POLICY RESEARCH WORKING PAPER 2730 Antidumping as Developing countries are now using antidumping more Safeguard Policy frequently than its traditional users such as the United States. It has become a real J. Michael Finger threat to continuing Francis Ng liberalization by developing Sonam Wangchuk countries. The World Bank Development Research Group Trade December 2001 | POLICY RESEARCH WORKING PAPER 2730 Summary findings Antidumping is by far the most prevalent instrument it were a specialized instrument. In reality, present WTO applied by countries to impose new import restrictions. rules allow it to be applied in any instance of politically In the 1980s antidumping was used mainly by a handful troubling imports. of industrial countries. More recently developing Finger, Ng, and Wangchuk argue that, as a "pressure countries have used it increasingly often. Since the World valve" to help maintain an open trade policy, Trade Organization (WTO) Agreements went into effect antidumping has serious weaknesses: Its technical in 1995, developing countries have initiated 559 strictures do not distinguish between instances that antidumping cases, developed countries 463 (through advance rather than harm the national economic interest. June 2000). Per dollar of imports, ten developing And its politics of branding foreigners as unfair countries have initiated at least five times as many strengthens rather than mutes pressures against antidumping cases as the United States. Even so, the liberalization. WTO community continues to take up antidumping as if This paper-a product of Trade, Development Research Group-is part of a larger effort in the group to support trade liberalization and to make trade policy work for development. Copies of the paper are available free from the World Bank 1818 H Street NW, Washington, DC 20433. Please contact Robert Simms, mail stop MC3-303, telephone 202-473-7156 fax 202-522-1159, email address rsimms@worldbank.org. Policy Research Working Papers are also posted on the Wet at http://econ.worldbank.org. The authors may be contacted at mfinger@aei.org or fng@worldbank.org. December 2001 (22 pages) The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Produced by the Policy Research Dissemination Center ANTIDUMPING AS SAFEGUARD POLICY by J. Michael Finger Francis Ng and Sonam Wangehuk TABLE OF CONTENTS 1. GATT EXPERIENCE ............................................1..............1 RENEGOTIATION ..............2 EMERGENCY ACTIONS ..............2 NEGOTIATED EXPORT RESTRAINTS ...............................................................................3 ANTIDUMPING ..............4 2. POST URUGUAY ROUND USE OF ANTIDUMPING ..............5 PERPETRATORS ..............5 VICTIMS ..............6 3. ANTIDUMPING METHODOLOGY SINCE THE URUGUAY ROUND AGREEMENT ..............6 4. MISUNDERSTANDINGS ABOUT ANTIDUMPING ..............8 5. A BETTER SAFEGUARD MECHANISM ........................................................... 10 6. CONCLUSION .............................................................. 10 7. REFERENCES .............................................................. 11 TABLES ............................................................ 12 Table 1: Numbers and Percentages of Antidumping Initiations by Country Group, 1995-99 ............................................................ 12 Table 2: Antidumping Initiations Per US Dollar of Imports by Economy, 1995-99.. 13 Table 3: Antidumping Initiations Per Dollar of Imports by Country Group, 1995-9914 Table 4: Numbers of Antidumping Initiations by Victim Country Group, 1995-99.. 14 Table 5: Antidumping Initiations per US Dollar of Exports by Victim Economy, 1995-99 .......................................................... 15 Table 6: Comparing the Intensity of Antidumping Initiations 1995-99 Across Different Groups of Economies .......................................................... 17 Table 7: Antidumping Initiations per Dollar of imports: Relative Intensities Against Different Groups of Exporting Economies/a .......................................................... 18 Table 8: Methodologies and outcomes of US Antidumping Investigations, 1995-98 19 FIGURES ............................................................ 20 Chart I Renegotiations, Emergency Actions and VERs .............................................. 20 Chart 2 Renegotiations, Emergency Actions, Antidumping Initiations and VERs ... 21 Chart 3 Antidumping Initiations by Developed and Developing Economies, 1986- 1999 ............................................................ 22 ANTIDUMPING AS SAFEGUARD POLICY by J. Michael Finger, Francis Ng and Sonam Wangehuk Political reality suggests that any government that attempts to establish or maintain an open import regime must have at hand some sort of pressure valve - some process to manage occasional pressures for exceptional or sector-specific protection. Since the 1980s antidumping has served this function. An antidumping petition is the usual way in which an industry, beset by troublesome imports, will request protection - to say the same thing from the other side, an antidumping investigation is the usual way that the government will consider a request for protection. We will, in this paper, treat antidumping from the general safeguard perspective. We begin with a discussion of how the safeguard instrument has evolved in the GATT/WTO system - through the post Uruguay Round period in which antidumping has become the most commonly used instrument of import politics for developing countries, as well as developed. Looking at the record of antidumping cases since the Uruguay Round we demonstrate, for example, that the developing countries now use the instrument even more intensely than the traditional users: Australia, Canada, the European Community and the United States. We then review the usefulness of antidumping as a general safeguard instrument and provide some suggestions on the characteristics of a more sensible safeguard instrument - one which provides a means for a government to manage pressures for protection in a way that (a) helps it to reach economically sensible answers as to when to impose new protection, and (b) supports rather than undercuts the politics of openness. We conclude that antidumping does not serve this function well. 1. GATT EXPERIENCE While the GATT is best known as an agreement to remove trade restrictions, it includes a number of provisions that allow countries to impose new ones. Among them, Article VI allows antidumping and countervailing duties, Article XVIII allows restrictions to defend the balance of payments or to promote industry development, and Article XX lists ten broad categories, e.g., restrictions necessary to protect human, animal or plant life or health. ' A complete list, with information on frequency of use, is provided in Finger 1996. 