Keep Anti-Dumping Laws Intact

In the late 1980s and early 1990s, a chorus of foreign governments, foreign companies, and their lawyers and lobbyists in Washington kept up a steady drumbeat demanding that anti-dumping laws be subject to more international policing under the world trading system.

They got their wish when the Uruguay Round of trade negotiations produced a complex series of international rules on anti-dumping. Now, before some of those hard-fought rules have even been tested, that same chorus is prematurely and unjustifiably demanding still more restrictions.

Enraged by the recent effective use of U.S. anti-dumping and countervailing duty laws to counter decades of subsidization and dumping of steel, a number of countries, including Japan, Korea, and Brazil, have called for new World Trade Organization negotiations to curb anti-dumping laws. Interestingly, these same countries showed no apparent interest in countering the problems of industrial subsidies, market collusion, government pricing, and sanctuary markets that make dumping possible and anti-dumping laws a practical necessity in largely open and competitive markets, like the United States.

The calls for new negotiations on anti-dumping laws are remarkably ill-timed. The world just concluded the most extensive set of negotiations ever on this topic in the Uruguay Round. These negotiations resulted in literally dozens of new limitations on anti-dumping and countervailing duty laws.

The most significant of these are new standing requirements, increased de minimis dumping and import levels, and a new sunset review on all anti-dumping cases. In accordance with the schedule set during the negotiations, some of these new requirements are just now being phased in.

How can anyone in good conscience declare these new rules insufficient without even allowing them a reasonable period of time to be tested?

Obviously, in the eyes of critics, if any anti-dumping duties can be imposed, the standard is too weak. There is no need to see if current standards effectively police unfair trade practices, since they believe any policing is too much.

The reality is that critics of anti-dumping laws -- domestically and internationally -- do not seek a reasonable standard for policing unfair trade practices. Rather, they seek a de facto ban on anti-dumping and countervailing duty actions and an international license to dump and subsidize.

To understand the core issues behind these demands for new limits on anti-dumping laws, it is important to turn careful attention to the policies of the countries seeking further limitations. Consider a few of those facts.

The Japanese steel cartel still strictly limits steel imports, limits domestic competition so that market shares of Japanese companies are unchanging, and maintains domestic steel prices often hundreds of dollars per ton over the export price.

Similar Japanese practices have been common on other products, such as semiconductors and supercomputers, on which U.S. anti-dumping actions have been made.

Korea has a long history of protectionism and anti-import campaigns across its economy and has subsidized its semiconductor, automobile, and steel industries to the tune of billions of dollars.

Brazil has followed a similar path; simply put, without heavy government subsidies over an extended period it is unlikely that Brazil would have much of a steel industry to "privatize" today.

Hopefully, a long series of bilateral and multilateral trade negotiations with all of these countries has lowered some of these trade barriers and curbed the trade distorting policies, but the impact of past policies and, in many instances, their current operation continues to affect markets.It is hardly an accident that it is in the very sectors where these governments worked hardest to distort comparative advantage -- steel, semiconductors and supercomputers -- that U.S. anti-dumping actions continue to focus.

To this point, the Clinton administration has treated these requests for new talks responsibly; it has argued that further negotiations on anti-dumping and countervailing duties are inappropriate.

But the Clinton appointees have not gone far enough. The administration should make a simple offer to those countries so fond of carping about U.S. trade laws: eliminate all of the trade-distorting practices that drive dumped and subsidized imports into the U.S. market and U.S. trade laws will cease to be a problem.

Until that happens, the appropriate topic for international trade negotiations is eliminating trade-distorting practices, not curbing the most effective remedy available to counter their injurious effects.

If anti-dumping laws are discussed at all in the upcoming round of trade negotiations, the topic should be toughening anti-dumping laws to attack those companies that repeatedly dump, increase dumping margins to blunt anti-dumping duties, or otherwise seek to circumvent anti-dumping orders.