The World Trade Organization ( Wto ) - 1234 Words

In international economy, trade agreement was made to gain fairness between the involved countries. Thus, the World Trade Organization (WTO) is established to protect these agreements and serves consequences for those who violate the agreement. Dumping is one of the examples of violation of the agreements. WTO defined dumping as imported goods in the market of the importing country with price less than its normal value (TrewinBosworth 1999, p.134). From one perspective, to protect local producers from dumping, the government imposes anti-dumping measures on imported goods. From another perspective, the anti-dumping measures will cause less incentive for local producers to produce efficiently; thus, it is important to avoid using†¦show more content†¦Exporters restricting their products to enter the market would decrease the total supply of the product in the market and later causes shortage in the market due to the inability of the local producers to meet the demand from con sumers. Hence, the market can be considered as imperfect market due to the existence of inefficiency in the market. It is important to note that if the local producers were able to meet with the demand, they would be able to gain profit maximization and achieve economies of scale. It is also stated in Dhar and Conway’s study (1994) that when dumping-sector profits increases, other sector profits such as wages would also increase, thus implicating that dumping-sector profits have relations to other sector profits. Imposing anti-dumping measure would result the opposite. Knowing that the anti-dumping measure would increase the price of the imported goods, the exporting country would cut off their cost of production by cutting off their labors, thus increasing the unemployment rate of the exporting country. Trewin and Bosworth (1999, p.136) gave an example of a case, which it took in 1999, Australian manufacturer of A4 copy paper had claimed that Indonesia should be treated as an unsuitable market for assessment of ‘normal values’ because at that time, Indonesia was facing a major devaluation