1 Renegotiation As reciprocal negotiation was the initial GATT mode for removing trade restrictions, it is no surprise that renegotiation was the most prominent provision for re- imposing them. The 1947 agreement gave each country an automatic right to renegotiate any of its reductions after three years (Article XXVIII), and under "sympathetic consideration" procedures, reductions could be renegotiated more quickly. Even quicker adjustment was possible under Article XIX. In instances of particularly troublesome increases of imports, a country could introduce a new restriction then afterwards negotiate a compensating agreement with its trading partners.2 The idea of compensation was the same here as with a renegotiation, to provide on some other product a reduction that suppliers considered equally valuable. In the 1950s the GATT was amended to add more elaborate renegotiation provisions. Though the details were complex, the renegotiation process, in outline, was straightforward. 1. A country for which import of some product had become particularly troublesome would advise the GATT and the principal exporters of that product that it wanted to renegotiate its previous tariff reduction. 2. If, after a certain number of days, negotiation had not reached agreement, the country could go ahead and increase the tariff. 3. If the initiating country did so, and at the same time did not provide compensation that exporters considered satisfactory, then the principal exporters were free to retaliate. 4. All of these actions were subject to the most favored nations principle; the tariff reductions or increases had to apply to imports from all countries.3 Emergency actions Article XIX, titled "Emergency Actions on Imports of Particular Products," but often referred to as the escape clause or the safeguard clause, provided a country with an import problem quicker access to essentially the same process. Under Article XIX: 1. If imports cause or threaten serious injury4 to domestic producers, the country could take emergency action to restrict those imports. 5. If subsequent consultation with exporters did not lead to satisfactory compensation, then the exporters could retaliate. 2 The early GATT rounds were collections of bilateral negotiations, but tariff cuts had to be made on a most favored nations basis (i.e., applicable to imports from all GATT members). A renegotiation was not with the entire GATT membership, but only with the country with whom that reduction was initially negotiated, plus any other countries enumerated by the GATT as "principal suppliers." 3 Renegotiation procedures are basically the same now -- under the Uruguay Round Agreements -- as they were then. ' The Uruguay Round agreement on safeguards (but not the initial GATT) requires a formal investigation and determination of injury. It allows however a provisional safeguard measure to be taken before the investigation is completed. 2 The GATT asked the country taking emergency action to consult with exporting countries before, but allowed the action to come first in "critical circumstances." In practice, the action has come first most of the time.5 History shows that during GATT's first decade and a half, countries opening their economies to international competition through the GATT negotiations did avail themselves of pressure valve actions (Chart 1). These actions were in large part renegotiations under Article XXVIII, supplemented by emergency actions (restrict first, then negotiate compensation) under the procedures of Article XIX.6 Over time, the mix shifted toward a larger proportion of emergency actions. By 1963, fifteen years after the GATT first came into effect, every one of the 29 GATT member countries who had bound tariff reductions under the GATT had undertaken at least one renegotiation - in total, 1 10 renegotiations, or almost four per country. In use, Article XIX emergency actions and Article XXVIII renegotiations complemented each together. Nine of the 15 pre-1962 Article XIX actions that were large enough that the exporter insisted on compensation (or threatened retaliation) were eventually resolved as Article XXVIII renegotiations. Article XXVIII renegotiations, in turn, were often folded into regular tariff negotiations. From 1947 through 1961, five negotiating rounds were completed; hence such negotiations were almost continuously under way. Negotiated Export Restraints By the 1 960s formal use of Article XIX and of the renegotiations process began to wane. Actions taken under the escape clause tended to involve negligible amounts of world trade in relatively minor product categories.7 Big problems such as textile and apparel imports were handled another way, through the negotiation of "voluntary" export restraint agreements, VERs. The various textile agreements beginning in 1962, provided GATT sanction to VERs on textiles and apparel. The same method, negotiated export restraints, or VERs, were used by the developed countries to control troublesome imports into several other important sectors, e.g., steel in the US, autos in the EU. Except for those specially sanctioned by the textile arrangements, VERs were clearly GATT-illegal.' However, while VERs violated GATT legalisms they accorded well with its ethic of reciprocity: I GATT 1994, p. 486. The Uruguay Round Safeguards Agreement modified the emergency action procedure in several ways. Among these, no compensation is required nor retaliation allowed in the first three years a restriction is in place. no restriction (including extension) may be for more than eight years, (ten years by a developing country). all measures of more than I year must be progressively liberalized. 