Damping and Anti-Damping

What is Dumping?

Dumping is one of the most debated concepts in international trade and has a direct impact on economic policies. In its simplest definition, dumping refers to the practice of a country's producer exporting goods to a foreign market at an unusually low price, often below the price in its own country or even below cost. The main purpose of this practice is for the exporting company to quickly gain market share in the target market, put competitors in a difficult position, and achieve market dominance.

While dumping practices may appear advantageous to consumers in the short term, in the long run, they harm domestic producers in the target country and disrupt fair competition conditions. Especially in developing countries, cheap products entering the market through dumping can lead to the closure of local manufacturers, increased unemployment, and economic imbalance. For this reason, dumping is considered “unfair competition” under World Trade Organization (WTO) rules and is restricted by various anti-dumping measures in many countries.

Dumping can be implemented not only by reducing prices but also through subsidized production, hidden discounts, or state-supported financial advantages. Whether a product is dumped is usually determined by independent audits, cost analyses, and international price comparisons. Importing countries, in particular, try to balance the price of imported goods by imposing anti-dumping duties to protect their domestic industries.

What are Anti-Dumping Measures?

Anti-dumping measures are protective actions taken by importing countries against dumped (i.e., sold below market price or cost) products in international trade. The main purpose of these measures is to protect domestic producers from unfair competition, ensure market balance, and guarantee long-term sustainable economic growth. Under World Trade Organization (WTO) rules, countries can implement various anti-dumping measures and impose special duties or restrictions on products found to be dumped.

The anti-dumping process usually starts upon a complaint from domestic producers. Relevant government institutions (such as the Ministry of Trade in Turkey) examine the complaint, investigate whether the imported product is actually dumped, and determine whether these products have harmed the domestic industry. If dumping and damage are found, an additional customs duty known as anti-dumping duty is imposed. This duty increases the price of the imported goods to restore equal competition conditions with domestic products.

Anti-dumping measures not only balance price differences but also force importing companies to be more transparent and provide detailed documents and cost records. Furthermore, these measures help ensure fair competition in international trade relations and prevent unfair gains in the global market. Anti-dumping measures are usually applied for five years and may be reviewed, extended, or lifted as necessary.

Differences Between Dumping and Anti-Dumping

The concepts of dumping and anti-dumping are two fundamental and often opposing economic practices in international trade. Dumping refers to the export of a product by a company or country to a foreign market at an unusually low price, often below cost. This strategy is used to quickly gain market share and put rival firms at a disadvantage. However, in the long term, it may result in damage to domestic producers and the formation of an unfair competitive environment.

In contrast, anti-dumping measures are legal and economic tools developed by importing countries to protect their own markets. Anti-dumping is a defensive mechanism activated when dumped imports are detected, typically involving additional duties (anti-dumping duties) or restrictive measures. These measures aim to increase the price of imported goods, protecting domestic producers and maintaining fair competition.

Anti-Dumping Measures and Their Economic Impacts

Anti-dumping measures protect domestic producers and industries by imposing additional duties and trade restrictions on dumped products. These measures are usually implemented when dumped imports are found to have caused or are likely to cause significant harm to the domestic industry. With anti-dumping duties, the price of imported products increases, making imports less attractive and helping domestic products maintain a competitive edge.

From an economic perspective, anti-dumping measures help local producers maintain market share in the short term, reduce bankruptcy and unemployment risks, and help strategic sectors survive. However, excessive and prolonged application of these measures may reduce competition in the market, increase consumer prices, and cause tensions in international trade relations. Furthermore, anti-dumping measures may sometimes trigger retaliatory actions by the exporting country.

Products Subject to Anti-Dumping Duty

Anti-dumping duty is applied to specific product groups determined to have been imported at dumped prices in international trade. These products are typically import items that cause excessive price decreases and harm domestic producers in the target country. In Turkey and worldwide, the most commonly subjected products to anti-dumping duties include iron and steel and metal products, textiles and garments, plastic and rubber raw materials, ceramics, glass and porcelain products, some chemicals, paper and paper derivatives, and automotive sub-industry parts.

Anti-dumping investigations are more frequently observed with low-priced products imported from countries such as China, India, Vietnam, Indonesia, and Thailand. By product, steel plate, galvanized sheet, PVC film, polyester fiber, yarn, cement, bicycle tires, fiberglass, aluminum profiles, and some electronic components often fall under these measures. Which products are subject to anti-dumping duties is regularly published in the official trade bulletins and relevant announcements of the Ministry of Trade of the importing country.

How Should Companies Prepare for Anti-Dumping Measures?

Dumping and anti-dumping processes involve significant risks and opportunities for both exporters and importers. Especially companies operating in international markets should develop proactive strategies against possible anti-dumping measures. First, companies should regularly analyze the prices and costs of their products in target markets and ensure that products are not sold below cost and that their pricing policies comply with international rules.

In addition, establishing a comprehensive documentation system for potential anti-dumping investigations and possible duties offers a significant advantage. All documents related to production, export, cost, price, quality, and quantity used in the process should be kept complete; anti-dumping regulations in the countries to which exports are made should be closely monitored. If necessary, support should be obtained from trade attachés, sectoral associations, and legal consultants to be prepared for a possible anti-dumping investigation.

Anti-Dumping Examples from Turkey and the World

Anti-dumping measures are a widely used trade defense tool worldwide and hold a significant place in the import policies of every country. Countries such as Turkey, the US, the EU, China, India, and South Korea frequently initiate anti-dumping investigations and impose additional duties on various products to protect their sectors and ensure fair competition.

In Turkey, products most frequently subjected to anti-dumping measures include iron and steel products, polyester yarn, ceramic tiles, plastic raw materials, fiberglass, bicycle tires, and some textile products imported from China and the Far East. For example, additional anti-dumping duties have been imposed on Chinese-origin polyester yarn and steel plates for years, allowing domestic producers to become more competitive in the market.

On the international stage, notable anti-dumping measures include the US's additional taxes of up to 30% on Chinese-origin solar panels, the EU's ongoing anti-dumping duties on steel plates and pipes from Russia and China, and India's additional tax measures on certain chemicals imported from Indonesia and Malaysia. These measures not only protect domestic industries but also play a key role in shaping international trade relations.

Frequently Asked Questions About Dumping and Anti-Dumping

Below you can find the most common questions and brief answers regarding dumping and anti-dumping processes. Details may vary by country and sector, so if you have a specific situation, it is advisable to consult trade experts.