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
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.
Copyright 1999, Journal of Commerce