6 Though, as Chart I shows, the mix shifted over time toward a larger proportion of emergency actions. 7 1980 statistics show that actions taken under Article XIX covered imports valued at $1.6 billion while total world trade was at the same time valued at $2000 billion. Sanpson (1987), p. 145. 8GATT 1994, p.494. 3 * They were at least in form, negotiations to allow replacement of restrictions that had been negotiated down. Negotiation was also important to prevent a chain reaction of one country following another to restrict its imports as had occurred in the 1930s. * A VER did provide compensation, the compensation being the higher price that the exporter would receive. * In many instances the troublesome increase of imports came from countries that had not been the "principal suppliers" with whom the initial concession had been negotiated. These new exporters were displacing not only domestic production in importing countries, but the exports of the traditional suppliers as well. A VER with the new, troublesome, supplier could thus be viewed as defense of the rights of the principal suppliers who had paid for the initial concession. * The reality of power politics was another factor. Even though one of GATT's objectives was to neutralize the influence of economic power on the determination of trade policy, VERs were frequently used by large countries to control imports from smaller countries. As the renegotiation, emergency action mechanism was replaced over time by the use of VERs, VERs also gave way to another mechanism - antidumping. There were several reasons behind this evolution: * the growing realization in developed countries that a VER was a costly form of protection, * the long term legal pressure of the GATT rules, * the availability of an attractive, GATT-legal, alternative. The Uruguay Round agreement on safeguards explicitly bans further use of VERs and, along with the agreement on textiles and clothing, requires the elimination of all such measures now in place. Antidumping Antidumping was a minor instrument when GATT was negotiated, and provision for antidumping regulations was included with little controversy. In 1958, when the contracting parties finally canvassed themselves about the use of antidumping, the resulting tally showed only 37 antidumping decrees in force across all GATT member countries, 21 of these in South Africa. (GATT 1958, p. 14) By the 1990s antidumping had become the developed countries' major safeguard instrument. Since the WTO Agreements went into effect in 1995, it has gained increasing popularity among developing countries. The scale of use of antidumping is a magnitude larger than the scale of use of renegotiations and emergency actions have ever been. (Chart 2) Once antidumping proved itself to be applicable to any case of troublesome imports, its other attractions for protection seeking industries and for governments inclined to provide protection were apparent:'0 9For example, Hufbauer and Elliott found that of the welfare loss placed on the US economy from all forms of protection in place in the early 1 990s, over 83 percent of that loss came from VERs. I0 The process by which the scope of antidumping was expanded is examined in Finger (1993) ch. 2. 4 * Particular exporters could be picked out. GATT/WTO does not require multilateral application. * The action is unilateral. GATT/WTO rules require no compensation or renegotiation. * In national practice, the injury test for antidumping action tends to be softer than the injury test for action under Article XIX. * The rhetoric of foreign unfairness provides a vehicle for building a political case for protection. * Antidumping and VERs have proved to be effective complements; i.e., the threat of formal action under the antidumping law provides leverage to force an exporter to accept a VER. * The investigation process itself tends to curb imports. This is because exporters bear significant legal and administrative costs and importers face the uncertainty of having to pay backdated antidumping duties, once an investigation is completed. * There is no rule against double jeopardy. If one petition against an exporter fails, minor respecification generates a new valid petition. 2. POST URUGUAY ROUND USE OF ANTIDUMPING This section provides a brief factual presentation of which economies are the most frequent perpetrators of antidumping cases and which economies the most frequent victims. It begins with no hypothesis, its purpose is more to raise questions than to answer them. Perpetrators Since the WTO Agreements went into effect in 1995, more than 50 developing countries have informed the WTO of their antidumping regulations, 28 have notified the initiation of antidumping cases. Chart 3 plots the number of antidumping initiations by developed and by developing countries over the past 15 years. Developing countries since the Uruguay Round (in 1995-99) have initiated 559 cases, developed countries 463 cases. (Table 1) Even transition economies have entered with 4 cases by Poland, 2 by the Czech Republic and 1 by Slovenia. The EU and the US have initiated by far the largest numbers of cases. These economies are, however, the world's largest importers. Hence we provide, in Table 2, two measures of frequency of use of antidumping: the number of cases initiated, and the number of cases per dollar of imports. The latter measure we present as an index. As the US is the country most associated with antidumping, we set the index of antidumping cases per dollar of imports to 1 00 for the US and scale other values from there. By cases per dollar of imports, the US has been among the users of antidumping, one of the least intense users. Countries such as Japan that have never initiated an antidumping case are the least intense users. 