Trigger Price Mechanism


Trigger Price Mechanism

Summary of Trigger Price Mechanism

A program of import surveillance instituted by the U.S. government in 1977. Under this scheme, a floor price is established for designated import items; this floor is predicated upon the production cost of the most efficient foreign producer, with adjustments for freight and currency fluctuations. If recent import purchase prices fall below the current trigger price, an antidumping investigation is initiated.

(Main Author: William J. Miller)

Trigger Price Mechanism (TPM) and the GATT Policy Negotiations

In relation to the GATT Policy Negotiations, Christopher Mark (1993) provided the following explanation and/or definition of Trigger Price Mechanism (TPM): Refers to a mechanism for controlling imports of sensitive products by establishing a minimum “fair price” for the imported goods. Under , the TPM established by the United States in 1978 for steel imports, the trigger price (or reference price) was pegged to within 5 percent of the cost of production of the most efficient international steel supplier –Japan –plus 8 percent nominal profit plus transportation costs. Imported steel sold below the reference price would automatically “trigger” an investigation of presumed dumping.

Trigger Price Mechanism in International Trade

Meaning of Trigger Price Mechanism, according to the Dictionary of International Trade (Global Negotiator): Price at which an import causes the importing country automatically to impose a tariff or quota. For example, a country may have a law stating that if an import falls below USD 10 per unit, a tariff is imposed that results in the import becoming USD 13 per unit. Trigger prices are used when the importing country generally wishes to promote free trade but does not want importers to undercut domestic industry.