Anti-dumping by whom and on what

Two-thirds of anti-dump­ing cas­es launched since the end of the Uruguay Round of WTO trade nego­ti­a­tions have been tar­get­ted at devel­op­ing coun­tries (about 15% of all actions against Chi­na alone). If you count the Rep. of Korea as a devel­op­ing coun­try the pro­por­tion of cas­es launched against devel­op­ing coun­tries jumps to almost three-quar­ters. But devel­op­ing coun­tries are now among the most inten­sive users of anti-dump­ing. Sev­en­ty per­cent of cas­es were ini­ti­at­ed by a devel­op­ing coun­try over that peri­od, with India lead­ing the pack by a long nose (342 cas­es up to the end of last year).

bar chart showing AD initiations 1995-03

A slide from my pre­sen­ta­tion in Bangladesh: data from WTO

I’ve been in Bangladesh, this last week, talk­ing to busi­ness lead­ers and aca­d­e­mics about what’s hap­pen­ing in world trade and what might be on the hori­zon. The gar­ment indus­try is Bangladesh’s biggest exporter but has large­ly escaped for­eign anti-dump­ing action. In fact, as the data shows, tex­tiles and gar­ments are a much small­er tar­get for the anti-dumpers than “base-metals”—that is, steel—plas­tics and chem­i­cals. But after the glob­al tex­tile and gar­ment trade regime changes from a quo­ta-based to a tar­iff-based sys­tem on 1 Jan­u­ary 2005, it’s very like­ly that we’ll see a big pick-up in the use of anti-dump­ing and ‘safe­guard’ action against gar­ment imports. As Chi­nese exports to North Amer­i­ca and Europe start to dis­place exports from East and South Asia and from Cen­tral Amer­i­ca whose mar­ket shares have been pro­tect­ed, to a degree, by the old gar­ment quo­ta regime, these prod­ucts will ‘slop-over’ into oth­er devel­op­ing coun­try mar­kets. Although Chi­na’s pro­to­col of acces­sion to WTO pro­vides as spe­cial safe­guard against it’s gar­ment exports (that the US has already used[⇒ relat­ed sto­ry]), there’s no such instru­ment avail­able for use against exports from e.g. Bangladesh. Hence the threat from anti-dump­ing … Of course, dump­ing is ratio­nal; it’s a com­pet­i­tive strat­e­gy that every firm uses in domes­tic mar­kets. Only in trade—thanks, his­tor­i­cal­ly, to the US anti-trust approach to com­pe­ti­tion policy—is pric­ing below the ful­ly-allo­cat­ed long-run cost of pro­duc­tion con­sid­ered some­how “unfair”. There’s no mys­tery about why chem­i­cals, steel and plas­tics are so com­mon­ly tar­get­ed: in an eco­nom­ic slump, firms with major cap­i­tal invest­ments typ­i­cal­ly price their prod­ucts to cov­er fixed costs and take a hit on vari­ables. That is, they “dump” so they can keep their plant run­ning and hold-on to cus­tomers. This does­n’t mean that they are not prof­it max­i­miz­ers or that their actions are anti-com­pet­i­tive. On the contrary.

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