Re: software dumping

[Daniel J. Weitzner <djw@eff.org>]

At  2:16 PM 12/15/93 -0500, David Farber wrote:
>requested it be non-attributed...
>
>"
>
>Heard an NPR newsbyte on the GATT talks and possible changes to the
>dumping rules.  Has anyone considered the moral equivalent of dumping
>in the software industry?  Some software developers  are now moving to
>do devlopment offshore to low-labor-cost high-education areas -- India,
>Taiwan, and the former eastern block.  Quatro, done in Hungary, is one
>example.  Paragraph, the handwriting recognizer for the Newton, was
>done in Russia, is another.  The primary manufacturing cost of software
>is the front-end intellectual effort to create it;  if it is manufactured
>offshore and then sold in the US at under the amortized cost to develop
>it here, does this not constitute dumping?"


In general, dumping is defined as exporting products for sale at "below
market price" though some kind of subsidy.  The subsidy either comes from
the exporting country's government (ie. undue tax breaks or direct
subsidy), or from the exorting company in order to gain market share and
drive out competitors from the importing country.  The whole trick in
dumping disputes is determining what "fair market value" actual is.  But
that is generally done based on the cost of production in the exporting
country, not by comparison to prices or production costs in the importing
country.  


I believe that the Europeans feel that American film/TV producers are
selling products at below fair market value in order to drive European
producers out of business.  That is to say, they aren't really recovering
the costs of producing the film when they sell it to Europeans. There may
be something unethical about unjustly benefiting from the cheap labor of
3rd world programmers, but I don't think it can be called dumping.  To do
so, you'd have to show that the software producers cited aren't recovering
the cost of production for work done in Hungary or India.  I don't think
that such an argument is being made, however.






......................................................................
Daniel J. Weitzner, Senior Staff Counsel              <djw@eff.org>
Electronic Frontier Foundation                        202-347-5400 (v) 
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