Antidumping Essays - International Trade, Trade Policy, Dumping

Antidumping While antidumping doesn't get a lot of press, it is certainly one of the biggest issues that the WTO is dealing with today. During the recent WTO Ministerial Conference in Seattle, much was mage about protesters who were demanding higher environmental standards or international labor standards. Little was mentioned about antidumping. However, In the midst of the many demonstrators there were steel workers and members of other union organizations like the AFL-CIO who were there to defend US antidumping laws. Antidumping regulation was a major issue for Seattle as it is for the organization of the WTO in general. From the inception of the WTO, there has been controversy over antidumping laws from diverse groups. Some countries feel that other countries place antidumping measures on products that have not really been dumped. Since the 1994 Uruguay Round, many developing nations feel that they have been unfairly targeted for antidumping penalties by the industrialized nations. Countries such as Japan and South Korea have also called for reforms. The US, being the largest economy in the world tends to be on the receiving end of much of this controversy about its national antidumping laws. Adding to the confusion, not many cases brought to the WTO panels have been settled as of yet. There are many complaints about antidumping procedures, and some economic graphs can be used to demonstrate these complaints about antidumping and the WTO's antidumping laws. In 1995, the World Trade Organization was born out of the Uruguay Round of trade talks. The WTO has upwards of 123 member countries and new members are always in the process of joining. The WTO is an organization that basically a more formal extension of the GATT (General Agreement on Tariffs and Trade) which had existed for around 50 years. However, the WTO agreements also cover trade issues not in the GATT agreement, such as trade in services and intellectual property rights. Also, WTO member countries must agree to all the obligations of its agreements. The WTO also features binding panel resolutions. Countries must accept the panel rulings; under GATT that was not necessarily true. Still, WTO embodies the same spirit as GATT. It favors trade liberalization and globalization over trade barriers. In particular, one main objective of the WTO is to reduce trade restrictions, and one of the first agreements it reached was a general reduction in tariffs. (Schott, 1). For all of the WTO's promise to tear down of trade barriers, there is some concern that antidumping procedures are a covert way of hanging on to some of these practices. Since the WTO has come into existence, antidumping cases have flourished. Between January 1994 and July 1995 there were 238 new provisional or actual antidumping measures were enforced by 19 WTO members (Schott, 221). Most came from countries such as the United States, Australia, Canada and the countries of the European Union. Under the WTO Antidumping Agreement, dumping is generally defined as selling a product in an export market at a lower price than the product is sold in the exporter's home country. It is also associated with selling the product at less than the marginal cost of production. This action is often called predatory pricing. The dumping company keeps its price so low that it drives its competition out of business so it gains monopoly power after a time. A company is able to do this in the long run because after a time it only has to cover its average variable cost, once it covers its overhead expenses. Antidumping is the practice where governments place tariffs or quotas or duties on imported goods that they believe are being dumping in their in order to prevent their domestic industries from collapsing due to the importer's unfair pricing. Examples of goods that often affected by antidumping measures are steel, computer screens and supercomputers, and agriculture. If in fact a domestic industry is indeed having competing products being dumped in its country, it is possible that it could be injured. The lower price imports could decrease the amount of domestic products purchased, and domestic companies may not be able to lower their prices in order to compete with these imports. Thus, antidumping procedures may be prudent in these cases. Antidumping can be a necessary measure for countries to enforce in certain cases. However, this paper focuses with the problems of antidumping. One particular issue is whether or not countries are using the valid methods (by the WTO's standards) to determine the presence of antidumping. Since this is such a controversial issue, this paper