Question

In: Economics

Describe the difference between safeguard and antidumping measures regarding the MFN principle

Describe the difference between safeguard and antidumping measures regarding the MFN principle

Solutions

Expert Solution

Binding tariffs, and applying them equally to all trading partners (most-favoured-nation treatment, or MFN) are key to the smooth flow of trade in goods.

Anti-dumping actions

If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping”. Governments take action against dumping in order to defend their domestic industries.

Difference Between Antidumping and Safeguard measures are:

  • Anti-Dumping Duty is a trade levy imposed by any government on imported products which have prices less than their fair normal values in their domestic market. While a safeguard measure is a temporary tariff or quota used to protect a domestic industry from foreign exporters.
  • The Antidumping tarif may only be imposed when foreign exporters are engaged in anti-competitive practices
    while the safeguard measures may be imposed on exporters that have a ‘fair’ competitive advantage. It is not that the safeguards are non-discriminatory measures, as they are equally applied to all the trade partners.
  • Anti-Dumping Duty is imposed under the multilateral World Trade Organisation(WTO) regime and varies from product to product and from country to country. While in case of safeguard, WTO allows, through its safeguard clause, to impose temporary and nondiscriminatory safeguards measures on imports that are causing injury.


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