Pros And Cons Of Antidumping

In the past, there have been many problems with both the theory and enforcement of antidumping laws, especially in the United States. To complicate matters, the antidumping provisions adopted by GATT are somewhat different than the provisions in U.S. law, and it has not yet been determined which set of laws will prevail in antidumping actions initiated in the United States. Some have suggested that adopting the GATT antidumping provisions would amount to a partial abrogation of U.S. Sovereignty. Others deny that this would be the case. Regardless of which set of antidumping provisions is utilized, there are many common features between the GATT and U.S. rules. Many of the weaknesses in the U.S. regulations have survived the Uruguay Round. One of the major criticisms leveled against the U.S. antidumping rules is the subjectivity with which they are applied. Many antidumping actions in the past have compared products that are not strictly comparable, with the result that an antidumping action might find a party guilty where a guilty finding is not For example, Product A in China might be compared to Product B in the United States event though Product A might be different qualitatively from Product B. …show more content…
The fact that the products are qualitatively different does not mean that there will automatically be some discounting applied to account for the qualitative difference. Where differences are taken into account, the Commerce Department sometimes uses strange comparisons that have no basis in economics. Where the alleged dumping has been done by companies in a non-market economy, the normal methodology is to choose a surrogate country’s prices, as a substitute for the alleged offender’s costs, in an effort to determine whether the foreign producer has sold products on the domestic market for less than cost. This faulty methodology invites abuse, and is compounded by the fact that the petitioners are often the ones that choose which country is to be used as a surrogate, and which data from the surrogate country are to be examined. This procedure is especially relevant to cases involving China, since the Commerce Department has on many occasions classified China as a non-market economy. The problem with antidumping laws is that they are used by domestic producers to prevent foreign competition. They use the force of government to either prevent foreign competitors from entering the domestic market, or if they do enter, they must either charge high prices or pay a high tariff to the government as a cost of doing business. One reason why the antidumping laws were passed was to prevent predatory pricing. Yet the antitrust literature of the past few decades has concluded that predatory pricing either doesn’t exist, or if it could exist, would benefit. The antidumping laws are based on a number of assumptions. For one thing, actual dumping rarely occurs, because, if it did, the company that does the dumping would probably go out of business. There are instances where a company sells its products, either in foreign or domestic markets, at less than the cost of production. Where this practice does occur, it is usually for good business reasons; the alternative to selling below cost may