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 ith
the congressional debate on Trade Promotion Authority heating up,
talks on the future of U.S. trade policy are underway. One of the
most contested issues is whether U.S. trade laws — in particular,
the antidumping law — should be open to negotiation. It should,
for the benefit of U.S. consumers and U.S. businesses.
Antidumping
laws have long been abused by protectionist U.S. industries seeking
a reprieve from foreign competition. However, in recent years, the
tables have begun to turn and U.S. exporters are increasingly under
target from foreign governments flexing their own antidumping muscle.
Despite this
trend, an alarming number of U.S. policymakers have declared antidumping
a sacred cow, off limits to revision and discussion in any future
trade agreements. A recent letter to President Bush from Senate
Finance Committee Chairman Max Baucus (D., Mont.) and signed by
61 senators expressed this view.
That position
risks stalling future trade talks because other countries may balk
at opening their markets if we refuse to reform our own trade barriers.
Furthermore, U.S. antidumping supporters ignore the new reality:
Antidumping laws are proliferating rapidly worldwide, closing or
limiting markets to U.S. exporters at a growing clip, threatening
to reverse gains achieved through years of market access liberalization.
Until the 1990s,
antidumping was a vice practiced almost exclusively by a few rich
countries: the United States, Canada, Australia, and Europe. High
tariffs and quota systems in the less-developed countries rendered
antidumping superfluous to their heavily protected industries. As
tariffs and other trade barriers have declined in the developing
world in accordance with WTO obligations, the appeal of antidumping
has risen. An examination of this trend and its implications is
the subject of a recent Cato Institute study. Some of the major
findings include:
- Between
1921 (the first year of the U.S. antidumping law) and 1967, there
were 75 instances in which U.S. industries succeeded in obtaining
protectionist relief.
- Changes
to the antidumping law in the 1970s, making it easier to find
dumping margins, precipitated a flood of new cases. In the 1980s,
the United States launched 398 antidumping investigations and
Australia, Europe, and Canada combined launched 1,091.
- In the 1990s,
2,483 investigations were launched worldwide, representing a greater
than 50 percent increase over the record of the 1980s.
- Sixty-two
countries now have antidumping laws on their books.
- Twenty-eight
jurisdictions (EU is one jurisdiction comprising 15
countries) used their antidumping laws to impose definitive measures
against imports between 1995 and 2000.
- Thirteen
of those 28 countries launched cases against U.S. exports during
1995-2000.
- The United
States has become the third largest target of antidumping actions
around the world — trailing only China and Japan.
- Among countries
that would comprise a Free Trade Area of the Americas (FTAA),
the United States was the number one target of antidumping in
1995-2000.
The likelihood
of continued antidumping proliferation poses a significant threat
to U.S. export growth. The product groups hardest hit by antidumping
protectionism worldwide during 1995-2000 (i.e., base metals and
articles of metal, chemicals, pharmaceuticals, and allied products,
machinery and electrical equipment, and textiles) comprised 55 percent
of U.S. export value in 2000. With respect to potential FTAA partners
Brazil and Argentina, 75 percent of U.S. exports were of products
produced by the four most active antidumping user groups there.
As the world's
largest exporter, the United States should expect to be targeted
even more as new countries learn how to wield the antidumping hatchet.
Traditional trade barriers are still high in developing countries,
which will find great comfort in the availability of a WTO-sanctioned
tool to replace those barriers. It is difficult to imagine how China,
heretofore relatively restrained in its antidumping actions, will
be able to resist pleas from its import-competing industries for
antidumping assistance, particularly since it has endured the most
antidumping abuse.
Declaring antidumping
negotiations off-limits ignores the fact that U.S. interests stand
to benefit the most from imposing restrictions on their use. Conversely,
allowing antidumping proliferation to continue will hurt U.S. interests
the most. America's policymakers should welcome opportunities for
antidumping negotiations in the World Trade Organization, the FTAA,
or in bilateral talks. The overriding national interest in a free
and open international trading system demands action to restrain
antidumping abuses before they spiral completely out of control.
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