5 Perhaps the most worrisome information in Table 2 is that the most intense users of antidumping are developing countries. South Africa, 89 cases; Argentina, 89 cases; India, 83 cases; and Brazil, 56 cases are high on the list by simple number of cases. By the alternate measure, Brazil's intensity of use is five times the US intensity - India's seven times, South Africa and Argentina's twenty times the US figure. Per dollar of imports, the US is not a high user of antidumping. Each of the other developed country users (Table 2) is above the US. Moreover, the number of cases per dollar of imports is lower for the US than for all developed countries combined, including non-users such as Japan. Victims Table 4 provides summary information about which countries are most often the victim of antidumping cases. Table 5 provides country-by-country information, not only the number of antidumping cases against each country, but also a measure of how many cases against a country per dollar of exports. The measure of how intensely a country's exports are targeted by foreign antidumping cases is scaled to the figure for Japan. Perhaps the most striking finding in Table 5 is that the transition economies are the ones with the highest intensity of antidumping cases against them. Table 6 focuses on the relative intensity of initiations against different groups of countries. Transition economy exporters are the most intensely targeted, developed economy the least intensely. As compared to developed economy exporters, developing economy exporters (including Chinese) are almost three times more intensely targeted. Developing economy antidumping enforcement is as much aimed at developing economy exporters as is developed economy enforcement. Developing economy exporters do not get a break from developing economy antidumping authorities. Developing economy antidumping cases pick out developing economy exporters to the same degree as do developed economy exporters. 3. ANTIDUMPING METHODOLOGY SINCE THE URUGUAY ROUND AGREEMENT The surge of antidumping usage in the 1980s brought forward a wave of legal and economic analysis of antidumping methodology. l l Antidumping arms protection-seeking interests with the emotionally compelling argument that foreigners are behaving unfairly. This work focused on two points: 1. The administrative methodology was biased - inclined to find dumping when a fair accounting even of pricing below cost would not. 2. The social justification - that antidumping extended to transactions from outside the national borders the same discipline that anti-trust law applied to internal transactions. Boltuck-Litan (1991) and Finger (1993) pulled together much of the criticism, both legal and economic. The first criticisms came from legal analysis, e.g., Dickey (1979). 6 The definitive analysis of the latter point was an extensive review by the OECD of antidumping cases in Australia, Canada, the European Union and the United States. The review found that 90 percent of the instances of import sales found to be unfair under antidumping rules would never have been questioned under competition law, i.e., if used by a domestic enterprise in making a domestic sale. Much less than ten percent of the antidumping cases would have survived the much more rigorous standards of evidence that applies under competition law. 12 As this mass of criticism came forward, defenders of antidumping shifted to a more political argument, based on a sense of legitimacy - rules of the game - rather than efficiency. Some sources of seller advantage should not be allowed - e.g., subsidies, selling from a "sanctuary" or protected home market and other government-provided advantages - even if they did not result in consumers being harmed by restraints on competition.13 Brink Lindsey of the Cato Institute has provided a damning analysis of these arguments. Lindsey reviewed 141 company-specific dumping determinations by the US Commerce Department, 1995-98, to ascertain the methods used by Commerce to identify the source of their findings of dumping, and to evaluate the compatibility of the actual determination of dumping with the rhetoric of what justified it. He investigates at two levels: 1. Are antidumping determinations as actually conducted effective methodologies to identify the pricing practices of price discrimination and selling below cost? 2. Are these pricing practices reliable indicators of the alleged market distortions that justify import restrictions? In simpler words: * Does the process bring forward the evidence it alleges? * Does the evidence prove that the crime was committed? The evidence Lindsey marshals soundly supports a negative answer to both questions. On detecting discrimination between home market and export price - and hence a direct indication of selling from a sanctuary market - Lindsey points out that price comparisons are almost never made. Virtually all cases are based on artificial indicators of what the home market price might (or should) be. Lindsey's findings on this point are in Table 1. From here, Lindsay went on to investigate the impact of various adjustments the Commerce Department routinely makes to the price information provided by exporters. He did this - generally speaking'4 - by obtaining from exporters the complete information they had submitted to Commerce, then recalculated dumping margins from the entire data set, e.g., the data set including the sales that Commerce threw out as "below cost." 12OECD Economics Department 1996, p. 18. The country studies were eventually published in Lawrence, 1998. 