Case: Antidumping Measures as Protectionism
Dumping is defined as the sale of a product for export at a price that is lower than the price charged by the same firm in its home market or at a price below costs of production. Dumping can happen for a number of reasons. Firstly, it can be maintained as a short-term predatory pricing strategy by exporters designed to put competitors in an export market out of business. Also, it can be the result of market intervention or state subsidy of a company’s production that enables it to artificially lower the cost of export. Predatory pricing is illegal under WTO rules if it harms producers in the export market, and states are entitled to use WTO anti-dumping rules to ensure that predatory pricing does not unfairly harm their domestic producers.
On September 14, 2007, China has asked WTO to settle its dispute with US over Chinese coated paper. China is seeking WTO help following a preliminary decision by the US Department of Commerce to impose duties on coated paper imported from China. The frequent usage of trade protective tools, like anti-dumping and special guarantee measures, has become a source of trade conflicts between China and the US. According to WTO statistics, China is the most targeted country in US anti-dumping investigations. With its huge trade deficit, the US government has to protect its domestic industries from foreign competitors. It is, therefore, natural for US authorities to resort to antidumping measures to protect their domestic industries. Another motive is the strategic interests of the US. It was found that US antidumping cases were often driven by political pressure, national security interests, and historical economic relations. And these considerations are sometimes more important than economic interests.
As shown in China’s dispute with US, there is a growing consensus among the economists that in many cases, the anti-dumping policy is an industry policy tool in disguise. Instead of its primary purpose of keeping “unfair imports” out, it is often aimed at fostering the interests of domestic producers. If anti-dumping duties were applied exclusively in situations when predatory pricing was being practiced, there would be no justification for complaining about protectionism of anti-dumping duties. However, anti-dumping duties can be put in place when foreign firms are following normal “fair” business practices. WTO allows anti-dumping duties when one of two definitions of the practice of dumping is met.
Shambaugh, David, “Lifting the EU Arms Embargo on China: An American Perspective”, Discussion paper prepared for the CSIS/SWP conference “China’s Rise: Diverging U.S.- EU Approaches and Perceptions,” Berlin, April 28-29, 2005
Office of Industries, U.S. International Trade Commission.(2009).Export controls: an overview of their use, economic effects, and treatment in the global trading system. Retrieved from United States International Trade Commission http://www.usitc.gov/publications/332/working_papers/ID-23.pdf
The predominant conflict between the United States and Great Britain prior to the war of 1812 was the British impressment of American sailors and merchants. At the time, Britain was at war with the First French Empire led by Napoleon Bonaparte. It was anticipated that many soldiers and sailors would desert the British Navy because of its substandard conditions. The majority of the deserting sailors joined the United States Merchant Marine; it not only had safer working conditions, but had payment of approximately four times the amount received in the British Navy. As substantial amounts of sailors abandoned the British Navy, U.S. ships were frequently stopped and searched for deserters. In this process, anyone allegedly deserting was impressed,
The United States had a turbulent start in the year 1789, as a new, vulnerable nation, desperately trying to gain respect from foreign countries. The country’s first president, George Washington, was beginning to shape the foundation of the government, while facing large economic problems, both foreign and domestic. The Federal Government issued taxes on goods, causing much colonial unrest. Meanwhile, political party spirit became very prevalent as well as a geographical divide; the country was a long way from becoming as united and stable as it was in 1816. Although the Embargo Act hurt America’s foreign policy, domestic and foreign affairs from 1789 through 1816 beneficially impacted the United States because of the Louisiana Purchase and
The Avalon Project, allowed Congress of the United States to take advantage of the people. The tariff angered many people. It didn’t consider everyone’s feelings, especially southerners. The people in the South argued that these tariffs are illegal. The people of South Carolina declared the tariffs useless because they weren’t fair, and southerners avoided the tariffs. To make sure that it was really illegal, the people of South Carolina made sure no one overstepped. Everything that was bound under the tariffs was nullified in South Carolina, from promises. It was made illegal for any official of the state and of the United States to tax anyone within the limits of the state of South Carolina. Legislators were informed by the people of South
Trading internationally, along with foreign trading policies has always been a controversial issue in America. Free trade is just as taboo if not more so. Today, the United States has made an attempt to maintain an open market of trading. Free trading greatly benefits a nation’s economy. The history of trade in The United States dates back over half a century ago. Through a substantial part of history, the United States had implemented rather extensive barriers and restrictions regarding importation, in order to better protect domestic suppliers from any serious foreign rivalry. Regardless, of Government restrictions and barriers set in place to avoid foreign competition it is healthy for our nation to have motivation and have the desire to
With so much focus on the positive elements of free trade, the negative aspects of an open system are often overlooked. However, they do exist, and protectionism is needed. Consequently, safeguards are built into the system. States look out for their own good, whether that is through the use of escape clauses or the choice of the optimal forum for dispute settlement based on the precedent they do or do not want set. This paper argues that protectionism is valuable and inherent in the current system; however, not enough. Powerful states exploit weaker states, and “free trade” exacerbates the problem. I will first discuss why free trade does not work. Then, I will explain how the current system enables the inherent protectionist attitude of states. Finally, I will analyze the fairness of the system.
