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International Trade Law: The History of Dumping and Antidumping Measures Essay Example

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International Trade Law: The History of Dumping and Antidumping Measures

International Trade Law: The History of Dumping and Antidumping Measures

1.0 Introduction

The discourse of free trade and its exact reverse, protectionism has been a subject of global discussion over the years.1 In numerous occasions, it is common to hear a country claiming that another country is selling its export product to the receiving/ importing country at a lesser price as compared to the prices within the exporting country.2 Such happenings have forced countries to employ tariff and non tariff measures in order to cushion their domestic industries.3 For instance, in 20th century, US used to impose barriers on certain imports with the precinct that they were being sold in US at price that was below their production cost or less than their expected market value.4 This realisation called for a global agreement on the same. Consequently in 1947 General Agreement on Tariffs and Trade (GATT) was formulated. This was later to be succeeded by World Trade Organisation in 1994. The aim of this treaty is to ensure fair trade/competition with the key aspect on antidumping being outlined in article VI of GATT 1994.5 The aim of this discourse is to discuss and outline the history of dumping and anti dumping measures in the context of other trade barriers. In the context of ‘other trade barriers’ the paper explores none tariff measures.

2.0 Dumping and Antidumping Concept

2.1 Dumping Concept

Dumping concept is largely anchored on free trade framework and utilitarianism. The supporters of this concept argue that it ensures greatest good for the greatest number. Nevertheless, free trade as embodied in utilitarianism has been accused of neglecting the rights of others.6 Dumping is conceptualised as the price discrimination at the international level whereby “the price of a product when sold in the importing country is less than the price of that product in the market of the exporting country”.7 Nevertheless, this is a simplistic conceptualisation and thus, there are renowned analytic parameters that are usually applied so as to determine the appropriate price/ normal value in the exporting country and appropriate price in the importing country/ export price.

To ensure fair trade practices article VI of GATT 1994 outlines to WTO members on the process of establishing the same and how to seek redress through Committee on Anti-Dumping Practices.8 The determination of dumping practices is a function of the interaction between normal value and export price. Normal value stands for the price in the ordinary course of sale. This phenomenon can equally be determined by the price by which the issue in contention is sold to another third party and on the basis of cost of production and other miscellaneous such as administrative costs and profits. On the other hand, export prices refers to the price that exporter sells the goods to an importer in the importing destination.9

2.2 Antidumping Concept and Antidumping Measures

Antidumping is anchored on the context of protectionism. Under this approach, policy makers are concerned with how to cushion local firms from import competition. This is usually attained through imposition of tariffs so as to increase import prices. Other non tariff approaches include establishment of quotas which restricts the quantity of import to be shipped into a country. Moreover, countries have formulated an antidumping law that govern the same and if one is found to have contravened the same is liable to court charges. For instance, USA has implemented the same so as to restrict importers from selling goods at a lower price as compared to cost of production or at a lower rate as they do in other markets.10

The fourth aspect that has been employed by countries is the manipulation of exchange rates. The difference between the earlier 3 approaches this one is based on the fact that the three can target a specific industry while the later impacts on all imported goods. Such practices have been implemented by Mexico who devalued so as to ‘hasten’ its balance of trade. The last antidumping approach that has been applied specifically by WTO members is by invoking 1994 agreement on antidumping.11 Thus, for a country to protect themselves from dumping, they can implement in isolation or a combination of tariff measures and other non tariff measures such as quotas, antidumping laws and exchange rate manipulation. Nevertheless, those who favour this policy have been critiqued for their one sided approach (how policy affects a particular group or industry) instead of the holistic approach.12

3.0 Historical Perspective on Antidumping

3.1 Global Perspective

Antidumping measures emerged in the twenty century. For instance, USA had outlined numerous measures so as to counter check goods that were being at lower price in US as compared to the country of origin.13 The same statement is corroborated by United Nations Conference on Trade and Development-UNCTAD (2003, p.3). They note that antidumping legislations are traceable to 20th century. The GATT agreement had various provisions in article VI that discouraged product dumping.14 Indeed, Block and Mc Gee (1997, p.395) identifies it as one of the instances of protectionism that is non tariff based. Article VI has evolved over the period up to the creation of WTO.

In 1958, secretariat was established to examine national antidumping laws of country and by 1960 they had agreed of various terms. This gave birth to Kennedy Round in 1967 that was signed by 17 parties. This didn’t succeed because US wasn’t a signatory. The second round was held in Tokyo in 1979 and was signed by 25 nations. The third review that gave birth to WTO was in 1994 in Uruguay. This code equally gave birth to Antidumping Agency.15 The 1994vagreement offers a raft of proposals that state members can apply in the event of dumping in the context of similar goods and cause of harm to local industries. Equally it outlines parameters that have to be met by the countries that are willing to invoke article VI.16 Thus, the antidumping measures at international level which is non tariff based has been through 1994 antidumping agreement. However, WTO antidumping does not outlaw dumping but provides that remedial action might be taken.

3.2 Antidumping in US

Historically, the first antidumping law was formulated in 1904 in Canada.17 As an example of legislation in countering dumping, US have had a long history in countering dumping. Irwin (2004, p.1) notes that antidumping has been part of US for over 80years. Such endeavours date back to Sherman Antitrust Act of 1890 that prohibited any act to monopolise any market. This was hastened by the Clayton Act of 1914 that illegalised price discrimination. Thereafter, subsequent legislations targeted international trade. These included Wilson Tariff of 1894 and Antidumping Act of 1916. This later graduated to Antidumping Act of 1921. It is the later act that outlawed selling of products in US at a lower price than the market value from the export country. However, the caveat that surrounds the act is that it must with intention of destroying given industry in US. The Act emphasizes on fines and not on higher import duties or a possibility of jail.18

Davis (2013) notes that since, 1980, it has been easier for American firms to block commodities from being dumped because as compared to 1930s to 1970s. this is because of ‘legal changes and bureaucratic incentives’. For instance, control of dumping was shifted from Treasury department to Commerce Department. The shift in antidumping in US in 80s is affirmed by Irwin (2004, p.1) where he notes that works by Finger, Hall and Nelson in 1982 created the shift. Irwin (2004, p.6) indicates determination of less than fair value products (LTFV) was moved to the Department of commerce in 1980 as recommended by Ways and Means Committee in 1979.

