- May 30, 2023
- Posted by: AITRC 2
- Categories: Blog, Report
WEEKLY TRADE POLL FOR AFRICAN COUNTRIES
MAY 2023
Dumping is regarded as a type of pricing discrimination that happens when a manufacturer reduces the price of an item entering a foreign market to less than what domestic buyers in the originating country pay. Dumping is a trade practice where a country exports goods to another country at prices lower than their normal value, often below the cost of production. Dumping can harm domestic industries in the importing country by creating unfair competition, undercutting prices, and causing economic distortions. Dumping is also forbidden when it causes “material retardation” in the creation of an industry in the domestic market.[1] Countries may resort to countervailing measures to protect domestic industries from the adverse effects of dumping.
Countervailing measures, also known as anti-dumping measures, are actions taken by governments to offset the harmful effects of dumped imports. These measures aim to restore fair competition and provide relief to domestic industries affected by dumped goods. They can include imposing anti-dumping duties or tariffs on the dumped products to increase their prices and make them less competitive in the domestic market.
Like in other regions, dumping has been a concern for domestic industries and policymakers in Africa. African countries, individually or collectively through regional economic communities, have taken steps to address dumping and protect their industries. The legal framework for countervailing measures in Africa is primarily based on the World Trade Organization’s (WTO) Agreement on Anti-Dumping.
African countries have established national institutions and authorities responsible for investigating dumping cases, determining injury to domestic industries, and imposing anti-dumping measures. These institutions work in accordance with the guidelines and procedures outlined in the WTO Agreement on Anti-Dumping.
The African Union (AU) and regional economic communities in Africa, such as the Economic Community of West African States (ECOWAS), Southern African Development Community (SADC), and East African Community (EAC), have also played a role in addressing dumping issues. They have developed regional protocols, agreements, and mechanisms to facilitate cooperation among member states in tackling dumping and implementing countervailing measures.
Furthermore, African countries actively participate in WTO discussions and negotiations on anti-dumping rules and procedures. They work towards strengthening the multilateral trading system and ensuring fair trade practices that protect the interests of African industries. One of Africa’s largest economic development agenda in recent times is the operationalization of African Continental Free Trade Area (AfCFTA) Agreement. By 2025, it is anticipated that the AfCFTA will boost Africa’s GDP by $450 billion and elevate 30 million people out of abject poverty. African nations have been preparing their businesses and sectors to reap the benefits of the AfCFTA, with the AfCFTA secretariat established in Ghana and the full implementation of the AfCFTA protocol which began in January 2021.[2] Although the majority of African nations have signed the AfCFTA on paper, the challenges remain in effectively addressing dumping and implementing countervailing measures in Africa. Limited institutional capacity, lack of resources, and the complexity of investigations are some challenges African countries face. Cooperation among African countries, capacity building, and technical assistance from international organizations are crucial to enhance the effectiveness of countervailing measures and protect domestic industries from the adverse effects of dumping.
Furthermore, the African economy may see an increase in the practice of dumping. The general criterion for any regional integration is that the participating nations should create as much as they import and then support this with their GDP levels.
WEEKLY TRADE POLLS (FOURTH WEEK MAY, 2023)
Figure 1: Curbing trade dumping in Africa
In light of this, Africa International Trade and Commerce Research (AITCR) conducted her weekly trade poll for African countries in order to evaluate public opinion and obtain responses on how trade dumping will be curbed in Africa. Findings from the polls, show that 57 percent of the respondents assert that trade dumping will be curbed in Africa through “production”, 36 percent opine that trade dumping will be curbed in Africa through “fight against corruption” and 7 percent posit that trade dumping will be curbed in Africa through “technology” while no one indicates that it will “never be curbed”. Thus, the poll confirmed that being productive is the best way to curb dumping. This reinforces the hypothesis that Africa has to focus more on industrialization to avoid being a dumping ground.
Trade policy measures including anti-dumping, countervailing, and safeguards, are crucial for reducing the negative consequences of globalization and international trade liberalization, as well as for industrial growth. However, the vast majority of African nations lack the necessary infrastructure to use them.[3] With the commencement of the AfCFTA, there is a significant risk of dumping in Africa, which poses a serious threat to state parties, particularly those that are less and vulnerable members.
Furthermore, to curb dumping in Africa will require a comprehensive approach involving various stakeholders and policy measures, including Curbing trade dumping in Africa requires a comprehensive approach involving various stakeholders and policy measures. Here are some key strategies to address trade dumping in Africa:
- Strengthening Legal Frameworks
It is crucial for African nations to implement strong and effective anti-dumping laws and regulations that comply with global standards, such as those established by the World Trade Organization (WTO). These regulations must clearly outline the definition of trade dumping, establish criteria for assessing harm caused to local industries, and provide a framework for conducting investigations and imposing anti-dumping measures.
- Enhancing Monitoring and Surveillance:
To combat trade dumping, African countries must improve their monitoring capabilities. This can be achieved through the creation of specialized units or agencies tasked with investigating and monitoring potential cases. Additionally, strengthening customs controls and border management is crucial in preventing dumped goods from entering the domestic market.
- Promoting Regional Cooperation:
Foster regional cooperation among African countries to address trade dumping collectively. This can involve sharing information, experiences, and best practices related to anti-dumping measures. Establish regional mechanisms for coordinating investigations and implementing anti-dumping measures to ensure consistency and effectiveness across the continent.
- Strengthening Institutional Capacity
To strengthen the ability of national institutions in investigating and enforcing anti-dumping measures, it is essential to provide them with sufficient resources and training. Anti-dumping commissions or authorities need to be equipped to handle intricate investigations and effectively fulfill their responsibilities.
- Supporting Domestic Industries
To promote the growth of domestic industries, it is important to implement targeted policies and initiatives that improve their competitiveness and resilience. This can be achieved through investment in research and development, innovation, and technology adoption, which can enhance product quality, productivity, and efficiency. Additionally, providing access to finance, capacity-building programs, and technical assistance can help domestic industries withstand competition from dumped goods.
- Dialogue and Negotiation
Engage in constructive dialogue and negotiations with trading partners to address issues of trade dumping. Seek cooperation on transparency, information sharing, and adherence to fair trade practices to prevent and mitigate instances of dumping.
- Create Awareness and Education
Raise awareness among policymakers, businesses, and the public about the detrimental effects of trade dumping on domestic industries and the overall economy. Provide education and training programs to help businesses identify and respond to instances of dumping, including legal remedies available to them.
In order for Africa to succeed as a unified entity, it is crucial to utilize the efforts of AfCFTA and establish strong institutional frameworks to combat dumping. Working in tandem with global organizations like the WTO can also greatly assist African nations in implementing successful anti-dumping strategies.
………………………..
For more information and clarification
Tel: +2349058603907
Em: mail@africainternationaltrade.com
[1] World Trade Organization. “Technical Information on anti-dumping.” Accessed June. 2, 2023
[2] AfCFTA, Dumping and Nigeria (utopianomics.com.ng)
[3] Illy, Ousseni, African Countries and the Challenges of Trade Remedy Mechanisms within the WTO (June 23, 2016). Society of International Economic Law (SIEL), Fifth Biennial Global Conference, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2799553 or http://dx.doi.org/10.2139/ssrn.2799553
