Protectionism: dumping, subsidy and safeguard

Protectionism: dumping, subsidy and safeguard

Protectionism: dumping, subsidy and safeguard

Protectionism: dumping, subsidy and safeguard

Dumping, subsidy and safeguard measures are measures, or practices, in foreign trade, that can be adopted by a country to benefit or protect domestic products or producers against external competition.

Dumping: dumping is understood to mean the supply of a product, or products, in the trade of another country, at a price below its normal value in the country of origin. It is when the export price is lower than the price practiced in the domestic market, less taxes. Dumping can be reported to the World Trade Organization (WTO). Where there is a suspicion of dumping, the harmed domestic producer may request an investigation from the foreign trade authorities of his country which will examine the merits and conduct investigations. Once the dumping has been proven, the government of the harmed producer may take provisional anti-dumping measures, price undertaking agreements or payment of anti-dumping duties to match prices.

Subsidy: it is an aid, a contribution or a benefit. It is a percentage or monetary value fixed and granted by the state, or corporation, for a product or activity of public interest, which represents an important role for the economy of the country and, in foreign trade, mainly to increase exports. In foreign trade, this subsidy can directly benefit the product or sector, as it can generate indirect benefits with the subsidy of items such as freight, foreign exchange, insurance and others, for example. Impaired countries, once confirmed the harmful practice of the subsidy, may impose “countervailing duties”, which should be in force for the time necessary to neutralize the subsidy, limited to five years.

Safeguard: these are measures taken by importing countries to protect their domestic market, their economy or certain areas of domestic production. The compensation restrictions of these losses can be quantitative, with a maximum term of four years, extendable by proven necessity or when dealing with developing countries. The safeguard can also be applied on export, to protect the internal market or national security.

These barriers are characteristic of protectionist policies, which limit the expansion of international trade. However, to help small businesses do international business, even with barriers, there are several free tools or platforms for doing business internationally, made available by government and private institutions.

Protectionism: dumping, subsidy and safeguard

You can learn more about restrictions on international trade on the Intradebook Blog: https://blog.intradebook.com/en/restrictions-on-international-trade/

Image: Johnlocke

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