International Trade Law
Dumping is the practice of selling goods from one country to another at substantially low prices; an action knows to discriminate price between the home market and the foreign market (Kerr 15). On the other hand, a subsidy is the act of distorting how things are run in the market and instead lead to resources being allocated resulting in low production and overall less wealth worldwide (Baker 15).
Dumping is not an activity driven and operated by the government, as it is operated by private companies or organization, which they are part of the government or parts of them are part of the government. On the other hand, the subsidy is an activity operated by the government, with an intention of supplying payments to the industries, as well as stabilizing their payment status, aiming to reduce their production and distribution cost so as to enable them to sell what they produce to the foreign markets at a good high price.
The GATT and the Anti-dumping allow the affected governments to inflict anti-dumping duties so as to prevent any effect that may result from foreign private dumping. On the other hand, the GATT and the subsidy agreement discourage any subsidization effected by the government.
Similarities
Both dumping and subsidiary cause distorts how things are done in the international trade, hence affecting the fair market competition. The two also, condemn the objective of GATT (General Agreement on Tariffs and Trade) which is the agreement that controls the behavior of the government in foreign trade because they believe that it affects the introduction and success of a certain commodity to the industry, or rather, it prevents the formation of such industry (Hilf 119).
Dumping Regulation Under GATT 1994
The GATT 1994 resulted in an agreement known as an anti-dumping agreement which in many instances, it is regulated in one way or the other (Vermulst 31). The determinant of anti-dumping duty is the dumping margin which is the difference between the price of export and the price of home country in a foreign country. When the dumping margin is added to the export price, it becomes advantageous to the foreign country as the price becomes fair. The abuse of anti-dumping measures occurs in occasions that the government does not accept the countermeasures that trade partners take. Also, dumping is determined by considering whether the export price of the product is less than the home price in the foreign country. The anti-dumping agreement is regulated in that the authority responsible for investigation must have solid evidence to support dumping of the goods, as well as proving that the dumping has affected competition between the home market and foreign market. Under the conditions of GATT, a country is allowed to act against dumping only if an industry in the home country is affected negatively. Again, when anti-dumping is endorsed, goods become less valuable to the importers and is a burden to organizations under investigation (Hilf 126).
Subsidy Regulation under GATT 1994
Subsidy under GATT 1994 led to anti-subsidy duty, meant to counteract what affected the subsidy negatively (Benitah 45). The anti-subsidy agreement is guided by the recommended administration such as International Trade Administration to examine whether the import under investigation will be subsidized or not, and if they will, how much of ill be subsidized. If home industries are negatively affected, International trade administration will be taxed, amount similar to subsidy margins. In some cases, petition is presented to the court by the domestic industry, but legally, petitioners should be in a position to present a portion of domestic goods that are affected by competition. GATT 1994 also regulates subsidy in that they can only get financial support from the government through a direct transfer, and it can precede revenue which is payable by the government, and can provide other goods and services to add an extra income. Under GATT 1994, the anti-subsidy agreement allows an organization to fund any private organization of choice with an intention of generating more income (Hilf 129).
Subsidy and Dumping Under National Supervision
Subsidies, as well as dumping, should not be subject to WTO/GATT disciplines, but rather, they should be under national supervision. This is because WTO and GATT result in an agreement that is exactly the opposite of food policy wanted, and this could probably lead to disastrous environment and rural economies, as well as food insecurity and poor quality. It will also lead to crumble of agricultural marketing boards that lead to supply management, and also leads to political breakdown that ends up with protests. When left under GATT/WTO, subsidy and dumping may bring about globalization instead of relocalization, and does not bring new food policy rules needed to control local production that manages local needs. Again, it may also lead to deregulation, global competitiveness, and economic efficiency that leads to accelerated urbanization.
In other words, GATT is an agreement made between governments to keep off from any practice that may lead to unfair policies when dealing with trade between them. The GATT is very effective in industrial system, but ineffective when it comes to agriculture for instance, subsidies banned in industry was acceptable in agriculture. As seen, subsidy and dumping is more of agriculture, meaning that they cannot do well under GATT or WTO, and therefore, they should not be subject to GATT/WTO discipline, but rather, they should be subject to national supervision.
Works Cited
Baker, C. Edwin. Media, Markets, and Democracy. Cambridge University Press, 2001.
Benitah, Marc. The law of Subsidies Under the GATT/WTO System. Kluwer Law International, 2001.
Hilf, Meinhard. Power, Rules and Principles-which Orientation for WTO/GATT Law? Journal of International Economic Law 4.1 (2001): 111-130.
Kerr, William A. Dumping: Trade Policy in Need of a Theoretical Make Over*. Canadian Journal of Agricultural Economics/Revue canadienned'agroeconomie 54.1 (2006): 11-31.
Vermulst, Edwin. "The WTO Anti-dumping Agreement: A Commentary." OUP Catalogue (2005).
