Anti-dumping cases are more successful than before in the U.S.

July 31, 2012

Free Market Foundation

Many American businesses convince the federal government to erect trade barriers by claiming foreign competitors are selling goods (dumping) in the United States at artificially low prices. These anti-dumping cases are becoming more and more prevalent in American trade policy. A new paper from the National Bureau of Economic Research argues that the number of anti-dumping cases is not growing, but that they are resulting in trade protection more often.

Contrary to the conventional wisdom, the author finds that the number of anti-dumping investigations in the 1930s, 1950s, and 1960s was roughly equivalent to the current rate. However, after 1980, the same number of cases resulted in more trade barriers:

Most pre-1980 cases were rejected at an early stage and only five percent of cases resulted in a favourable ruling for U.S. industry.

In contrast, nearly all of post-1980 cases receive hearings and half result in favourable rulings for domestic industry.

Another difference is that contemporary cases usually charge that the dumping involved imports from several countries simultaneously.

Legislative changes caused these differences, says NBER:

In 1980, the U.S. Congress gave the Commerce Department authority over reviewing anti-dumping cases, because they felt it was more sympathetic to domestic business than the Treasury Department.

In 1984, the International Trade Commission began to add up the total value of the imports involved when calculating harm.

This shift motivated companies to file antidumping complaints that focused on many countries.

This combination of a particularly favourable venue and the shift to multi-country complaints appears to have dramatically altered the dynamic in favour of domestic industries alleging harm, says NBER.

Source: Matthew Davis, Antidumping in Historical Perspective, NBER Digest, January 2005; based upon: Douglas Irwin, Antidumping in Historical Perspective, National Bureau of Economic Research, Working Paper No. 10582, June 2004.

For text: http://www.nber.org/digest/jan05/w10582.html

For abstract: http://papers.nber.org/papers/w10582

For more on Tariffs and Other Trade Barriers: http://www.ncpa.org/pd/trade/trade.html

FMF Policy Bulletin/ 12 April 2005