3.3 Antidumping in Australia

The antidumping history in Australia is greatly intertwined with happenings at the global level. In this respect GATT and WTO comes in forefront.19 In Australia, the first antidumping legislation was Industries Preservation Act of 1906. However, from 1980s through to 1996, there are numerous reviews by the government on the requisite legislations. These tackled time frames, investigations and durations and so on.20 The same observation is affirmed by (Australia Government) who notes that in 1921-1960 antidumping legislations were relegated to back seat at the expense of tariffs and import licensing.

4.0 Conclusion

The aim of this discourse was to discuss the history of dumping and antidumping measures in relation to other barriers. The paper established other barriers in the context of being non tariff measures. Secondly, the paper conceptualised what is meant by dumping. Thirdly, the paper in brief examined these ‘other barriers’ and established that they include quotas, antidumping laws, manipulation of exchange rates and application of GATT agreement on antidumping. To contextualise the discussion, the paper examined the history in global perspective since 1947 to 1994 then to specific countries with focus being on legislation.

References

Australia Government, ‘A brief history of Australian antidumping policy’<http://www.pc.gov.au/__data/assets/pdf_file/0009/93762/12-appendixb.pdf>.

Australian Customs Service, ‘Australia’s anti –dumping and countervailing administration’ (2000) <http://www.customs.gov.au/webdata/resources/files/antidumpingbooklet.pdf >.

Block, Walter & Robert W. Mc Gee, ‘Must protectionism always violate rights’ (1997) 24 (4) International Journal of Social Economics, 393-407.

Davis, Matthew, Antidumping in Historical Perspective (29 July 2013) The National Bureau of Economic Research <http://www.nber.org/digest/jan05/w10582.html >.

Irwin, A. Douglas, ‘explaining the rise in the U.S. antidumping activity (2004) <http://www.fordschool.umich.edu/rsie/Conferences/ADSym/Irwin.pdf>.

Sierra, Enrique, ‘The quality-related international trade agreements of the World Trade Organisation and their implications for quality professionals, (1999) 11 (6) The TQM Magazine, 396-401.

UCTAD, ‘Dispute Settlement’ (2003) < http://unctad.org/en/Docs/edmmisc232add14_en.pdf >.

World Trade Organisation, ‘Antidumping Agreement: agreement on implementation of article VI of the General Agreement on Tariffs and Trade 1994’ (2013) <http://www.wto.org/english/tratop_e/adp_e/antidum2_e.htm>.

World Trade Organisation, Technical Information on anti-dumping (2013) <http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm >.

Zimmerman, Alan, ‘Impacts of services trade barriers: a study of the insurance industry’ (1999) 14 (3) Journal of Business & Industrial Marketing, 211-228.

1 Walter Block and Robert W. Mc Gee, ‘Must protectionism always violate rights’ (1997) 24 (4) International Journal of Social Economics 393, 393-407.

2 World Trade Organisation, Technical Information on anti-dumping (2013) <http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm >.

3 Alan Zimmerman, ‘Impacts of services trade barriers: a study of the insurance industry’ (1999) 14 (3) Journal of Business & Industrial Marketing 211, 211-228.

4 Matthew Davis, Antidumping in Historical Perspective (29 July 2013) The National Bureau of Economic Research <http://www.nber.org/digest/jan05/w10582.html >.

5 Enrique Sierra, ‘The quality-related international trade agreements of the World Trade Organisation and their implications for quality professionals, (1999) 11 (6) The TQM Magazine 396, 396-401.

6 Block and Mc Gee, above n 393, 394.

7 World Trade Organisation, Technical Information on anti-dumping (2013) <http://www.wto.org/english/tratop_e/adp_e/adp_info_e.htm >.

10 Block and Mc Gee, above n 394.

11 Ibid 395.

12 Ibid 393.

13 Davis, above n.

14 UCTAD, ‘Dispute Settlement’ (2003) 3< http://unctad.org/en/Docs/edmmisc232add14_en.pdf >.

15 Ibid 4, 5.

16 World Trade Organisation, ‘Antidumping Agreement: agreement on implementation of article VI of the General Agreement on Tariffs and Trade 1994’ (2013) <http://www.wto.org/english/tratop_e/adp_e/antidum2_e.htm>.

17 Australian Customs Service, ‘Australia’s anti –dumping and countervailing administration’ (2000) <http://www.customs.gov.au/webdata/resources/files/antidumpingbooklet.pdf >.

18 Douglas A. Irwin, ‘explaining the rise in the U.S. antidumping activity (2004) 4, 5 <http://www.fordschool.umich.edu/rsie/Conferences/ADSym/Irwin.pdf>.

19 Australia Government, ‘A brief history of Australian antidumping policy’<http://www.pc.gov.au/__data/assets/pdf_file/0009/93762/12-appendixb.pdf>.

20 Australian Customs Service, ‘Australia’s anti –dumping and countervailing administration’ (2000) <http://www.customs.gov.au/webdata/resources/files/antidumpingbooklet.pdf >.