US accuses Portuguese company of product ‘dumping’

Importers of goods produced by a manufacturer of paper bags and packaging in Santo Tirso, Portugal are now facing an upfront import duty tax of 6.14% after US import enforcers accused the company of ‘dumping’.

Dumping, in economics, is a form of predatory pricing, especially in the context of international trade.

It occurs when manufacturers export a product to another country at a price below the normal market price with a prejudicial effect on local competitors.

The US Department of Trade had decided to impose a duty on the imports of paper bags produced by the company Finieco after having concluded that they were being sold at a price that is less than those practised in the US market.

In light of the decision taken at the end of May, US importers of paper packaging and bags produced by the company will have to present a percentage of the imported products to the US customs which will calculate the duty based on the value of future purchases.

Following an anti-dumping investigation opened in June, 2023 for the period 1 April 2022 to 31 March 2023, the US authorities set a duty of 6.14%.

In practice, it means that importers will have to pay back around US$1.19 million based on 2022 data for the complete year 2022-2023 based on total imports of US$19.48 million.

Finieco, which exports over 80% of its paper packaging products overseas, and is 50% owned by the German paper group Papier-Mettler, has made no comment.

The objective of dumping is to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product.

Trade treaties usually include mechanisms to alleviate problems related to dumping, such as countervailing duty penalties – as was the case with Finieco – and anti-dumping statutes.