Anti-dumping: A growing problem in international trade

Résumé du document

Since the signing of the General Agreement on Tariffs and Trade (GATT) in 1947, free trade has been widely adopted and has enabled countries to enjoy prosperity. It was aimed to foster free trade by reducing tariffs and by settling an international mechanism to solve international trade disputes. This agreement was replaced in 1995 by the World Trade Organization (WTO), which was aimed to implement an opened and multilateral trading system. Nevertheless, some companies have succeeded to convince their governments to protect themselves from overseas competition. Anti-dumping (AD) was thus adopted to cut down on harsh competition. It is an official policy introduced to heal the problem of dumping. Under the coverage of contending for allegedly unfair trading practices, governments have implemented AD laws. They were designated to thwart foreign companies that were accused of practicing dumping. " A product is to be considered as being dumped, i.e. introduced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country."

Extraits

[...] Indeed, the anti-dumping legislation of the EU exists to counteract unfair dumping practices by third-country exporters. The EU legislation is based on an agreement reached in 1994 between all members of World Trade Organisation. This agreement condemns dumping as an unfair trade practice and allows action to be taken. Although several European countries like France and the UK adopted AD legislation in the 1920s, it was not until after the Kennedy round, when AD first became a significant GATT issue that European AD legislation was established in 1968. [...]

[...] We can observe a steady increase since the 80's. Prusa totally agrees with these figures since he uses them to demonstrate his point of view. In that respect, we can consider the following repartition of the AD disputes: in the early 1990s there were 250-300 AD cases registered while they amounted to 300-350 by the end of the 1990s. As a conclusion, we do agree with the steady increase of AD disputes since the 1980s. Figure 4 AD investigations by traditional users: 1987-2002 Miranda, Torres and Ruiz after present the evolution for a segment: the traditional users that is to say the U.S., EU, Canada, and Australia. [...]

[...] The first countries that have introduced the Anti-dumping policy were said to be equally concerned by economic as well as political factors. A good example is the case of the United States: "The number of US anti-dumping investigations conducted in the late 1930s and the late 1950s and early 1960s is surprisingly large and comparable to the post-1980s levels of activity" (Irwin; 2005). That has changed today. The research shows that among the countries, which have started to use AD lately, investigations were made mainly because of political reasons. [...]

[...] According to Anderson (1992), AD laws create an incentive for firms to dump even more. The numbers of countries with an AD law are correlated with the number of countries members of the WTO. The largest users are Australia, Canada, the EU and the USA. There are also few new entries like Argentina, India and South Africa (they have larger shares than Canada and Australia). The role of new users has become more and more important that it becomes so essential to take them into account. [...]

[...] The explanation is the following: a country, even if it is doing business with a new partner, is likely to resort to AD if the country is deliberately known as a staunch user of AD. The conclusion drawn is obvious. It is a "strategic factor": retaliation. This study is reliable since it relies on Anti-Dumping cases filed from 1980 to 1988 by WTO and GATT members. We can take to granted that retaliation is a strong motivation to use Anti Dumping. [...]