Antidumping And Hte Wto Essay Research Paper

Antidumping And Hte Wto Essay, Research Paper Antidumping and the WTO While antidumping doesn’t get a lot of press, it is certainly one of the biggest issues that the World Trade Organization (WTO) is dealing with today. During the recent WTO Ministerial Conference in Seattle, much media attention was given to protesters who were demanding higher environmental standards or international labor standards. Yet, little media attention was given to the issue of dumping. Unseen by the television cameras or news reporters were steel workers and members of other union organizations like the AFL-CIO who were there to defend US antidumping laws. Unbeknownst to much of the general public, antidumping regulation was a major issue in Seattle as it is for the WTO in general. From the

inception of the WTO, there has been controversy over antidumping laws from diverse groups. In 1995, the World Trade Organization was born out of the Uruguay Round of trade talks. The WTO has approximately 140 member countries with new members in the process of joining(WTO website). The WTO can be considered a more formal extension of the GATT (General Agreement on Tariffs and Trade) which has existed for around 50 years. However, the WTO covers trade issues that are not addressed by GATT, such as trade in services and intellectual property rights. The WTO also features binding panel resolutions. Upon joining, countries agreed to accept these rulings; under GATT that was not necessarily true. Still, WTO embodies the same spirit as GATT. It favors trade liberalization and

globalization over trade barriers. In particular, one main objective of the WTO is to reduce trade restrictions, and one of the first agreements it reached was a general reduction in tariffs. (Schott, 1). For all of the WTO’s promise to tear down of trade barriers, there is some concern that antidumping procedures are a covert way of hanging on to some of these practices. Since the WTO has come into existence, antidumping cases have flourished. Adding to the confusion, many cases brought to the WTO panels have not been settled yet. There are many complaints about antidumping procedures. Between January 1994 and July 1995, 238 antidumping measures were enforced by 19 WTO member states(Schott, 221). Most of the countries that enforced these measures were industrialized countries

such as the U.S., Australia and members of the E.U. Under the WTO Antidumping Agreement, dumping is generally defined as selling a product in an export market at a lower price than the product is sold in the exporter’s home country. Dumping can be associated with firms or countries selling goods at less than the marginal cost of production. This action is often called predatory pricing. By keeping their export prices so low, the dumping company can drive its competition out of business so after a time it can gain significant market share, if not outright monopoly. A company is able to do this because in the long run it only has to cover its average variable cost, once it covers its initial fixed costs are covered. Antidumping is the practice of governments where they place

tariffs, quotas or duties on imported goods that they believe are being dumped in the domestic economy. Technological goods and components, as well as agricultural items are two of the main industries where dumping seems to be most numerous. Consumers are the benefitients of dumping in the short run, the low costs will be appealing to them, and they will buy from the foreign supplier. But as the domestic competitive industries are put out of business, it becomes possible for the foreign firm to increase prices to an appropriate level to maximize profits. Thus, Antidumping can be a necessary measure for countries to enforce in certain cases. On the other hand, if a foreign country dumps products into a market because they have comparative advantage in this particular industry, it