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insurance dump and how to dumping insurance

 Dumping is the act of exporting a product to another country (region) at a price lower than its normal value. If the exporter’s economy is a market economy, the normal value can be determined based on its domestic sales price and the export price to a third party; if the exporter’s economy is deemed to be a non-market economy, the price of the surrogate country and similar products should be used. The normal value of the alleged product is determined on the basis of the sales price in the importing country. [1]        

The agreement on the implementation of Article 6 of the 1994 General Agreement on Tariffs and Trade stipulates that if a product is exported from one country to another in the normal course of trade, the export price of the product will be lower than that of the same product consumed in its own country. Comparable prices, that is, a commercial channel that enters another country at a value lower than its normal value, the product will be considered dumped.

Chinese name dumping, foreign name dumping aims to eliminate competitors and monopolize the entire market. Type of improper means of competition. Intrinsic artificial low-price sales measures are not classified as dumping. 

Seasonal price reductions

table of Contents

1 main purpose

2 Components

3 performance characteristics

4 Type division

▪ Sudden dumping

▪ Intermittent dumping

▪ Continuous dumping

5 Countermeasures

6 Low-price dumping

7 Legal responsibility

Main purposeedit

In order to achieve the purpose of eliminating competitors and monopolizing the entire market.

Dumping is regarded as an improper means of competition and is prohibited by the WTO. Therefore, anti-dumping has also become a powerful excuse and reason for countries to protect their own markets and support their own enterprises.

Component editing

(1) The product is sold at a price lower than the normal value or fair value;

(2) This act of selling at a low price causes damage to the industry of the importing country, including material damage, material threat and material hindrance;

(3) The damage is caused by low-price sales, and there is a causal relationship between the two.

Generally speaking, if a manufacturer can implement dumping, three conditions must be met:

First, it must be an industry with imperfect competition, and a firm with monopolistic power is the setter of market prices rather than the receivers of market prices.

Second, the home country and the foreign country must be well separated so that domestic residents cannot easily buy back export products.

Third, the demand elasticity faced by exporters in China is smaller than that in foreign countries. Only with these conditions, the monopolist will find it profitable to implement dumping. Due to the low-price strategy of dumping, although exports can be expanded, there are risks of falling profits and losses. Therefore, dumping must have strong government support. For example, the government of exporting countries builds high tariff and non-tariff barriers to control the entry of foreign goods in order to maintain high domestic monopoly prices, make up for export losses, and prevent export goods from flowing backward. The government of the exporting country bears export losses, purchases at high domestic prices, and dumps at low foreign prices. After squeezing out competitors and monopolizing foreign markets, exporters raise prices to make up for losses in the dumping stage, and so on. [2] 

Performance characteristics

First, dumping is an artificial low-price sales measure. It is based on different markets for exporters to sell the same commodity at a price lower than the market price of the relevant commodity in the exporting country.

Second, the motives and purposes of dumping are diverse, some are to sell surplus products, some are to compete for foreign markets and expand exports, but as long as it causes substantial damage or substantial threat to the establishment and development of an industry in the importing country Substantial obstacles will result in penalties for anti-dumping measures.

Third, dumping is an act of unfair competition. Under the government's export incentive policy, producers often sell products at low prices in order to obtain government export subsidies; at the same time, producers sell their products in foreign markets at dumped prices, thereby gaining a competitive advantage in another country's market and then Eliminate competitors, and then raise prices to obtain monopoly high profits.

Fourth, the results of dumping often cause damage to the importer’s economy or the interests of producers. In particular, predatory dumping disrupts the importer’s market economic order and brings devastating blows to the importer’s economy.

Example: The company conducts large-scale sales within a certain period of time regardless of cost loss, causing its competitors to lose control of the regional market, reduce the market ratio it owns, and achieve monopoly, so as to defeat its competitors and finally dominate the market. market.

Type divisionedit

Sudden dumping

(Sporadic dumping), also known as short-run dumping, refers to a product manufacturer dumping a large amount of the product to overseas markets at low prices in a short period of time in order to prevent a large backlog of the product from endangering the domestic price structure. Viner believes that the "damage" of this type of dumping to the importing country's industry is temporary, while the importing country's consumers can get the benefits of low-cost consumption, so it is understandable.

Intermittent dumping

(Intermittent dumping), also known as predatory dumping, refers to the fact that in order to obtain a monopoly position in a certain overseas market, the producer of a certain product sells the product to the market at a price lower than the marginal cost, pending the expulsion of the competitor from the market Later, monopoly high prices will be implemented. Viner believes that this type of dumping has predatory intent, and its "damage" to the importing country's industry exceeds the benefits of the importing country's consumers, so it should be resisted by anti-dumping laws.

Continuous dumping

(Persistent dumping), also known as Long-run dumping (Long-run dumping) refers to a commodity manufacturer on the one hand to achieve economies of scale and large-scale production, on the other hand, in order to maintain the domestic price structure, part of the commodity is long-term Land is sold to overseas markets at low prices. Viner believes that this type of dumping will only “damage” the importing country’s industry once, that is, when it is forced to switch to production, but the benefits of the importing country’s consumers are accumulating, and therefore should not be resisted by anti-dumping laws.

