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Book Review
Ramifications of anti-dumping law
RAGHU DAYAL
THE ANTI-DUMPING AGREEMENT AND DEVELOPING COUNTRIES: Aradhna Aggarwal; Oxford University Press, YMCA Library Building, Jai Singh Road, New Delhi-110001. Rs. 595.
Amidst frequent avowals of affluent nations for free and equitable global trading system, inequities abound and increase. The glaring instance of anti-dumping (AD) law is dissected with industriousness and scholarship in the book with an authoritative treatment of what the author views as “perhaps the most egregious” of the developed country trade barriers.
The current legal provisions relating to AD remain “highly subjective, complex and ambiguous”, “over legalised” and “arcane” provisions “plagued with several conceptual and technical problems.” AD law bodes ill for the process of globalisation.
The Agreement on Implementation of Article VI of GATT 1994, better known as WTO’s Anti-dumping Agreement (ADA) allows governments to act against dumping where there is ‘material’ injury to the competing domestic industry. Typically, AD action implies charging extra import duty on the particular product, for its price to be closer to the “normal value”, or remove the injury to the domestic industry in the importing country. The volume analyses the legal and economic issues relevant to the law, traces its genesis and evolution, investigates its use in developed and developing countries, and determines the macroeconomic factors motivating the countries to make use of it.
Evolution of AD law
Chapter two deals with the notion of contingent protection within the WTO framework and describes how developed countries adopted AD legislations in the early 1920s for protecting their infant industries from competition.
The next chapter explains but a minor role historically played by developing countries in the evolution of AD law. It was the Uruguay Round that marked the first major attempt by developing nations to earnestly participate in the AD negotiations. The world’s first AD law was adopted by Canada in 1904, to be followed by New Zealand (1905) and later by the U.S. (1916) and the U.K. (1921). While the AD provisions were incorporated into the GATT 1947, the first AD code was negotiated during the Kennedy Round (1963-7) and entered into force in 1967, its disciplines improved during the Tokyo Round (1973-9), by incorporating the “Enabling Clause” in the GATT.
The current ADA came into force upon the establishment of WTO on January, 1 1995, and superseded the Tokyo code. There was a spurt in AD cases noticed during the decade 1991-2000: 2,675 AD cases or an annual average of 267 in comparison with no more than 12 cases per annum between 1947 and 1968. It is endorsed by B. Blonigen and T. Prusa in their paper on anti-dumping (2001) how the Tokyo Round was a pivotal point in the AD debate since almost as many cases were filed in the first three years following the Round as during the entire 1970s.
Chapter four reveals that developing countries sometimes initiate AD actions primarily to develop the capacity to challenge the cases targeted against them and post some retaliatory threats.
Assessment of options
The penultimate chapter critically assesses different policy options advanced by experts for ADA reform, culminating in the final chapter on the possibility of reforming the agreement by addressing the issue of “balancing of interests” of producers and consumers. T.N. Srinivasan has argued elsewhere for consumer interest to be heard in the process of decision-making on the use of anti-dumping mechanisms and thus expand the definition of domestic industry for the purpose of determining injury caused by alleged dumping.
It is reiterated that the anti-dumping agreement is fundamentally flawed; its objective is to counter unfair trade practices but it fails to define what unfair trade practices are; “that the primary jurisdiction for the anti-dumping laws is really more political than economic”, and that much of the contingent protection handled under these laws could have been dealt with under safeguard measures. Safeguard measures are “more transparent, less belligerent, and better focused than anti-dumping,” says the author.
Realistic roadmap
Some of the regional agreements provide a forum for replacement of AD laws by competition policies. The EFTA (European Free Trade Area)-Singapore Agreement shows a realistic roadmap to replace AD laws by competition policies.
The author herself argues, “Not much progress can be made in this direction in the absence of a multilateral framework of competition.” Several economists advocate “a more practical approach” by way of modification of AD laws so as to make them “competition friendlier.”
Developed countries seem to resist any significant change in the current agreement. A critical review of some of the major proposals towards reforming the agreement has been attempted in the book, only to feel exasperated that “any effort to fine-tune the agreement will add to complexities to an already complex mechanism.”
It seems that, despite a compelling case, at least on political grounds, anti-dumping cannot be abandoned. The book opts for a “practical solution” in refining the existing provisions.
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