FIGHTING THE LAWS
ON DUMPINGIn his Oct. 7 opinion article, Prof. Kent Jones argues forcefully and correctly that U.S. anti-dumping and countervailing duty laws are unfair ("America's Unfair Trading Laws," Page 6A).
The recent steel cases highlighted this fact. Moreover, at the end of the process, the results were inconclusive overall. Nonetheless, victims of the process will be restricted in the U.S. market, limiting competition and hurting steel consumers.
Prof. Jones lays blame at the feet of the Department of Commerce. But there is no question that the law was structured by Congress to avoid considering the interests of U.S. consumers, or the U.S. economy in general. This is bound to lead to distortions that will make U.S. industry less competitive globally.
One could argue that no rational trade law should be set up deliberately to ignore the broader public interest. However, the politics of trade are such that these laws are staunchly defended in Congress. One constantly hears the excuse that making the trade laws more rational would amount to "unilateral
disarmament" in the face of "unfair" practices by our trading partners.
The United States publishes an annual report of trade barriers of other countries. This report, which catalogs a 200-page mixture of real and imagined trade abuses, helps to provide a protective cover for the maintenance of our own "unfair trade" laws.
The Congressional Record abounds with statements about the unfair practices of our trading partners as an excuse for our own protectionist actions.
How can we break this deadlock? First, proponents of a more rational system should support mutual reductions in barriers. Both sides should talk to each other rather than past each other.
Second, more trade observers should criticize the anti-dumping and countervailing-duty laws when they reach trade-distorting results in particular cases.
For example, dumping margins of 100 percent or more have been found in a number of cases. These percentages purport to state that prices of globally priced products should be doubled in order to be "fair." This is plainly ridiculous. The determinations are patently arbitrary and stem from the use of fanciful data masquerading as the "best information available."
The Department of Commerce also has suggested the anti-dumping law is intended to increase market prices. This view is dangerously anti-competitive and not supported by the statute.
Third, U.S. exporters have not stood up to criticize U.S. "unfair trade" laws. For U.S. exporters to be recruited to the ranks of critics of the dumping laws, other countries should threaten to use those laws against U.S. exporters.
There are two ways to do this. First, countries that buy U.S. products could impose the same anti-dumping rules against U.S. exporters as the U.S. imposes against foreign exporters. Second, other countries could take U.S. unfair trade practices to GATT dispute settlement panels. The problem with the first approach is that there are few "pressure points" that can be used effectively against the United States.
American steel producers, for example, are notoriously uninterested in exporting. Also, Japan, a frequent victim of anti-dumping actions in this country, is understandably reluctant to encourage its own industries to attack imports using anti-dumping laws.
In the steel cases, the European Community and other countries are pursuing a GATT dispute settlement proceeding in connection with countervailing duties on lead and bismuth steel bar products. They are considering convening a dispute panel in the recent flat-rolled steel cases. The GATT case on countervailing duties would challenge several Commerce Department conclusions, including the decision that privatization of former state-owned enterprises does not extinguish previous subsidies.
Finally, the GATT rules governing anti-dumping and countervailing duty actions need to be improved. GATT should say that defects in current law are expressly inconsistent with international trading rules.
Uruguay Round negotiators are considering several proposed improvements. All of them are being stoutly resisted by U.S. industries that would like to take advantage of the nearly automatic anti-dumping and subsidy findings provided under current U.S. law.
The ability of the world community to complete the Uruguay Round negotiations is being tested by these U.S. interests, as well as by vested interests abroad such as French farmers. Advocates of opening world markets should urge governments to adopt a rational, public interest-based approach to a range of trade issues, including anti-dumping, intellectual property rights, services, agriculture and others.
If the GATT negotiations can move forward to an agreement by Dec. 15, the world can look forward to greater prosperity, as well as fairer application of U.S. trade laws.
Lewis E. Leibowitz
Hogan & Hartson