It should be said that it is reasonable to take anti-dumping measures in order to stop dumping, but if the implementation of anti-dumping measures exceeds its reasonable scope or reasonable degree, anti-dumping measures will also become a kind of trade protectionist measures, which will hinder the expansion of international trade.

 [3] For example, arbitrarily determining that there is no dumping of goods as dumped goods, or unreasonably exaggerating the dumping margin, thereby unreasonably implementing anti-dumping measures or improperly increasing the amount of anti-dumping duties, these will hinder the normal import trade. Such as the dispute between the United States and Canada over the collection of special dumping duties on imported potatoes.

 In 1962, due to climatic reasons, the harvest season of American agricultural products was earlier than Canada. When potatoes in the United States were on the market in large numbers, Canadian potatoes had not yet been harvested. At this time, the potatoes exported from the United States to Canada were very cheap. Canada decided to use the "normal price" and export prices The difference is subject to special dumping duties. The US government believes that Canada’s tax collection is a non-tariff barrier, and it has filed a complaint with GATT, demanding that Canada’s anti-dumping duties on imported potatoes be resolved. On January 2, 1963, Canada cancelled this tax. [4]

Countermeasuresedit

Anti-dumping (anti-dumping) means that the competent authority of the importing country, based on the complaint of the damaged domestic industry, in accordance with certain legal procedures, sells in the importing country at a price lower than the normal value, and produces similar products in the importing country. Procedures and measures for filing, investigating and handling foreign products that have caused statutory damages. Anti-dumping is a measure recognized by the previous "General Agreement on Tariffs and Trade" and "World Trade Organization" to resist unfair international trade practices. [5]

Low-price dumpingedit

According to Article 11, paragraph 2 of China’s Anti-Unfair Competition Law, one of the following circumstances is not an act of unfair competition, that is, an exception to low-price dumping:

1. Selling fresh goods

Such commodities mainly refer to agricultural and sideline products, such as vegetables, fruits, aquatic products, and livestock products. Because these products have the characteristics of short insurance period, perishable, perishable, and strong selling time, selling them at prices below cost does not constitute unfair competition. However, it should be noted that if the operator deliberately sells fresh and live products below cost with the purpose of squeezing out competitors, it also constitutes low-price dumping.

2. Deal with products whose expiration date is about to expire or other overstocked products

Commodities with expiration date mainly include food, beverages, nutrition, medicine, cosmetics, etc. According to China's "Product Quality Law", "Drug Administration Law" and other laws and regulations, such products are strictly prohibited from being sold after their expiry date. The backlog of goods generally refers to products that have been unsalable for a long time due to oversupply and replacement by new products. Dealing with commodities whose expiration date is about to expire or is overstocked is often an act of last resort by operators to reduce prices. It does not have the purpose of squeezing out competitors, so it is not an act of unfair competition.

3. Seasonal price cuts

Seasonal commodities refer to commodities whose market demand changes significantly with seasonal changes, such as clothing, cold drinks, electric heaters, etc. Once the sales season has passed, there is very little market demand for it, and it is difficult to sell if it is still sold at the original price. This is not conducive to the flow of corporate funds, nor is it conducive to the use of resources. If you use reduced prices to sell, or even sell them at a price below the cost, the out-of-season products can be quickly sold out, which can avoid the difficulties in production and operation and the waste of social resources.

4. Sales of goods at reduced prices due to debt repayment, conversion of production, or closure of business

Some companies are heavily in debt due to poor management and other reasons. In order to repay their debts, selling goods at prices below cost is a last resort measure. In addition, when an enterprise changes production or goes out of business for objective reasons, it also needs to dispose of the original equipment, materials, commodities, etc. as soon as possible, and selling commodities at a price lower than cost during the treatment process is not an act of unfair competition. However, if under the guise of applying the exceptions, and selling at a price below cost is actually aimed at squeezing out competitors, it should be considered low-price dumping. Such as false claims about conversion, relocation, debt repayment, etc., and selling products below cost to squeeze out competitors are acts of unfair competition.

Legal responsibility editor

Regarding the legal liability for low-price dumping, the "Anti-Unfair Competition Law" does not provide direct and specific provisions; Article 40, paragraph 1, of China's "Price Law" stipulates that if there is low-price dumping, the relevant competent authority may order corrections , Confiscation of illegal income may be concurrently imposed a fine of less than five times the illegal income; if the illegal income is confiscated, a warning and a fine may be concurrently imposed; if the circumstances are serious, the business shall be ordered to suspend business for rectification, or the business license shall be revoked by the administrative department for industry and commerce. 

Article 4 of the "Provisions on Administrative Penalties for Pricing Illegal Acts" has made certain additions to the handling of "no illegal gains", that is, a fine of 30,000 yuan up to 300,000 yuan may be imposed concurrently; Article 9 also stipulates: If the business operator is an individual, he may impose a fine of less than 50,000 yuan on prices for which he has no illegal income.



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