Anti-Dumping Summary

WTO members have called for negotiations on anti-dumping measures in the Doha Development Round. The desired reforms will be the first since the 1994 Uruguay Round Agreement on Anti-Dumping. The negotiations aim to clarify ambiguities in the agreement and foster greater transparency in the use and reporting of anti-dumping measures. However, WTO members are negotiating with disparate interests at heart. Some countries want to maintain the strength and efficacy of anti-dumping measures while others want reforms that will curtail the use of such measures.

Anti-dumping suits, along with safeguards and countervailing measures, are tools for protecting domestic industries from surges of cheap foreign imports. Although the WTO strives to eliminate all trade barriers, it recognizes that nations require flexibility to adjust to economic shocks as multilateral agreements increasingly liberalize trade. Thus, these measures allow nations to temporarily protect their economies against fluctuations in trading patterns. Although anti-dumping, safeguards, and countervailing measures share an often uneasy relationship with the WTO’s core principles, many member nations consider them essential to fostering fair and free trade.

The three tools of domestic protection target sudden influxes of imports in different ways. In an anti-dumping suit, a nation retaliates against specific trading partners who are found to be exporting goods at prices lower than those dominant in the domestic market. To prove an anti-dumping case, there must be proof of dumped imports, material injury to a domestic industry, and a causal link between the two. Once a nation proves a case, it may levy a compensatory duty to bring the price of the imports up to the domestic level. Safeguards allow nations to erect duties on certain goods when a deluge of imports threatens to damage domestic producers. To put safeguards in place, a nation must demonstrate that the market share of imports would rise substantially in the absence of some kind of domestic protection. Instead of targeting imports from specific trading partners, safeguards set a quantitative restriction on the allowable market share of all imports. Finally, nations use countervailing measures (i.e. import tariffs) to neutralize the effect of foreign subsidy programs.

Although protective measures like anti-dumping can be considered a good pressure valve for countries undergoing rapid trade liberalization, they can also create political and economic tension. Political tension stems from debate over the recent rise in anti-dumping suits. The WTO saw a record high of 328 suits in 2001, sparking concern that while negotiations dismantle transparent and stable tariff barriers, members are substituting discriminatory, unpredictable anti-dumping suits. Developing countries object to the proliferation of anti-dumping and safeguards because they are particularly vulnerable to unpredictable shifts in market access. However, industrialized countries insist that conditional domestic protection is key to gradually liberalizing international trade.

The WTO has expressed concern that as stable, transparent tariffs are eliminated, countries are increasingly substituting discriminatory anti-dumping measures as domestic protection. Even though the number of anti-dumping cases has dropped somewhat since they reached a record high of 328 in 2001, the widespread use of temporary protections still seems at odds with WTO principles. Thus, Doha round negotiations will focus on clarifying when and how nations can impose temporary protections.

Aside from the debate surround the ubiquity of anti-dumping suits, WTO members disagree on the specific conditions and procedures that should allowed. Recently, the EU and Australia along with 8 other nations brought a case against the US for anti-dumping legislation that they claim is unfair. The US law allows the anti-dumping duties collected on imports to be given to competing American firms. The concern is that this procedure acts as an incentive for domestic industries to lobby harder for inappropriate anti-dumping suits. The WTO ruled that the law must be abolished and refused the US request for an appeal.

Although the most common argument in favor of strong and effective anti-dumping measures is that it relieves the competitive tension of free trade, many nations uphold that the measures protect the safety of their citizens. Recently, anti-dumping cases and issues of food safety have overlapped. The EU has had to raise import duties on certain foods that it must inspect for certain antibiotics and hormones it has banned for food safety reasons. For example, shrimp imports from ASEAN countries now take longer and are more expensive to ship to EU nations. The ASEAN countries clamor that this is a discriminatory barrier to trade that takes a grave toll on their developing economies.

Overall, the Agreement on Anti-dumping stands to be purged of its vague wording and revamped to include specific restrictions and procedures agreed to be WTO members. Whether anti-dumping becomes a weaker and limited option or a strong and oft-used tool for protection depends greatly on the negotiations leading up the fifth ministerial meeting in September 2003.

Last updated January 2003