Is dumping a criminal practice and do some foreign companies engage in predatory pricing in Georgia? This was the topic raised during the latest episode of “Priority” on Iberia TV. According to Levan Silagava, president of Georgian Entrepreneurs’ Association, the country should possess anti-dumping legislation. “We are frequently told that we have a free market, but this does not imply violated borders; any self-respecting country should promote its own entrepreneurship and try to employ its people,” - he said.

Davit Jandieri, an international law expert, explained that dumping is used by foreign companies either to establish themselves at the market or to drive out competitors.

“Opponents of dumping perceive it as an unfair method of competition, which is why countries engage in actions against it. The World Trade Organization is not explicitly opposed to undercutting, but it still possesses a mechanism of fines that helps and encourages countries to fight undercutting,” - explained Mr. Jandieri, concluding that dumping has the most negative impact on goods produced by the state, hampering the growth of domestic industry and targeting its weakest spot.

Mr. Jandieri also said that the WTO only envisions making use of anti-dumping legislation in cases of goods getting sold at prices below normal cost or foreign goods getting imported at the cost far below the market price.

“At times like these, the state is within its rights to take action. Besides, the so-called Anti-dumping Code also allows for an investigation to be conducted if native entrepreneurs demand it, establishing whether imported goods are engaged in undercutting or not,” - he said, adding that most countries have their own anti-dumping laws.

Mr. Jandieri also talked about European experience in this regard, noting that in 2009 the EU passed a directive that gives the Trade Directorate the right to investigate cases of dumping and provide recommendations to EU member countries. It is precisely due to the anti-dumping laws that numerous goods are restricted on the EU territory.

As for Georgia, Mr. Jandieri explained that anti-dumping regulations could be strewn about into various legal acts, including the Tax Code, although he warned that in such a case, a consolidated anti-dumping document should exist as well.

“The issue of creating such a document in Georgia was raised in 2015 by the former Minister of Economy, although it never came to fruition for a variety of reasons,” - the international law expert concluded.

Temur Maisuradze, former MP and another of the episode’s guests, claimed that dumping, when used by foreign companies against domestic businesses that have troubles with technology and production, results in a brief period of friction when the latter try to maintain their pricing, but inevitably ends in a smaller company collapsing and the larger, foreign one taking its place.

“After getting rid of its opponents, the foreign company starts increasing its prices, slowly matching them to those it uses in other countries. Some states even help their companies with predatory pricing when exporting their goods, because it results in conquest of other countries’ markets. When predatory pricing is underway, the consumer profits, but when competition is done away with, the prices skyrocket. This harms not only the consumer, but the country’s economy in general, as it loses employers and taxpayers, getting reduced to serving international companies as a retailer. In the end, it results in loss of jobs and death of industry,” - said Mr. Maisuradze, immediately providing an example: “When a visitor from Turkey heard that Georgia imports fowl from abroad, he was dumbfounded and asked me whether our production capacity was too low to produce enough chicken to satisfy even the domestic demand. It is difficult for a Turk to digest the idea that Georgia cannot feed its own people, figuratively speaking.”

Zurab Uchumbegashvili, representative of Poultry Farmers’ Association, noted that imported Turkish eggs are sold at the local market at the same price as locally produced ones, which is a classic example of undercutting.

“The government has computers, doesn’t it? Let them go on the internet and take a look at eggs from Belarus, which are also imported at suspicious prices. To boot, the Belarusian Agriculture Ministry’s website displays a press release warning about overproduction of eggs due to incorrect planning, forcing Belarus to export them to Kazakhstan and Georgia at prices far below prime cost. What other proof do you need? We’ve been talking about this for five years now; we’ve gathered three parliamentary committees and achieved something resembling a solution, but this expression of political will remained on paper and is now gathering dust,” - Mr. Uchumbegashvili said.

Beka Gonashvili, chairman of the Sheep Breeders’ Association, also emphasized the importance of political will in his statement: “Sheep breeders were facing the issue of dumping for the last three years, caused by documentation gerrymandering and the customs regime. We have managed to take this issue upwards, involve Deputy Prime Minister Dimitri Kumsishvili and Agriculture Minister Levan Davitashvili in it and eventually close the legal loopholes. Obviously, it took political will to solve this problem. In general, will is necessary for anything and everything. I can claim with full responsibility that the problem that haunted sheep breeders for three years has been dealt with and we’ve even received a boost when the new markets opened.”

Mr. Gonashvili also claimed that the recent growth of prices on beef and pork was caused by Iraqis buying large numbers of young animals. “As a cattle-breeder, I am happy that the prices have increased, but then there’s the issue of financial solvency and the country’s economic condition – will the people still be able to afford it? Growth of prices on locally produced meat also coincided with import of frozen meat, which is much cheaper. If you offer any Georgian meatpacker pork at 6 or 7 GEL per kilogram, he will refuse due to frozen meat at 5 GEL per kilogram being more readily available and its price remaining stable. In this case, I think it’s not the government that is to blame, but the poor state of local agricultural industry. If we want to become more competitive and produce affordable goods, the Ministry of Agriculture and other related ministries need to get involved,” - he said.