In the acclaimed novel, The Choice: A Fable of Free Trade and Protectionism, author Russell Roberts, an economist and writer, tells a fictional story that enlightens readers to the wonders of the economic system. Russell provides an insightful, thought provoking story that illustrates protectionism and free trade, while making the concepts and arguments easy to comprehend.
When America's cotton is sent to China, it is made into T-shirts in the sweatshops of China by laborers working 12-hour days and being paid subsistence wages. When the finished T-shirts re-enter the U.S., they are protected by the government through subsidies, tariffs, taxes, and protectionist policies that ensure that these foreign products will not provide too much competition to American-made shirts. Government regulations control how many T-shirt can be imported from various countrie...
The massive increase in the Chinese trading relations was fueled by the United States in the year 1979 through the normal trade relations between the two countries. In addition, the Chinese non-concession to the World Trade Organization (WTO) in the year 2001 also facilitated its trading activities with different countries including the United States (Kaplan, 57). However, trading relations with the Chinese have been uneasy resulting from the massive trade imbalances in the recent past, which grows exponentially. The protectionist policies of the United States especially in Washington and Beijing have been putting pressure on the Chinese to revalue their currency as well as protecting it from counterfeits, which may be of adverse effects to the trading relations. This paper gives a comprehensive discussion on the foreign trade relations with china. It further gives an elaborate discussion on the impacts of foreign tr...
International Trade Law Case Study Introduction International trade transaction is essential for the sale of goods with the addition of an international element. In practice, the seller and buyer are in different countries where the goods must travel from the seller’s country to the buyer’s country by various means of transports. In international sale of goods, they usually transit the goods by sea because of the international transactions. Therefore, contracts for the carriage of those goods must be procured between the seller or buyer and common carrier depending on different types of sale of contracts. Moreover, in most of incidences, the agreed goods are usually insured at a reasonable amount in case of being loss or damaged during the transit.
There are two potential losers from such action. First, all domestic producers who are not competitive would lose because they would be out-competed by low-cost import. Second, all exporters who previously enjoyed local subsidies would lose because their governments cannot subsidize their production.
One of the most cited arguments for intervention is that of protecting jobs and industries from unfair foreign competition (Hill). While industries like aerospace are protected given their importance for national security, job protection appears as a result of unions and industries putting political pressure given the threat of more efficient foreign firms (Hill). Many countries achieve this by increasing the tariffs on imports of foreign products. What really happens when a certain industry is ...
...y supply and this causes the collapse in the U.S. and elsewhere (Pinnell, Lecture notes, 3/23). Consequently, countries become very protectionist to protect firms at home and international trade collapses (Pinnell, Lecture notes, 3/23). Therefore, states must make decisions with reciprocity and consequences in mind (Pinnell, Lecture notes, 3/23).
Embracing the concept of free trade means that a government does not influence the trade by imposing sanctions but rather has a laissez-faire approach that allows the international market to decide which product has the comparative advantage. The global economy runs on this assumption but not all “play” by the same rules. The United States has limited sanctions imposed on free trade, allowing the free market to operate across the world. The United States’ approach to free trade is much like our approach to the US Olympic Team. Our athletes are unpaid volunteers that often fund their Olympic quest with sponsorships. As our metal count often shows, you do not always “win” ...