13 Lindsay 1999, pp. 2ff., provides a good discussion as well as quotations from and references to antidumping defenders. 14 See Lindsey for specifics. 7 Among the telling points Lindsey documents is the extent to which constructed cost methodology overstates profit rates. In no instance for which he found comparable data was the profit rated used in the Commerce calculation less than twice the actual rate of profit in the US industry. In no other instance was it less than three times as high.'5 He also documents an investigation in which the dumping margin is increased by a factor of three when Commerce screened out as "below cost" some of the prices on home-market sales supplied by the exporter, others in which there would have been no dumping margin without the adjustments. As to the results of a dumping investigation supporting the conclusion of the exporter enjoying a sanctuary home market, the first point Lindsey makes is that such investigations hardly ever provide price comparisons. "Data" on selling below cost is based on questionable measures of cost, and even if it were accurate cost data, it does not demonstrate that the same low prices were available in the home market. 16 The evidence leaves much more than a reasonable doubt than the alleged sanctuary situation. Lindsey adds supplementary evidence against the sanctuary allegation, e.g., 1. he finds no correlation between dumping margins and foreign tariff rates, 2. the US government's own "official" tabulation of foreign import restrictions'7 lists significant restrictions in only two of the instances he covered. In sum, Lindsey's findings establish that the Uruguay Round Agreement did not change the nature of antidumping practice. The evidence against the exporter is mostly constructed (value). If the exporter does not supply data from which the investigating agency can perform the construction, the accusation from the companies seekinlg protection then becomes the evidence - the "facts available." 4. MISUNDERSTANDINGS ABOUT ANTIDUMPING Dealing sensibly with antidumping as trade policy requires first that it be dealt with for what it is - a wide-reaching instrument for restricting imports. Thus two of Washington's most skilled international trade lawyers begin their advise on how to deal with such instruments in the following way: "From the perspective of a US industry seeking protection, [trade laws] simply represent different ways of reaching the same goal - improvement of the competitive position of the complainant against other companies. Exporters should disregard any moralistic claims associated with trade litigation ('dumping,' 'subsidies,' 'unfair' access to raw materials, cheap labor, etc.) and view it from the same perspective - how will the dispute affect their competitive position in the US market." (Horlick and Shea, 2000, p. 1) 5 Lindsey, 1999; Table 4. 16 Lindsey, p. 10, documents instances where, had the cost comparison had been against variable cost there would have been no dumping margin - even using Commerce "cost" data. 7The National Trade Estimates Report, issued annually by USTR. 8 Sensible as it sounds, this not the typical attitude. The following three incidents, drawn from the experiences of the authors of this paper, portray more typical views: 1. The chairperson, director of the local chamber of industries, opened a one-week seminar on antidumping by exhorting his colleagues on the benefits of integrating the local economy into the world economy, cajoled them against the dangers of their traditional protectionist sentiments, and urged them to pay attention to the possibilities offered by this modern, WTO-sanctioned instrument, antidumping. 2. A deputy minister of a small country descried his situation as follows: "In our country, farmers grow chickens. If you want chicken for dinner, you go to the market and you buy a chicken. In the United States, farmers do not grow chickens, they grow chicken parts. Because people in the United States are afraid of cholesterol, they prefer white meat, so it sells at a good price. The legs, the dark meat, they export to our country, at a price lower than what our farmers usually get for a chicken. That's dumping, isn't it, so shouldn't we take action?" 3. Since 1990, an industrializing Asian country has conducted a number of antidumping investigations. Several of these investigations concerned imports of industrial inputs such as steel or chemicals. After receiving a petition from another such domestic industry, the country's international trade commission examined the petitions, found them to be complete and the information in them to be accurate. The government then imposed a preliminary antidumping duty. User industries complained about the higher costs imposed on them, and eventually convinced the government that the jobs and output that would be lost by user industries exceeded what would be saved in the industry that had sought protection. The government then lifted the antidumping duty and closed the case. This decision left the Commission in a quandary. The (preliminary) antidumping investigation that had proceeded by the letter of the WTO agreement, had come out affirmative; yet imposing an antidumping action did not seem to be the correct thing to do. The Commission called in several outside experts to help them to review their investigation procedures. The point of these stories is that the WTO antidumping agreement is not economic advice. It is about when an import restriction is permitted, not about when one is recommended. Antidumping's rise to prominence had nothing to do with the logic of a sensible pressure valve instrument. The political struggle that shaped it was over more vs. less import restrictions, not over what makes for sensible economic policy. The government in the third incident above made the correct decision, the decision that took into account the impact of an import restriction on all domestic interests. Yet the