Anti-Dumping Measures and International Pricing Policy: An Australian Study

By Rahman, Syed H. | Journal of International Business Research, January 2004 | Go to article overview

Anti-Dumping Measures and International Pricing Policy: An Australian Study


Rahman, Syed H., Journal of International Business Research


ABSTRACT

The number of anti-dumping initiatives by governments all over the world has increased significantly during the recent years. This has a potential effect on the international pricing policy of firms.

This research focuses on the impact of the anti-dumping measures on the international pricing policy of firms and any strategic measures that the firms take to counter the anti-dumping actions. An a priori model of the impact of anti-dumping measures on international firm's pricing policy has been developed based on literature review and tested using structural equation modelling technique. Data for the research has been gathered from 178 Australian international marketers. Results of the study show that there is an agreement among the participating firms that the current anti-dumping laws of different countries are often confusing and there is no uniform definition of what may be called as ' dumping'. There is a general perception among the participating firms that more and more governments are using this as another non-tariff barrier.

Results of this study also show that international firms are finding concentrating in less sensitive product categories, cooperation with local competitors and differentiation through enhanced services and trading up as good strategic measures, to counter the effects of anti-dumping actions.

INTRODUCTION

International pricing is one of the most critical issues that international firms face. A potential obstacle for international pricing policies is the antidumping laws that increasing number of governments are using to counter dumping practices (Miranda, Torres and Ruiz, 1998). International firms need to take antidumping laws into account when determining their international pricing policies.

In developing a pricing policy a firm has to consider both external environment in which it has to compete and also the internal factors which condition and control the courses of action open to the firm. One of the major elements of an international firm's external environment for pricing purposes is host country's government policies of which antidumping measures are a part. A World Bank study showed that the impact of dumping duties in the United States manufactured goods sector has boosted average tariffs in that sector from nominal 6 percent to actual 23 percent (The Financial Times, 1993). To minimise risk exposure to antidumping actions, international marketers might pursue various marketing strategies (Kostechi, 1991).

The research questions this paper addresses are: Do international marketers take into account antidumping measures in the host country while setting their international prices? Do they take any strategic measures to counter the anti-dumping impost?

CONCEPTUAL FRAMEWORK

The definition of dumping is usually pretty murky. Different economists have defined dumping differently. One approach defines imports as dumped if the products are sold below their cost of production. The other approach characterises dumping as selling goods in a foreign market below the price of the same goods in the home market. World trade Organisation defines dumping as "the sale of a product for export at a price below its 'normal Value'" (WTO, 2003). According to WTO definition "normal value" is usually the domestic price of the product in the exporting country. If this price cannot be used for comparison purposes, normal value may be calculated on the basis of the price of the product when sold to a third country, or as a constructed value including per unit fixed and variable costs plus reasonable amount for profits. Obviously, the definition is not clear-cut, and gives the host country advantage to take leverage out of the confusion.

The number of antidumping initiatives has increased in recent years. Most of the antidumping actions take place in the USA and the European Union countries. However, antidumping measures are increasingly initiated in other countries including the developing ones.

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