NCPA - National Center for Policy Analysis

Antidumping Laws Are Another Form Of Protectionism

December 6, 1999

While traditional trade barriers such as tariffs have fallen, they are being replaced by a new form of protection: antidumping laws. 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 to protect U.S. firms from unfair foreign competition.
  • But there were fewer than 250 cases brought between 1934 and 1974, according to economist Gary Hufbauer.
  • The Trade Act of 1974, however, greatly expanded the 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 http://www.ncpa.org/pd/gif/pd120699.gif).

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 developing countries use such laws against the industrialized countries.

  • According to economist Thomas Prusa, 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 accused U.S. firms of dumping computer chips there, and Mexico has taken action against U.S. beef imports.

Anti-dumping laws are mostly just another form of protection. As Federal Reserve Board Chairman Alan Greenspan put it, 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.

Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, December 6, 1999.

 

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