Question

1.

a) What is the textbook definition of the term ‘dumping’? Please give a ‘real life’ example of dumping.

b) What is a ‘quota’, exactly? Please give a real life example of a quota that our government imposed upon a trading partner.

Answer 1

1 a) Dumping is a term used in the context of international trade. It's when a country or company exports a product at a price that is lower in the foreign importing market than the price in the exporter's domestic market. Because dumping typically involves substantial export volumes of a product, it often endangers the financial viability of the product's manufacturers or producers in the importing nation.

Example of Alleged Import Dumping - Steel and Solar Panels from China. China's steel industry is experiencing significant excess capacity and China has being accused of dumping its steel products on the European Union, selling them for less than they are worth. That makes it harder for EU steel producers to compete.

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b) A quota is a government-imposed trade restriction that limits the number or monetary value of goods that a country can import or export during a particular period. Countries use quotas in international trade to help regulate the volume of trade between them and other countries. Countries sometimes impose them on specific products to reduce imports and increase domestic production. In theory, quotas boost domestic production by restricting foreign competition.

For example, as reported by Time, in January 2018, President Trump imposed 30% tariffs on imported solar panels from China. This move signaled a more aggressive approach toward China's political and economic stance, but it also was a blow for the $28 billion solar industry in the United States, which imports 80% of its solar panel products.