The Efficacy of Antidumping Duties

James M. DeVault

• Publisher: Taylor & Francis
• Year: 2017
• Print ISBN: 9781138295346
• eBook ISBN: 9781351587013
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

The postwar era was characterized by unprecedented economic expansion. The growth in international trade contributed significantly to this expansion, the growth being the product of the reduction of tariff barriers. As protectionism increased in the 1970s and 80s, the use of non-tariff barriers rose dramatically. This book, first published in 1993, explores how the use of one such barrier, antidumping laws, influenced the US economy.

Part I: The Administration of Antidumping Duties

In the first part of the book, I examine the nature of the protection provided by the U.S. antidumping laws as well as the institutions responsible for providing it. The first chapter examines the outcomes of the 516 antidumping cases completed between 1980 and 1991. This chapter details the various outcomes and examines the countries and industries involved in antidumping cases. The second chapter examines the institutions responsible for administering the U.S. antidumping laws. The role played by these institutions is analyzed, as is the question of whether there is any bias in the decisions of these institutions.

Chapter 1: U.S.
Antidumping Actions and
Outcomes

1.1 Introduction

In this chapter, I provide an overview of how U.S. antidumping law is administered. The purpose of the chapter is to describe how the law works (both in theory and in practice) and who has been affected by it. I begin by briefly describing U.S. antidumping law. Next, I examine the outcomes of all the antidumping cases filed between 1980 and 1991. These outcomes are then broken done according to the countries and industries involved. Finally, I examine the large number of antidumping cases which were withdrawn during this time period. These cases are of interest because several authors have argued that most of them were withdrawn only after the domestic industries involved reached collusive agreements with foreign firms which were detrimental to domestic welfare.

1.2 A Summary of U.S. Antidumping Law

Current U.S. antidumping laws are contained in the Trade Agreements Act of 1979 and its subsequent revisions in 1984 and 1988. An antidumping investigation is typically initiated when a domestic firm (or group of firms) presents a petition to the two agencies who administer the U.S. antidumping laws: the International Trade Administration (ITA) and the International Trade Commission (ITC).¹ This petition provides information on the nature of the dumping as well as the foreign firms involved. If the ITA finds that the petition contains sufficient information, an antidumping investigation is initiated.

Two conditions must be met before an antidumping duty is imposed: first, dumping must be shown to exist; second, dumping must be shown to be the cause of “material injury” to a domestic industry. The ITA is responsible for determining whether dumping exists while the ITC is responsible for determining whether material injury has resulted from the dumping.

In each antidumping case, each agency may make both a preliminary and a final ruling. Within 45 days of the filing of the petition, the ITC must make its preliminary decision. If it finds no reasonable indication of material injury, the case is dismissed. If there is a reasonable indication of material injury, the investigation will continue.

Given an affirmative preliminary decision by the ITC, the ITA then has 160 days from the filing of the petition to reach its preliminary decision.² Unlike the ITC’s preliminary decision, however, a negative preliminary ruling by the ITA will not lead to a dismissal of the case. The preliminary decision of the ITA is still important, however, because an affirmative decision produces provisional relief for the domestic industry. This relief takes two forms: first, the liquidation of the dumped imports is suspended; second, a bond equivalent to the estimated value of the antidumping penalties must be posted by any importer of the dumped goods.³

Once the ITA has reached its preliminary decision, it then has 75 days to make its final determination.⁴ If this determination is negative, the case is dismissed and any provisional relief is revoked. If the ITA’s final determination is positive, the ITC then has to make its final determination within 45 days of the ITA’s final determination or within 120 days of the ITA’s preliminary determination, whichever is later.⁵ A negative final decision by the ITC leads to the dismissal of the petition and the revoking of any provisional measures. An affirmative final decision by the ITC leads to the issuing of an antidumping order by the ITA. This order is issued to U.S Customs and specifies the rate at which the antidumping duty is levied as well as the imports against which it is levied.

Antidumping investigations are terminated or suspended prematurely in several situations. Antidumping investigations are terminated prematurely when the antidumping petition is withdrawn. Petitioners may withdraw a petition if they feel the likelihood of obtaining relief is small or if the legal costs involved in continuing the case are too great. Petitions may also be withdrawn if domestic and foreign firms (or their governments) can reach an agreement which mitigates the effects of the dumping. Suspension of an antidumping investigation occurs when foreign firms agree to eliminate the injurious effects of the dumping. This agreement usually involves a pledge by foreign firms to either raise prices or to cease exporting the dumped merchandise. The antidumping investigation will remain suspended as long as the foreign firms keep their promise.

Any agreement (suspension or otherwise) reached after the ITA has initiated its investigation must be found by the ITA to be in the public interest. This means that the agreement must involve a smaller welfare loss than that which would occur under an antidumping duty. Unfortunately, the law does not specify how welfare is calculated and thus it is unclear how the public interest enters into the ITA’s decision to accept or reject an agreement.⁶ If the ITA has not initiated an investigation when an agreement is reached, it cannot restrict the agreement in this way.

In summary, antidumping duties are levied only when the preliminary decision of the ITC and the final decisions of the ITA and ITC are affirmative. Even when one of these decisions is negative, domestic firms may still receive some relief through provisional measures. Domestic firms may also obtain relief if they can reach an agreement with the foreign firms responsible for the dumping.

1.3 U.S. Antidumping Outcomes

Having discussed the current U.S. antidumping laws, I now examine the outcomes of the 516 antidumping cases completed between 1980 and 1991. These cases were selected for study because they were all filed under the Trade Agreements Act of 1979, which substantially altered previous U.S. antidumping law. I then examine the preliminary and final decisions of the ITA and ITC. These decisions are important because they determine how much provisional relief is provided. Next, I consider the pattern of outcomes according to the countries and industries involved.I conclude by examining the cases which were withdrawn prior to their completion.

1.3.1 The Overall Pattern of Outcomes

Table 1-1 breaks down the outcomes of the 516 antidumping cases completed between 1980 and 1991. The table also lists these outcomes by the year in which they were reached. Table 1-1 reveals that the U.S. antidumping laws produce antidumping duties in about 37% of all cases. This does not mean, however, that relief was not provided in the remaining cases. As we will see shortly, provisional protection was provided in many of the negative outcomes. Furthermore, 23% of all antidumping cases were terminated prematurely because the petitions supporting them were withdrawn. Whether or not these petitions were withdrawn as a result of collusive agreements between domestic and foreign firms is unclear from Tab...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Tables
• Preface
• Introduction
• I The Administration of Antidumping Duties
• II Models of Antidumping Duties
• Conclusion
• Appendices
• References
• Index