Margin of dumping
Also called: Dumping margin · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
Dumping means exporting a product below its normal value. Normal value is usually the product's price in the exporter's home market, or its cost of production. The margin of dumping measures how much lower the export price is.
Margin of dumping = Normal value − Export price
It is the basis for anti-dumping duty. The duty can go up to this margin, and only after dumping, material injury to domestic industry and a causal link are all proved.
Example
A foreign steel product sells at ₹1,000 per unit in its home market but is exported to India at ₹800. The margin of dumping is ₹200 per unit (25% of the export price). India's anti-dumping duty could be at most ₹200 per unit.
Don't confuse with
- Injury margin: this is the duty needed to remove the harm to domestic industry. Under the lesser duty rule, India imposes whichever of the two margins is lower.
Related concepts
- Trade remedies
- Dumping
- Anti-dumping duty
- Lesser duty rule
- Countervailing duty
- Safeguard duty
- Sunset review
- Export subsidies
- Fisheries subsidies