GATT procedures unlikely to succeed in lifting antidumping actions
JAKARTA (JP): The GATT (General Agreement on Tariffs and Trade) dispute settlement process is unlikely to provide discipline against the increasing number of antidumping restrictions against imports, a noted economist says.
Michael Finger, a leading economist on trade policy from the World Bank, told a meeting at the Center for Strategic and International Studies (CSIS) here on Monday said that antidumping, which he defined as a preferred means of restricting imports through certain protectionist measures, has shown a sharp increase within the last five years.
Dumping laws were originally created to prevent a foreign company from selling their product below cost, "dumping" their product on a market, in an effort to shut down local, competitors.
"Only one case was challenged as illegal within the first 40 years of the GATT but within the period of 1985 to 1992, more than 1,000 antidumping cases have occurred," he said when he presented the findings of his studies on antidumping contained in his book entitled Antidumping: How It Works and Who Gets Hurt.
"Through the early 1960's, GATT member countries undertook fewer than a dozen antidumping actions per year. However, by the latter half of the 1970's, the U.S. alone averaged 35 cases per year and now the frequency across all GATT member countries is more than 200 per year," Finger said.
He said the country with the highest number of antidumping initiations between 1985 and 1992 were the U.S., Australia, Mexico, the European Community (EC) and Canada.
Misuse
Based on his studies, Finger concluded that several conditions have resulted in the increased, and apparent, misuse of antidumping measures.
This includes the fact that national regulations allow antidumping action that the investigation process itself tends to curb imports.
"Apart from that, almost half of antidumping actions are superseded by negotiated export restrictions before they come to a formal, legal ending," he said.
Finger explained that if a GATT member country accuses another member country of violating legal GATT regulations, the "victim" may present the evidence and request for consultation from GATT.
"Either one may bring the dispute to a three-member panel of GATT, which can conclude whether or not the action is a violation of the GATT rules," he said.
He added that recommendations from the panel can then be reported to the GATT membership, which will decide whether or not to object to the case.
"The panel's reports have so far never reached the level of a GATT decision, thus none of the antidumping actions have successfully been lifted," he said.
However, since 1989, 15 national antidumping actions have become the subject of GATT dispute settlement procedures. "The appointed panels have completed the findings and recommendations of five of these," Finger explained.
According to him, antidumping investigations included inquiry on the existence of dumping actions, injuries -- in which domestic products were displaced by unreasonably priced imports -- and a reasonable causal link between the facts and the dumping.
"The measures also include the comparison between home market and export prices and between export prices and estimate of costs. To measure injury, the indicators include domestic output, employment, profits and capacity utilization," Finger explained.
Counterparts
Mari Pangestu, a noted economist from CSIS, told reporters that the key to avoid antidumping measures in developing countries was to seek as many counterparts as possible.
"Mr. Finger seems very pessimistic that GATT can settle these disputes. And with the signing of the Uruguay Round, the number of antidumping measures are likely to increase," she said.
She said it was unrealistic to think that developing countries could ever win against large economies like the U.S. and the EC.
"The U.S., for example, can initiate an antidumping action only by providing evidence that domestic producers suffer from imports," she said.
Thus, she said, since the procedures to file against and to defend oneself from antidumping were very expensive and time- consuming, the countries accused of dumping should instead seek public support overseas.
"If we find the right public support -- who in this case are consumers or users of our product -- who can claim that they will suffer if they do not receive our product, the implementation of an antidumping measure can be prevented," she said. (10)