Trade-Remedy Laws and Non-Tariff
Barriers
As tariffs in many countries were lowered over the years since the Second
World War, countries that wanted to protect domestic industries began
using, and often abusing, a series of trade restrictions that came to be
known as non-tariff barriers (NTBs). The original purpose of some of these
barriers was to remedy certain legitimate problems that arise in
international trade and, for this reason, they are often called trade-remedy
laws. All too often, however, such laws are misused and over time
become powerful means of simple protection.
Dumping
Selling a product in a foreign country at a lower price than in the
domestic market is known as dumping. For example, if U.S.-made cars
were sold for less in Canada than in the United States, the U.S.
automobile firms would be said to be dumping. Dumping is a form of
price discrimination studied in the theory of firms with price-setting
power (see Chapter 10).
Dumping, if it lasts indefinitely, can be a gift to the receiving country. Its consumers get goods
from abroad at lower prices than they otherwise would.