On December 22, 2015, The U.S. Department of Commerce (“DOC”) made a preliminary decision in its anti-dumping investigations on imports of corrosion-resistant steel, claiming that China, India, Italy and South Korea had been illegally dumping corrosion-resistant steel into the U.S. market. And anti-dumping duties would be adopted to the corrosion-resistant steel. According to the article in Bloomberg Business, imports from China would face a tax up to 256% while imports from the other three countries would face much smaller tax rates from 3.25% to 6.9%. Anti-dumping here is very likely to be a tool for protectionists rather than for fair trades.
However, to get a conclusion here, we need to solve the question: why do we oppose dumping and what is dumping.
Anti-dumping: For fair trade, not for protectionism
According to what WTO says, if a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. Usually, when a country is recognized by another country as dumping, its dumping products would be imposed an anti-dumping duty similar to a special tariff. The rationale of anti-dumping has the same idea as to what anti-trust means. People who are approve of anti-dumping worry that other countries would be able to take the whole market or eliminate other competitors by adopting dumping strategy and finally receive a monopoly price. However, this idea tries to justify the protections and what it means is that under some circumstances we need protections, which is against what free trade suggests. No matter in Ricardian model or HO model, the idea behind is that countries should do what they have advantages and trade with other countries to improve the total efficiency. Trades benefit both the participants. It is questionable whether companies would choose to give up profits and even sell their products under the costs. And the globally competitive environment is unlikely to create a country monopolizing the market. The lower prices by dumping would only benefit consumers and downstream manufacturers like automobiles or shipment buildings. Anti-dumping, therefore, might not be able to hurt consumers, but acts more like another tool for protectionists.
Problem of corrosion-resistant steel in US: Low productivity, not dumping
In the corrosion-resistant steel case, according to the data from U.S. Department of Commerce, all other countries involved in the anti-dumping cases finally received a small anti-dumping duty based on their market economy positions. Usually, the cause of anti-dumping cases is concurrent with the increase of certain imports or the reductions of domestic prices. When countries accused of anti-dumping are recognized as having market economy, the problem exposed here might not related to unfair trade and dumping. The low antidumping and countervailing duty rates in these cases simply indicate that the US Steel Industry’s problem is not steel imports. The problem is the US steel industry’s failure to modernize their facilities and remain competitive with the rest of the world, meaning that they lose their comparative advantages. And in these cases, anti-dumping acts as a tool for protectionists instead of a tool to avoid unfair trades.
|IMPORT STATISTICS: Cold-Rolled Steel Flat Products|
|Volume (metric tons)||88,600||29,900||89,600|
|Volume (metric tons)||252,300||242,700||792,300|
|Volume (metric tons)||6,900||15,900||77,700|
|Volume (metric tons)||129,700||140,300||130,700|
|Volume (metric tons)||156,800||168,100||234,200|
|Volume (metric tons)||0||200||81,100|
- US CHINA TRADE WAR–DEVELOPMENTS IN TRADE POLICY, TRADE, PRODUCTS LIABILITY, 337/IP ANTITRUST AND SECURITIES
- U.S. to investigate imports of corrosion-resistant steel by Siyuan Du
- Antidumping and Market Competition: Implications for Emerging Economies by Chad P. Bown, The World Bank and Rachel McCulloch, Brandeis University
- FACT SHEET: Commerce Preliminarily Finds Dumping of Imports of Corrosion-Resistant Steel Products from China, India, Italy, and Korea, and No Dumping of Imports of Corrosion-Resistant Steel Products from Taiwan
- Economic Perspectives on Antidumping Law by Alan V. Deardorff, University of Michigan
- U.S. Calls for 256% Tariff on Imports of Steel From China
- A Theory of Dumping and Anti-dumping by Phillip McCalman, Frank St¨ahler, and Gerald Willmann, Preliminary version of February 2009
- U.S. Levies Antidumping Duties on Corrosion-Resistant Steel