The GATT 1994 establishes a number of fundamental principles governing trade among WTO members, including the most-favoured-nation principle. It also provides that imported goods shall not be subject to internal taxation or any other modification in excess of that levied on domestic products and that imported goods shall not be treated less favourably than domestic goods in accordance with national laws, regulations and administrative provisions, and lays down rules on quantitative restrictions, import fees and formalities. and value for duty. WTO members have also agreed to schedule bound tariff rates. Article VI of the GATT 1994, on the other hand, expressly permits the imposition of a specific anti-dumping duty on imports from a given source in excess of bound duties where dumping causes or threatens to cause injury to a domestic industry or materially retards the establishment of a domestic industry. The Agreement on Implementation of Article VI of the GATT 1994, commonly referred to as the Anti-Dumping Agreement, explains in more detail the basic principles governing the investigation, assessment and application of anti-dumping duties set out in Article VI itself. (4) Exchange Rate Adjustment If the Department of Commerce determines that a product is being dumped, it must determine the margin of dumping between the price at which a product is sold in the foreign market and the assumed price in the U.S. market. To be compared, both prices must be calculated in US dollars. But this creates a problem.
Some trade agreements between a foreign company and a U.S. importer use fixed-rate contracts. Thus, the selling price in the exporter`s national currency fluctuates according to the current exchange rate, but the cost of production remains unchanged. However, when investigating a dumping case, the U.S. government sometimes uses the current exchange rate. These are just a few points. A list of the most recently applied anti-dumping duties is available on the Government`s website. If the USITC`s finding is positive, the Secretary of Commerce issues an anti-dumping order (as part of a dumping investigation) or a countervailing duty order (as part of a subsidy investigation), which is enforced by U.S.
Customs. If the USITC`s determination is negative, no anti-dumping or countervailing duty order will be issued. If the USITC finds de minimis findings, the investigation with respect to these imports will be terminated. Although the purpose of anti-dumping duties is to save domestic jobs, these duties can also lead to higher prices for domestic consumers. And in the long run, anti-dumping duties can reduce international competition from domestic firms producing like products. Example: bearings. U.S. anti-dumping laws allow even the smallest U.S. company to impose a dumping fee, regardless of domestic demand for the foreign products in question. This allowed a small American manufacturer of ball bearings, the Torrington Company of Torrington, Connecticut, in 1988, to accuse virtually every bearing manufacturer in the world of dumping in the United States. The company claimed that companies in nine countries were undermining Torrington`s competitiveness. Many U.S.
companies are increasingly concerned about the enforcement of international anti-dumping laws. The United States makes extensive use of dumping laws to prevent foreign imports, and other countries have begun to learn that it is a means of imposing protectionist measures without violating GATT rules. U.S. laws have become the model for dumping legislation. More and more countries have increased dumping duties against U.S. companies. Between 1980 and 1988, Canada opened 55 investigations against U.S. companies, Australia 52 cases, the European Community 23 cases, Mexico fourteen and Argentina six, most in recent years. (“Some Big U.S. Companies Favor Relaxing Anti-Dumping Laws,” The Wall Street Journal, August 31, 1990, p. 1990.
A2.) Significantly, several countries apply U.S.-style anti-dumping laws against U.S. products. South Korea, for example, discovered in 1990 that the American DuPont Chemical Company was selling plastic resin at prices 30 to 90 percent higher than its domestic prices. A tariff of 40 to 50 per cent was recommended. (“A Korean Firm`s Dumping Charge Takes DuPont, Two Others, By Surprise,” The Wall Street Journal, November 8, 1990, p. A20.) Over the past decade, many U.S. politicians have replaced calls for more free trade with calls for “fair trade.” The U.S., they say, should keep its markets open to imports, but it must also act aggressively against “unfair” trade practices by foreign companies and governments. One of the pillars of this “fair trade” approach is a series of so-called anti-dumping and countervailing laws. (Unless otherwise specified, anti-dumping and countervailing duties are hereinafter referred to simply as anti-dumping laws.) Anti-dumping laws are designed to prevent foreign-made products from being sold by foreign companies in the United States at less than fair value.
Countervailing duties are intended to offset subsidies that foreign governments provide to certain exporting companies by imposing tariffs on goods that these companies export to the United States. Anti-dumping disputes are subject to binding dispute settlement before the WTO Dispute Settlement Body in accordance with the provisions of the Dispute Settlement Agreement (Article 17). Members may challenge the imposition of anti-dumping measures, in some cases challenge the imposition of provisional anti-dumping measures, and raise any issue of compliance with the requirements of the Agreement before a panel established under the DSO entity. In the case of disputes under the Anti-Dumping Agreement, a special standard of review applies to a panel`s review of the decision of the national authorities adopting the measure. The standard provides for a certain degree of consideration for national authorities when establishing facts and interpreting legislation and is intended to prevent dispute resolution bodies from taking decisions on the basis of their own opinions. The standard of review applies only to anti-dumping disputes and a ministerial decision states that it will be reviewed after three years to determine whether it is of general application. The imposition of the anti-dumping duty has advantages and disadvantages. Companies that compete internationally are naturally not always willing to disclose to the U.S. government trade secrets and other information that could help their U.S.
competitors. But even if they are willing to comply, it is often costly, difficult, or impossible for foreign companies to collect such amounts of information in the time required. If the Ministry of Commerce does not receive the information in a timely manner, it will use other methods to calculate the cost of production. One is to compare the production costs of other producers in a third country with a “similar” degree of industrialisation. This happened in 1986 when a Chinese cookware company was accused of disposing of its products in the United States.