US Abuse of Anti-Dumping Duties

Last week, the Financial Times opined:

Anti-dumping duties are designed to prevent predatory companies pricing goods lower abroad than at home. But rules defining dumping vary between countries and are hopelessly opaque.

In the EU – as with most members of the World Trade Organisation except the US – anti-dumping actions are a politicised process, and investigators are allowed considerable leeway in deciding how comparisons between export and domestic prices should be made. Thus authorities are susceptible to lobbying, and inefficient businesses in shrinking sectors such as shoe-making spend too much time begging governments to protect them from cheap imports rather than figuring out how to make themselves competitive.

If I were to write the FT a letter, it would say:

Sir,

Anti-dumping policy is a dangerous and frequently abused trade instrument. You were right to criticize the politicized processes that produce anti-dumping actions in most countries but erred in exempting the United States from your criticism (“Down in the dumps,” June 14). Anti-dumping policy in the US, as in other nations, is dominated by special interests and based on suspect calculations.

For a number of years, US law — the Byrd amendment — actively encouraged lobbyists to bring anti-dumping claims by awarding the tariff revenues to the companies that filed a complaint. It was the European Union, along with ten other nations, that brought a successful case against this measure at the WTO dispute settlement panel in 2002.

Despite that ruling, the Byrd amendment was not repealed by the US Congress until February 2006 and will remain in effect until September 2007. Anti-dumping actions are protectionist interventions, whether implemented by Asians, Europeans, or Americans. The United States should not be let off the hook.