U.s. International Trade

Topics: World Trade Organization, International trade, General Agreement on Tariffs and Trade Pages: 6 (2321 words) Published: March 3, 2004
Antidumping law and practice- USA and China.

Among the trilogy of trade remedy regimes- countervailing duty, safeguard and antidumping actions- antidumping actions are by far the remedy of choice. It's a measure internationally adopted to stop unfair competition, regulate international market order and protect the security of the national industries. It's adopted by an increasing number of countries as it's playing an increasingly important role in international trade. It's perhaps the most controversial subject involving foreign trade. The United States is the world's biggest user of antidumping and has been for decades. China, on the other hand, has been the number-one target of antidumping by most countries for the past decade. The first dumping lawsuit against china came in 1979 when Europeans accused Chinese saccharin manufacturers of dumping.

If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be "dumping" the product. The WTO agreement does not pass judgment. Its focus is on how governments can or cannot react to dumping- it disciplines antidumping actions, and it is often called the "Antidumping Agreement" (The Agreement on Implementation of article VI of the General Agreement on Tariffs and Trade 1994). Antidumping refers to a legal system under which the government of a country investigates the dumping of imports and take corresponding antidumping measures in accordance with the law.

Broadly speaking, the WTO agreement allows governments to act against dumping where there is genuine ("material") injury to the competing domestic industry. In order to do that the government has to be able to show that dumping is taking place, calculate the extent of dumping and show that the dumping is causing injury or threatening to do so. Typically, antidumping action means charging extra import duty on the particular product from the particular exporting country in order to "bring" its price closer to the "normal value" or to remove the injury to domestic industry in the importing country. There are many different ways of calculating whether a particular product is being dumped. The agreement (AD Agreement) narrows down the range of possible options to three methods. The main one is based on the price in the exporter's domestic market. When this cannot be used, two alternatives are available- the price charged by the exporter in another country, or a calculation based on combination of the exporter's production costs, other expenses and normal profit margin. The agreement also specifies how a fair comparison can be made between the export price and what would be a normal price. The AD agreement (Article 16) requires member countries (WTO members) to inform the Committee on Antidumping Practices about all preliminary and final antidumping actions, promptly and in detail. Member countries must also report on all investigations twice a year.

World Trade Organization makes statistics on antidumping initiations available to everybody visiting its website. According to the data on "AD initiations by exporting country" for period from January 1st 1995 to June 30th 2003 there were the total of 324 AD cases initiated against China and 122 against the United States. Which gives these countries first and third place, respectively. Republic of Korea takes second place with 174 antidumping cases initiated against it during a period of 8.5 years. It's interesting to mention that from 1999 to 2002 number of initiated cases against China has a growing tendency (41, 43, 53, 51 cases), while an inverse tendency for the U.S. (14, 13, 15, 12).

Antidumping has been called the "third rail of American trade politics" because politically powerful special interests enjoy the protection it provides. For years, American companies have taken advantage of the antidumping law to punish foreign firms that give American consumers a bargain. In the U.S. the...
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