government was uncomfortable with its decision, both because it was not one dictated by 9 GATT/WTO rules, and because following GATT/WTO rules had not convinced the domestic users to accept the hardship an import restriction imposed on them. 5. A BETTER SAFEGUARD MECHANISM The key issue is the impact on the local economy. Who in the local economy would benefit from the proposed import restriction, and who would lose? On each side, by how much? It is therefore critical that the policy process by which the government decides to intervene or not-to intervene gives voice to those interests that benefit from open trade and would bear the costs of the proposed intervention. Such a policy mechanism would both (a) help the government to separate trade interventions that would serve the national economic interest from those that would not, and (b) even in those instances in which the decision is to restrict imports, support the politics of openness and liberalization. Antidumping fails to satisfy either criteria. As economics, it looks at only half of the economic impact on the domestic economy. It gives standing to import competing domestic interests, but not to domestic users, be they user enterprises or consumers. As politics, it undercuts rather than supports a policy of openness; by giving voice to only the negative impact of trade on domestic interests and by inviting such interests to blame their problems on the "unfairness" of foreigners. The key characteristic of a sensible safeguard procedure is that it treats domestic interests that would be harmed by an import restriction, equally with those domestic interests that would benefit. The "morality" of the foreign interest is irrelevant - the issue is the plus and minus on the domestic economy. Operationally, this suggestion means simply that what is done in an "injury test," - identification of impact on import competing interests - is repeated for users of imports. The mechanics involve the same variables; impacts on profits, output, employment, etc. and the same techniques to quantify them. 6. CONCLUSION Antidumping is by far the most prevalent instrument for imposing new import restrictions. As a "pressure valve" to maintain an open trade policy, it has serious weaknesses. Burgeoning use by developing economies demonstrates how dangerous it can be. Even so, the WTO community continues to take up antidumping as if it were a specialized instrument. As long as the rest of us continue to deal with antidumping within the apparent technical conception that its users have created, we will continue to lose. '8 18 We offer another conclusion that is not supported by the material in the paper: Any economics treatise on antidumping that begins by defining "dumping" is part of the problem, not part of the solution. 10 7. REFERENCES Boltuck, Richard and Robert Litan (eds.) 1991. Down in the Dumps: Administration of the Unfair Trade Laws, Washington DC: Brookings. Dickey, William L. 1979. "The Pricing of Imports into the United States," Journal of World Trade Law, 13(May-June) 238-56. Finger, J. Michael and Tracy Murray, 1993. "Antidumping and Countervailing Duty Enforcement in the United States," Ch. 13 in Finger 1993. Finger, J. Michael and K. C. Fung, 1993. "Will GATT Enforcement Control Antidumping?" Policy Research Working Paper Number 1232, Washington DC: The World Bank, Finger, J Michael, 1993. Antidumping: How It Works and Who Gets Hurt, Ann Arbor: University of Michigan Press. ----, 1996. "Legalized Backsliding: Safeguard Provisions in the GATT," in Martin and Winters (1996). Horlick, Gary N. and Eleanor Shea 2000. "Dealing with US Trade Laws: Before, During and After," in Bernard Hoekman and Philip English (eds.) Developing Countries and the Next Round of WTO Negotiations, World Bank, forthcoming. Lawrence, Robert Z. (ed.) 1998. Brookings Trade Forum 1998, Washington DC: Brookings. Lindsey, Brink 1999. "The US Antidumping Law: Rhetoric versus Reality," Cato Insitute, Washington DC, Trade Policy Analysis No. 7, August 16. (http://www.freetrade.org/pubs/pas/tpa-007es.html) Martin, Will and L. Alan Winters, 1996, The Uruguay Round and the Developing Countries, Carnbridge, Cambridge University Press. OECD, Economics Department, 1996. Trade and Competition, Frictions After the Uruguay Round (Note by the Secretariat), Paris: OECD. Mastel, Greg. 1998. Antidumping Laws and the U.S. Economy, M. E. Sharpe for the Economic Stategy Institute, Washington DC. Sampson, G. 1987. "Safeguards." in J. Michael Finger and Andrej Olechowski,. The Uruguay Round. A Handbook for the Multilateral Negotiations, Washington DC: The World Bank. 1987. 11 TABLES TABLE 1: NUMBERS AND PERCENTAGES OF ANTIDUMPING INITIATIONS BY COUNTRY GROUP, 1995-99 Against Industrial Developing China, Transition All By l~ Economies /a Economies /b PRC /c Economies /d Economies y Numbers of Antidumping Initiations Industrial Economies 127 274 54 62 463 Developing Economies 178 282 82 99 559 Transition Economies 3 1 1 3 7 All Economies 308 557 137 164 1029 Percentages of Antidumping Initiations lIndustrial Economies 27 59 12 13 100 Developing Economies 32 50 15 18 100 Transition Economies 43 14 14 43 100 All Economies 30 54 13 16 100 Notes: /a Include USA, Canada, Australia, Japan, New Zealand, Iceland, Norway, Switzerland, and 15 European Union members. /b All other economies excluding industrial economies and transition economies. /c Exclude Hong Kong, China; Macau, China; and Chinese Taipei. /d Include 27 transition economies in Eastern Europe and Central Asia 12 TABLE 2: ANTIDUMPING INITIATIONS PER US DOLLAR OF IMPORTS BY ECONOMY, 1995-99 Against All Economies Country/Economy No. of Antidumping initiations per US dollar Initiating I Initiations Index (USA-10 Argentina S9 2125 South Africa 89 2014 Peru 21 1634 India 83 1382 NewZealand 28 1292 Trinidad & Tobago 5 1257 Venezuela 22 1174 Nicaragua 2 988 Australia 89 941 Colombia 15 659 Brazil 56 596 ........................... ......... ... . ........ ........ .... ................ Panama 2 431 Israel 19 418 Chile 10 376 Indonesia 20 330 Mexico 46 290 Egypt 6 278 Turkey ]14 204 Korea 37 185 .C..a.n.,ad.,...,,,. ,, ... , . ... .., 0... .17 Canada 50 172 Guatemala 1 i 168 Costa Rica I 144 Ecuador 1 140 , , .,,, . .., ...,... ... ........., ......... .. ......... . .. '' . .... ...... ... .. .. .... . ..... European Union i 160 130 Philippines 6 113 United States 136 ]00 ......... . .. ... ........ .. ..... ...... .... ... .. . .... .. . . .. . ...... .; Malaysia .1 97 Slovenia 1 66 Poland 4 65 Czech Republic 2 45 Singapore i 2 10 Thailand 1 10 13 TABLE 3: ANTIDUMPING INITIATIONS PER DOLLAR OF IMPORTS BY COUNTRY GROUP, 1995-99 Against All Economies No. of Antidumping Initiations per US dollar By; Initiations Index (USA-100) Industrial Economies 463 116 Developing Economies 559 184 ....... ........ .. - -.... .. ... ...... . . ...... ...... ............ . .. .. j. . ........... . ....... Transition Economies 7 23 ...~~~~~~~~~~~~~~~~~~. -. ............... ................................. ....... . . . . . .. .. ........... ............. ... ....... All Economies 1029 140 TABLE 4: NUMBERS OF ANTIDUMPING INITIATIONS BY VICTIM COUNTRY GROUP, 1995-99 By - All r Developing Transition T Industrial Against I J Economies [ Economies Economies | Economies Number of Antidumping Initiations Industrial Economies /a 308 178 3 127 Developing Economies /b 557 i 282 , 274 . .......... .... .... .-- ... .. ... ...... --- -- ....... ... ....... ... .... - . . . ......... ... ..... ..... China, PR/c 137 82 1 54 Transition Economies /d 164 99 3 62 All Economies 1029 559 7 463 Percentage of Antidumping Initiations Industrial Economies /a 100 58 1 41 ............... . . ... .... _ .......... ..... . .. ... ... ....... .. ... ..... ... .. ....... . . . .... ..... .. i- ' Developing Economies /b X 100 51 0 49 ... ..... ....... ... ..... .... . .... ..... .. . ...... . .. . . .. .... i.--. -- ------ China, PRC /c 100 60 1 39 .......................... .... ... .. ........... .... Transition Economies /d 100 60 2 38 All Economies 100 54 1 45 Source: WTO data file. Notes: /a Include USA, Canada, Australia, Japan, New Zealand, Iceland, Norway, Switzerland, and 15 European Union members. /b All other countries excluding industrial economies and transition economies. /c Exclude Hong Kong, China; Macau, China; and Chinese Taipei. /d Include 27 transition economies in Eastern Europe and Central Asia. 14 TABLE 5: ANTIDUMPING INITIATIONS PER US DOLLAR OF EXPORTS BY VICTIM ECONOMY, 1995-99 Initiations by All Economies Against 4-No. of Antidumping 1 Initiations per US$ Initiations ] Index (Japan=100) Armenia 16777 G9eora 13909 JKyr ysan 1 3737 ITajikistan 1 3153 Azeraijn 1 3118 yugoslavia 5 3059 Kazakhstan II 2588 Former Yugoslav Rep of Macedonia 3 2313 Ukraine 25 2095 lBosnia-Herzegovina 1 1880 Latvia 3 1818 Egypt 6 1608 Bulgaria 6 1287 Uzbekistan 3 1274 Belarus 6 1255 Cuba 2 1247 Romania I10 1154 Lithuania 4 1107 I1ndia 38 1079 Honduras 1 1077 Par uay ~~~~~~~~~1 917 Par g .............ay ... . ... -.......... ... ...... - . ..... Zimbabwe 2 889 Moldova, Rep. Of 1 852 B1olivia 1837 South Africa 20 809 Brazil 41 788 Trinidad & Tobago 2 783 China, PRC 137 776 Estonia 2 749 Indonesia 36 691 Croatia 3 628 Portugal3 621 Spain 1 9 609 Korea 75 564 iTurkmenistan 1 562 Russian Federation 41 558 ............ ... ........ . .... ...............I.................Ch ile 9 5 5 4 Costa_Rica 2 513 Slovak Republic 5 512 Thailand 30 509 _ Turkey 13 502 1 5 Initiations by All Economies Against 4-No. of Antidumping Initiations per US$ Initiations f Indexc(Japan=~100) Macau, China 1 474 lPoland 12 448 Pakistan 4 438 Bahrain 1 _ 424 Chinese Taipei -47 386 Hjong Kong, China I11 381 iGreece 2 378 Netherlands 17 330 Argentina ~~~~~~~~~8 313 Austria 6 267 IColombia 3 265 Denmark 5 240 Czech Republic 6 240 Venezuela 5 231 Vietnam 2 223 Slovenia 2 222 Malaysia 1 6 199 Finland 4 197 ItaLy ~~~~~~~~~~22 195 Sweden 7 188 Mexico 20 188 Germany ~~~~~~~~~44 182 Peru 1 179 Ireland 3 177 Israel 4 177 Iran 3 159 United Kingdom 19 157 New Zealand 2 144 ~Belgium 7 142 IFrance is 134 European Union 2 /b 179 106 lUnited States 66 lOS Japan ~~~~~~~~~~44 100 Ph.i.lippines 2 82 Saudi Arabia 4 66 Alger~ia - 64 ,Australia 3 56 Singapore 6 48 Canada t0 46 Switzerland 3 36 Norway 1 21 EuropeUnion I /a 6 7 Liechtcnstein I\C All Above Countries 12031 268 Notes: /a European Union 15 memebers as the whole. /b European Union as the whole plus EU individual members. cl Export data not available 16 TABLE 6: COMPARING THE INTENSITY OF ANTIDUMPING INITIATIONS 1995-99 ACROSS DIFFERENT GROUPS OF ECONOMIES Victim - Developed Developing China, PRC Transition |All Economies Initiator l Economies Economies Economies Developed Economies 55 131 199 285 l00 Developing Economies 52 147 240 i 403 100 I .... ._ . ______________________ ....... _ _ ... .. _._ ... .. ................. ...... _ -_ ' ._ , . .. .. , , ... . . , . _ Transition Economies 71 j 101 989 168 100 I ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~... ,, . ... ..... ...... ................ .................. ....... ........ ........... ... .." ' '" ...... i ...... . .... ..... .. .... All Economies 54 138 230 294 100 17 TABLE 7: ANTIDUJMPING INITIATIONS PER DOLLAR OF IMPORTS: RELATIVE INTENSITIES AGAINST DIFFERENT GROUPS OF EXPORTING ECONOMIES/A LInitiated against -fIndustrial Developing f{Transition 1 All By 4 Economies Economies__ China, PRC Economies JEconomies Argentina T 61 147 625 i 194 100 Australia . . ......... .... .......... ......... ......... .... .. .... ...... 1 9 4 6-1 1190 t00 rait 64 90 819 1986 100 ,Canada 1 629 2 289710 Che 3 - -- 35 9329 6997 1100 Colmia 20 182 - 70-23 Czech Republic -144 K o -- 0 0. Ec a . . ... . ..... .. - .............- ....0 238 0 0100 Egypt 0 - ~~~~~~~~~ ~~~~~55 1 i06 European Uin/b - 2- 150 - 8151 Guatemala 0 25 ~ - 0 - - - 0 100 India - 61 103 724 -703 100 - - ~~ ~ ~~~~~~~40 150 277 - 1600' 0 KInoresa I 76 iOO -- ~~~~~~~~~~~~~~~~ 4.