Free Trade Under Fire by Douglas Irwin

Free Trade Under Fire by Douglas Irwin

Author:Douglas Irwin
Language: eng
Format: mobi
Published: 2011-04-02T04:00:00+00:00


19 Prusa 2001.

20See Blonigen and Prusa 2003.

21Reynolds 2006. For some of the issues raised by the Byrd amendment, see U.S. GAO 2005.

22King 2002.

However, in a dispute initiated by the EU and seven other countries, a WTO panel ruled in 2002 that the subsidy was inconsistent with the multilateral rules, a finding affirmed by the WTO’s Appellate Body in 2003. In 2005, Congress repealed the Byrd amendment, but still allowed the distribution of antidumping tariff revenue to members of the affected U.S. industry who supported the petition for investigation on goods that entered before October 2007. The government disbursed about $380 million in FY2006 and, since the amendment came into force, the government has disbursed some $1.9 billion in revenue to petitioners.

However, the issue is still alive: the original complainants have charged that the United States has not fully complied with the WTO ruling and some members of Congress want to re-enact the Byrd amendment.

The Costs of Antidumping Despite the apparent ease with which domestic firms can obtain some form of protection under the antidumping laws, only a tiny fraction of total U.S. imports are covered by AD duties. AD orders covered just 0.1 percent of all imports in 2007.23 In any given year, the value of imports targeted by antidumping petitions is usually much less than this amount. Given these small figures, does the antidumping process really matter?

There are several reasons why antidumping continues to merit close scrutiny. First, these tariffs quickly add up. The net welfare cost of AD and CVD actions in the United States was a whopping $4 billion in 1993.24 With the demise of the Multi-Fiber Arrangement in 2005, it is likely that they are collectively the most costly of all U.S. import restrictions.

These costs are only going to mount over time as more cases are filed. This is because AD duties are hard to remove once they are imposed. The average duration of AD measures in place is eleven years.25 The oldest antidumping duty in place dates from 1973, and more than thirty have been imposed for more than twenty years. One of the few reforms of AD actions in the Uruguay Round was to introduce a sunset rule starting in 1995. This required that all AD duties be terminated after five

23 World Trade Organization 2008, 23. In 1991, the figure was 1.8 percent; U.S. International Trade Commission 1995, 4–1.

24Gallaway, Blonigen, and Flynn 1999.

25World Trade Organization 2008, 23.

years unless a review finds that this would lead to a recurrence of dumping and injury. Yet Commerce is unlikely to revoke an antidumping order over the objections of the domestic industry. In 210 reviews conducted from 2000 to 2007, only fifty-eight duties were revoked.26

Second, the coverage figures understate the harm in antidumping actions. The very existence of the antidumping law allows it to be used as a tool to enforce collusive agreements. For example, in 1989 U.S. producers of ferrosilicon formed a cartel and reduced output. The lower output was used to prove injury and justify the imposition of antidumping duties against five foreign competitors.



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