Practice of Dumping Essay

Coined by Mother Jones magazine, the term “dumping” is used to describe the practice of selling products in other countries, typically developing nations, after they have been banned for sale in the United States. Although still widely practiced, dumping has been criticized as an immoral business practices that inevitably causes harm to others, usually for profit or to avoid the financial losses that would be caused by being forced to withdraw products from the marketplace. To determine the validity of these criticisms, this paper provides a review of Case 1.1, “Made in the U.S.A. – Dumped in Brazil, Africa, Iraq” from a utilitarianism perspective, followed by a summary of the research and important findings concerning these issues in the conclusion.

The history of dumping unsafe or otherwise banned products in other countries by U.S. companies is lengthy and damning at first glance. For example, Shaw cites numerous examples of U.S. companies selling infant wear in other countries that had been shown to be carcinogenic, painkillers that caused fatal blood disorders, and baby pacifiers that caused choking deaths. The motive for these practices is usually profit or the avoidance of financial losses from being forced to withdraw these unsafe products from the U.S. market, but there are other factors involved that make an analysis of the practice more complex. In a spirit of “if it’s not good enough for us, it’s still good enough for third worlders,” Shaw cites the example of the Dalkon Shield manufactured by A. H. Robbins that was shown to cause pelvic inflammation, blood poisoning and tubal pregnancies and perforated uterine walls in women.

After these findings were released to the American public, A. H. Robbins sales in its domestic U.S. market suffered and the company turned to the Office of Population in the U.S. Agency for International Development (USAID) in which the company sold thousands of these devices at a discount price for distribution in 42 countries that needed population control (Shaw). The moral argument in support of this approach was said to be humanitarian due to the inordinately high death rates during childbirth in these countries. As Shaw notes, “The agencies involved say their motives are humanitarian. Because the death rate is relatively high in third-world countries, almost any birth-control device is safer than pregnancy” (p. 31).

In this context, though, the concept of “safe” depends on who is being asked. Indeed, Joachim (2007) points out that in some countries that received the Dalkon Shield, “Women were reported to have suffered from anemia and infections, pelvic inflammatory diseases, unintended sterilization, and tubal pregnancies, and even to have died” (p. 138). It is reasonable to posit that the Dalkon Shield may have prevented some deaths during childbearing, but it is also clear that there was a corresponding trade-off in the safety of the women who were duped into using these devices, all to profit an American corporation that knew about these risks. In this regard, Joachim adds that, “Dumping made apparent the double standards of international family planners, who regarded Southern women as objects or [targets] rather than as individuals with rights and needs” (p. 139).

More damning still, not only did the executives at A. H. Robbins know their product was unsafe, they colluded with USAID to ensure their financial losses were minimized to the maximum extent possible. As Joachim (2007) emphasizes, “These contraceptives had not been approved by the Food and Drug Administration for distribution in the United States or had been withdrawn after they had been found to be unsafe. However, they continued to be sold in the developing world” (p. 139). Moreover, despite being proven unsafe, the unsanitary manner in which these contraceptive devices were distributed by AID was also highly questionable. In this regard, Joachin (2007) adds that:

While Dalkon Shield IUDs had been sold in the United States in individual, sterilized packages with a disposable inserter for each device, USAID distributed them in developing countries in bulk packages, unsterilized, with only ten inserters per hundred shields, and only one set of instructions for each pack of 1,000 shields. (p. 139)

While it is clear that A. H. Robbins and similarly situated enterprises and their stockholders benefited financially from dumping practices, the harm they caused to consumers in third world countries cannot be measured in dollars and cents because of the enormous human toll that has been exacted.     

In response to these unethical business practices, a growing number of countries have passed antidumping laws. For instance, during the period 1995 through 2010, there was an all-time high of 237 antidumping measures passed by World Trade Organization member states (Matschke & Schottner, 2013). Up until 1986, there were laws in the United States that prohibited the dumping of products that had not been approved by the U.S. Food and Drug Administration in other countries, but corporate pressure resulted in omnibus legislation called the Food, Drug, and Cosmetic Act that contained the following provisions:

Twenty-one developed nations (Australia, New Zealand, Canada, Japan, and 17 in Western Europe) were specified as approved countries to which unapproved drugs could be exported;

The exported product must be approved in advance by the importing country;

The drug must already be partway through the approval process at the U.S. Food and Drug Administration, and the sponsor of the drug must be actively pursuing approval of the pharmaceutical in the United States;

The drug had not previously been taken off the American market because of ineffectiveness or lack of safety, and an application for approval had not been denied by the United States; and,

An unapproved drug intended for the treatment of a tropical disease could be exported to a country not on the approved list with the approval of the U.S. secretary of health and human services (Silverman & Lydecker, 1999, p. 225).

Not surprisingly, this change in anti-dumping legislation resulted in widespread criticism from international observers. For instance, Silverman and Lydecker (1999) report that, “the action of the U.S. Congress on the export of unapproved drugs was bitterly denounced—‘treachery’ was one of the milder epithets--by international and national consumer groups, notably in Great Britain, the Netherlands, West Germany, France, and Switzerland” (p. 225). It is noteworthy, though, that all of these countries continued to practice dumping of unapproved medicines in third world countries as well (Silverman & Lydecker, 1999).

These issues are important for a utilitarianism analysis of dumping because there are some significant cultural factors involved that must be taken into account that relate to dumping practices. For example, in support of the above-described changes to U.S. anti-dumping laws, Silverman and Lydecker (1999) note that, “The drug industry declared that the United States had no divine right to tell other countries what drug products they could or could not import. We cannot play nanny to the rest of the world” (p. 223). Likewise, the FDA commissioner at the time, Frank Young, claimed that, “Each sovereign government has the chief responsibility to determine the types of drugs that can be imported from abroad [and] it was arrogant for the United States to attempt to dictate drug policy to any developing nation” (cited in Silverman & Lydecker, 1999, p. 224).

There are also some more pragmatic reasons for dumping that can be considered as having a benefit for countries that import these products. Because the U.S. has set exceedingly high safety standards for its products, consumers in other countries might view even less-than-optimal alternatives as being superior to what they have available otherwise. In this regard, Hoffman and Kamm (1999) ask, “Is it ethical for a manufacturer to sell outside their home market when products fail to meet the standards of its sophisticated home market?” (p. 139). In those cases where the products involved differ only in terms of aesthetic tastes or economic ability to pay, then dumping cannot be considered unethical. In fact, Hoffman and Kamm maintain that companies that engage in this type of dumping are providing a benefit for consumers in developing nations. For instance, these researchers argue that: