Opinion Editorial | |
| Monday, December 6, 1999 | |
Antidumping Laws Are Another Form Of Protectionism |
Protesters stormed the World Trade Organization meeting in Seattle last week, complaining that free trade is hurting workers, despoiling the environment and eroding national sovereignty. In truth, there has been much less of a movement toward free trade than they think. While traditional trade barriers such as tariffs have fallen, they are being replaced by a new form of protection: antidumping laws. The U.S. pioneered the use of antidumping laws, but other countries quickly have caught up, to the detriment of U.S. firms.
Historically, dumping is said to have occurred when a foreign producer sells goods in the U.S. market for less than it charges in its domestic market. The first U.S. antidumping law was enacted in 1916 in order to protect U.S. firms from unfair foreign competition. For many years, there were very few dumping cases. According to economist Gary Hufbauer, there were fewer than 250 cases brought between 1934 and 1974. The Trade Act of 1974, however, greatly expanded the traditional scope of what constituted dumping, leading to a sharp expansion of antidumping investigations by the Department of Commerce and the U.S. International Trade Commission. Between 1980 and 1990, U.S. firms brought more than 500 antidumping cases (see figure).
For many years, industrialized countries such as the U.S., Canada, Australia and the European Community were the traditional users of anti-dumping laws, mainly against developing countries in Asia and Latin America. Now these latter countries have become the new users of such laws against the industrialized countries. According to economist Thomas Prusa of Rutgers, antidumping actions by traditional users have fallen from almost 90 percent of the total 10 years ago to about half today. Just this year, Taiwan has accused U.S. firms of dumping computer chips there and Mexico has taken action against U.S. beef imports.
It is becoming increasingly clear that anti-dumping laws are less a defense for domestic firms against unfair trade practices than they are just another form of protection. As Federal Reserve Board Chairman Alan Greenspan put it in an April speech in Dallas, anti-dumping actions "oftentimes are just simple guises for inhibiting competition." Many of the actions found to violate the anti-dumping laws, he notes, are perfectly legal in the domestic market, such as lowering prices when there is a fall in demand.
Anti-dumping laws clearly are a two-edged sword. They may have helped U.S. firms when they were the main users. But as foreigners now use them more often against us, they may hurt more than help U.S. companies.
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, December 6, 1999.
For Prusa study
http://www.nber.org/papers/w7404
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