In International economics, dumping occurs when manufacturers export products to other countries below the normal price. This difference in price results in unfair competition between the imported goods and locally made products.
Dumping is legal under the World Trade Organization. It becomes illegal when the importing country can show the ill effects the imported goods cause its local producers.
Thus, we’d shed more light on how to respond to US Anti-dumping measures when importing stainless steel sink.
Antidumping duty
The government of the United States and other countries of the world established Anti-dumping duties to protect her local economies from the adverse effects of dumping.
An anti-dumping duty is a tariff imposed on imports that the domestic government believes are priced below optimal market value. The importer pays this duty on importation. The duty aims to improve the cost of importation, which would consequently make the importer increase the price of the commodity.
How does Anti-dumping investigation occur?
Under the Tariff Act of 1930, domestic industries may petition the government for relief from imported products sold in the United States at suboptimum value. Industries could also submit this petition for imported goods that enjoy subsidies through foreign programs.
Antidumping and Stainless steel sinks
On the 11th day of April 2013, Commerce published its antidumping duty order on drawn stainless steel sinks imported from China. March 5th, 2018, commerce published her notice of initiation of the first sunset review of the antidumping order on the aforementioned sink.
The stainless steel sink products covered by this order include stainless steel sinks with single or multiple drawn bowls. The sinks could be with or without drainboards, finished or unfinished, irrespective of the type of finish, gauge, or grade of stainless steel. This order also covers Mounting clips, sink fasteners, seals, and sound-deadening pads when you include them within the sales price of the drawn stainless steel sink.
Beyond the scope of this order are stainless steel sinks with fabricated bowls. These bowls made from notching and bending the stainless steel do not have seamless corners. Forming bowls in this sink involves welding and finishing the notched and bent stainless steel.
Harmonized Tariff Schedule of the United States (HTSUS) is the umbrella that houses the products covered by this order, under the statistical reporting numbers 7324.10.0000 and 7324.10.0010.
Anti-dumping Measures in Other Countries
| S/N | COUNTRY | ANTIDUMPING DUTY | COUNTERVAILING DUTY |
| 1 | United States | 76.53% | |
| 2 | Canada | 4.4%-103.1% | 0.21-264.94 RMB/Piece |
| 3 | Australia | 49.5% | 6.4% |
| 4 | Mexico | U.S $5.40/kg | |
| 5 | Columbia | 132% | |
| 6 | South Africa (China)South Africa (Malay) | 62.41%95.84 |
How Anti-dumping duty affects individuals and businesses
Importers are at the receiving end of anti-dumping laws and duties. Below are the ways anti-dumping laws affect importers.
Increase in the price of imported products
There are few reasons why importers source goods from outside the country. Some of these reasons include;
· Making unavailable goods available in their home country. Countries while being sovereign are not always self-sufficient. They often require inputs from other countries in form of inputs to keep the economy afloat and goods in circulation.
· The product sells for cheaper in a foreign country.
· To make a profit
These reasons all get defeated when antidumping duty covers a product. Antidumping duty increases the price of goods on importation. It does this in a bit to equilibrate the price of the imported good with that of its counterpart in the home country.
This reduces the profit margin of the importer.
The decrease in the rate of import and export
Antidumping duty indirectly reduces the rate of import and export of goods and services between countries. This is because the importers find no need to indulge in import since profit is minimal.
How to Avoid Anti-Dumping Duties?
Antidumping duties differ from country to country. Importation from China to the United States carries a high import duty as compared to importation from other countries.
Since antidumping duties adversely affect importers and consumers, let us examine home to avoid them.
Third Country Re-export
This is the main method most importer uses to avoid antidumping duties. Countries suitable for re-exports include Malaysia, Thailand, Singapore, Taiwan, Hong Kong, Indonesia, and the Philippines.
There are details you need to pay attention to when re-exporting from the above-listed countries. Some of these details include;
Ø Information: You need to inform the importer
Ø Packaging: You need to repackage the product. This means changing the country of origin written on the product. You do not want “Made in China” written on the product as it identifies the product as Chinese.
Payment for Goods
Since in re-export, there is minimal contact between buyers and sellers, there are other ways to make payment. Below are these ways;
Ø Third-party payment: You need to contract an agency company in the country of re-export to serve as middlemen in the financial transaction and handling of the product. This agency company protects both the interest of the buyer and seller. The company receives the goods from the seller, as well as payment from the buyer.
Once there is an agreement on fees between the buyer and seller, the buyer pays the agreed fee to the agency company who transmits it to the buyer after collecting their handling fee. The agency company also handles exporting the goods to the importer.
Ø Letter of Credit (L/C): This is another medium of payment used in international trade when it is difficult to determine the reliability of contracting parties. Under this form of payment, a credit-worthy bank stands in as a guarantor for the buyer. In any event that the buyer becomes unable to pay for the goods supplied, the bank bears the risk.
When you use this document in re-export, the L/C must indicate that the third-party documents are acceptable. This is so customs clearance goes smoothly.
Conclusion
Antidumping duties affect importers negatively as it puts them out of business and reduces their profit margin. The good news is that you can help your customers avoid the exorbitant duty charged on goods imported from China. This is best done by re-exporting from pocket-friendlier countries.
