1986). The developing countries had experienced a long-run decline in their terms of trade. Their

demand for imported manufactures grew much more rapidly as their real incomes rose than did

the advanced countries’ demand for their exports, with a consequent pressure on their balance of

payments. Protection would improve their terms of trade by causing a reduction in the price of

their imported manufactures arising from their reduced demand, and it could also be used as a

means for allocating the limited supply of foreign exchange. Protection has also been proposed as

a means by which the advanced countries could prevent a fall in the real incomes of their unskilled

labour occasioned by low-cost imports from the developing countries.

Vocabulary Notes to Text 4.7.1.1

1. reliance — опора, зависимость

2. excess capacity — избыточная возможность

3. the multiplier effect — эффект мультипликатора

4. a counter to dumping — противодействие демпингу

5. contingent protection — защита от непредвиденных обстоятельств

6. a retaliatory measure — карательная (репрессивная) мера

7. to be occasioned by... — быть вызванным...

4.7.1.2.Read and translate the text “Dumping in International Trade and Antidumping Measures

Taken in Some Countries.” Make a synopsis in writing.

Dumping in International Trade and Antidumping Measures Taken in Some Countries

For the last ten-year period, the notion of “dumping” came into use, strictly meaning the sale

of a commodity on a foreign market at a price below marginal cost. An exporting country may

support the short-run losses of this policy in order to eliminate competition and thereby gain a

monopoly in the foreign market. Alternatively, it may dump in order to dispose of temporary surpluses

In order to avoid a reduction in home prices and therefore producers’ incomes. The General

Agreement on Tariffs and Trade approves the imposition of special import duties (tariffs) to counteract

such a policy if it can be established that dumping is taking place and is harming a domestic

Industry. Under gatt regulations, if products are sold in a foreign market below the price at

which they are sold on the home market, dumping is deemed to take place. The practice of dumping

Is prohibited under the terms of the European Economic Community’s Treaty of Rome. Rules

to be followed by governments were agreed as part of the GATT Kennedy round of trade negotiations

concluded in 1967 by the European Community, North America and the European Free

Trade. Association. The review of the rules for determining antidumping measures was also part of

the Uruguay round of trade negotiations. Market economies are more open to the making of comparisons

of the prices and input costs of products in different markets in order to judge whether

dumping is taking place. For planned economies, the EC compares the price of the product exported

with that produced in a free-market by a non-EC country in order to decide whether the

product is being dumped. If such a free-market price cannot be found, the EC judges a fair price on

the basis Of its own calculations of the costs of production. In the USA, the government must

obtain the approval of the International Trade Commission before imposing antidumping duties

on imports, and decisions may be overruled by the US Court of International Trade.