Countervailing Duties

Countervailing Duties (or CVDs) are the kind of duties, which are imposed on imported goods. The main reason why such duty exists is the dumping.

CVDs are intended to protect the domestic manufacturers. The foreign exporters bring the goods to the country and establish dishonest prices. It leads to the low demand for local products and high demand for imported goods, as they are cheap and seem more attractive to the consumer. The domestic market suffers losses. Then the government takes the next action.

The government neutralizes such a disposition by imposing countervailing duties for the imported assets. The exporters are forced to raise tariffs because of such extra costs. Thus, foreign and domestic goods become equal in price and demand.

The World Trade Organization regulates the possibility and procedure of imposing such types of measures, which the states can take, in order to reach or avoid particular consequences.

The WTO gives the permission to impose and collect the countervailing duties after performing some steps. The Organization establishes the criteria and rules determining the circumstances when the duties can be implemented. The states must prospect the impact and consequences of such imposing.