ABSTRACT
One of the most contentious issues in international trade policy in recent years has been the problem of so-called ‘unfair trading’. The term is a pejorative one since ‘unfair’ may simply mean at a price which domestic producers cannot match. Nevertheless, there have always been in international trade law some provisions designed to counter certain kinds of trading practice deemed to be unfair. Specifically, these cover two situations often closely related: the first is the case of dumping and the second the use of subsidies. Briefly, dumping refers to a situation in which an exporter is selling a good abroad at a price below that charged in its own domestic market. This can include, but is not confined to, cases where an exporter sells a good abroad at a price which is below production cost. Where dumping is taking place and where it is causing injury to domestic producers, the GATT rules permit countries to impose antidumping duties, provided only that they do not exceed the so-called ‘margin of dumping’. Subsidies may have a similar effect by enabling an exporter to charge a lower price than otherwise, possibly below costs of production. Again, where subsidisation is injuring domestic producers, the GATT rules allow countries to impose countervailing duties on imports so long as this does not exceed the amount of the subsidy. But this only covers the case of an export subsidy. More recently, the GATT rules have been extended to impose discipline over domestic subsidies which may similarly distort trade.
