be a direct causal relationship and not a mere suspicion or conjecture, sometimes unfounded. None of the factors indicating injury taken in isolation, nor several of them together, are sufficient to determine injury without a doubt.
A direct causal relationship is necessary between the reported practice and the direct damage to the national industry, otherwise this foreign trade tool would become a means to convert a free market into a captive one.
In the classic approach to dumping, there must be a manoeuvre carried out by a company with monopoly power; that is, activity with the direct intention of destroying a market in order to take over it. In addition, in order to determine the damage, it is necessary to take into account a number of other elements, such as:
1) domestic prices; 2) actual and potential decline in sales; 3) inventories; 4) production volume; 5) employment; 6) wages; 7) negative effects on cash flow; 8) utilization of installed capacity; 9) profits; 10) return on investments; 11) investment; 12) ability to raise capital; 13) growth; 14) productivity; 15) market share; 16) dumping margin: (According to Guillermo Feldman – Foreign Trade Management – Chapter 11 – The role of trade defense instruments – Ed Edicon)
In summary, There must be a determining causal link between the objected imports and the alleged damage, in order to be able to analyze whether the national production branch of similar merchandise presents any other factor causing the damage, other than the alleged unfair practice. Last but not least, all this must be combined with the time in the processes in administrative headquarters, since their indefinite situation causes harm to those investigated and to the complainants, since both parties expect to obtain a prompt response. Most of the doctrine has already considered that the international treaties referring to reasonable terms in legal processes are applicable to those that are substantiated both in judicial and administrative headquarters. It is to be expected then that said processes will not be indefinite because constitutional guarantees are violated.
Author: Guillermo J. Sueldo
Aduana News is the first Argentine customs newspaper to launch its digital version. With 20 years of experience, its publications and initiatives aim to provide the most relevant knowledge on customs issues in order to contribute to safe trade in the region.