~~~~~~~~~~~~~~~...-- ---- f'-',aei------ --- .--..... 705 -- 11 06 - - 142 -10 New Zealand 28~~~~~7 35 095 76 100 P"anamsa 05 226 0422100' Peru ~ ~ ~ ~~~~~~.. ..... ..............- .......... . . ...... .. .. ..........100. oln 3462- 6118 13536 I 100 ........1 2. .. . -... -. --- aragua 203 ~~~~~~~~0 0 100 S in g a p o re -..-.---.---.----~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~------.- . - .--,.~~~~............ Thianda0ma 0 0 52 100 Trure 9_ 1 35 1360 0 loo~10 UniiedpStaes 9-661.1.3 186.672100 Alln Abv3cnois5 143 2180 324 i 100 initations agis2iprsfrmaleoois;eg,Agnia pe olro mprshd62 tims or antidumping~....... ..... ...... initiations .....against ........ China.. PR tha against........ all...countries.... Slovexclud EU inr6trade. . . . . . .. ................... .. - --- TABLE 8: METHODOLOGIES AND OUTCOMES OF US ANTIDUMPING INVESTIGATIONS, 1995-98 Number of determinations Average dumping margin (percent) Affirmative affirmative Methodology Total Affirmative as percent of determinations total only US prices to home-market prices 4 2 50 7.36 US prices to third-country prices 1 0 0 US prices to mix of third-country prices, above cost 2 2 100 7.94 third country prices and constructed value US prices to mix of home-market prices, above cost 3 1 25 8 1 17.95 home-market prices and constructed value Constructed value 20 14 70 35.07 Nonmarket economy 47 28 60 67.05 Facts available 36 36 100 95.58 Total 141 107 76 58.79 Source: Lindsey (1 999) p. 8 19 FIGURES CHART 1 RENEGOTIATIONS, EMERGENCY ACTIONS AND VERS 120 100 80 60~ 40 20 -4- 4 - - 1M 48-50 51-55 56-60 61-65 66-70 71-75 76-80 81-85 86-90 91-93 Period ERenegotiations Emergency Actions* OVERS in Place 20 CHART 2 RENEGOTIATIONS, EMERGENCY ACTIONS, ANTIDUMPING INITIATIONS AND VERS 1200 1000 800 S 600 400 200 0 48-50 51-55 56-60 61-65 66-70 71-75 76-80 81-85 86-90 91-93 Period 0Reniegotiationis gEmergencyActions* 0lAntidumpirig OVERS in Place Initiations 21 CHART 3 ANTIDUMPING INITIATIONS BY DEVELOPED AND DEVELOPING ECONOMIES, 1986-1999 250 200 -__ _ _ _ __ __ _ _ _ _ \ --/ _ __ ___ __ __ _ 150 O - 100 50- 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Year --_-Developed -4Developing 22 Policy Research Working Paper Series Contact Title Author Date for paper WPS2706 Household Income Dynamics Jyotsna Jalan November 2001 C. Cunanan in Rural China Martin Ravallion 32301 WPS2707 Financial Intermediary Development Thorsten Beck November 2001 A. Yaptenco and Growth Volatility: Do Mattias Lundberg 38526 Intermediaries Dampen or Magnify Giovanni Majnoni Shocks? WPS2708 Accountability and Corruption: Daniel Lederman November 2001 P. Soto Political Institutions Matter Norman Loayza 37892 Rodrigo Reis Soares WPS2709 Explaining Leakage of Public Funds Ritva Reinikka November 2001 H. Sladovich Jakob Svensson 37698 WPS2710 Breaking up the Collective Farm: Martin Ravallion November 2001 C. Cunanan Welfare Outcomes of Vietnam's Dominique van de Walle 32301 Massive Land Privatization WPS2711 Identifying Class Size Effects in Miguel Urquiola November 2001 H. Sladovich Developing Countries: Evidence from 37698 Rural Schools in Bolivia WPS2712 Contract Risks and Credit Spread Mansoor Dailami November 2001 W. Nedrow Determinants in the International Robert Hauswald 31585 Project Bond Market WPS2713 Causes of Inequality in Health: Adam Wagstaff November 2001 H. Sladovich Who You Are? Where You Live? Pierella Paci 37698 Or Who Your Parents Were? Heather Joshi WPS2714 On Decomposing the Causes of Adam Wagstaff November 2001 H. Sladovich Health Sector Inequalities with an Eddy van Doorslaer 37698 Application to Malnutrition Inequalities Naoko Watanabe in Vietnam WPS2715 Paying for Health Care: Quantifying Adam Wagstaff November 2001 H. Sladovich Fairness, Catastrophe, and Eddy van Doorslaer 37698 Impoverishment, with Applications to Vietnam, 1993-98 WPS2716 Does Foreign Bank Penetration George R. G. Clarke November 2001 P. Sintim-Aboagye Reduce Access to Credit in Robert Cull 37644 Developing Countries? Evidence Maria Soledad Martinez Peria from Asking Borrowers Policy Research Working Paper Series Contact Title Author Date for paper WPS2717 Bridging the Economic Divide within Raja Shankar November 2001 A. Santos Nations: A Scorecard on the Anwar Shah 31675 Performance of Regional Development Policies in Reducing Regional Income Disparities WPS2718 Liberalizing Basic Carsten Fink November 2001 R. Simms Telecommunications: The Asian Aaditya Mattoo 37156 Experience Randeep Rathindran WPS2719 Is There a Positive Incentive Effect Truman G. Packard November 2001 T. Packard from Privatizing Social Security? 89078 Evidence from Latin America WPS2720 International Migration and the Global Andres Solimano November 2001 A. Bonfield Economic Order: An Overview 31248 WPS2721 Implications for South Asian Countries Sanjay Kathuria November 2001 M. Kasilag of Abolishing the Multifibre Will Martin 39081 Arrangement Anjali Bhardwaj WPS2722 Japan's Official Development Masahiro Kawai November 2001 J. Mendrofa Assistance: Recent Issues and Shinji Takagi 81885 Future Directions WPS2723 Using Development-Orineted Equity Helo Meigas November 2001 S. Torres Investment as a Tool for Restructuring 39012 Transition Banking Sectors WPS2724 Tropical Bubbles: Asset prices in Santiago Herrera November 2001 R. Izquierdo Latin America, 1980-2001 Guillermo Perry 84161 WFS2725 Bank Regulation and Supervision: James R. Barth November 2001 A. Yaptenco What Works Best? Gerard Caprio Jr. 38526 Ross Levine WPS2726 Applying the Decision Rights Florence Eid November 2001 A. Santos Approach to a Case of Hospital 31675 Institutional Design WPS2727 Hospital Governance and Incentive Florence Eid November 2001 A. Santos Design: The Case of Corporatized 31675 Public Hospitals in Lebanon WPS2728 Evaluating Emergency Programs William F. Maloney December 2001 A. Pillay 88046 WPS2729 International Evidence on the Value Luc Laeven December 2001 R. Vo of Product and Geographic Diversity 33722