Dumping

Dumping occurs when an exporting nation lowers the price of its product below that of competitors in the importing nation. The goal of dumping is for the exporting nation to gain a competitive foothold in the importing nation. Because the importing nation’s customers can buy the imported product cheaper than other domestic products, the exporting nation creates a competitive advantage.

Dumping is legal under the World Trade Organization unless the importing nation can show that the lower-priced product is hurting domestic producers. Dumping is a type of price discrimination, which is seller (i.e., exporting nation) driven.

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