Australia has just done a report on its anti-dumping and countervailing duty system. Some snippets:
Should Australia retain an antidumping system?
Key points
• The price raising effects of anti-dumping measures give rise to a range of benefits and costs for applicant industries and their suppliers, importers, downstream user industries and, in some cases, consumers; with ensuing effects on employment, activity and investment across the economy.
• Most of these impacts represent transfers between different domestic stakeholders. But there will be some adverse consequences for Australia’s overall economic performance and community well-being.
– Resources attracted to, or retained in, industries by virtue of anti-dumping protection will provide a lesser return to the community than if used elsewhere.
– Longstanding anti-dumping measures that become akin to tariffs are likely to lessen the imperative for recipient industries to respond to import competition through innovation and other forms of productivity improvement.
– There are costs for government in administering the system and for local (and overseas) suppliers in complying with its requirements.
– An effect of the undertaking and duty refund provisions is that some duty revenue that would otherwise accrue to the Australian Government flows overseas.
• However, as the industry and product coverage of the anti-dumping system is narrow and diminishing, the aggregate cost is likely to be very small.
• Also, the ability for local industries, like those in most other countries, to use the system to address what are perceived to be ‘unfair’ trading practices and outcomes may have lessened resistance to more significant tariff reforms. Thus removal of an anti-dumping ‘safety valve’ could make it more difficult to address remaining tariff and related reform issues.
• Accordingly, and with practical and other considerations militating against using competition law as a generalised substitute for a dedicated anti-dumping system, there is a case for retaining a system.
• But the current arrangements have a number of significant deficiencies including:
– a lack of consideration of the economy-wide impacts of imposing measures
– inadequate mechanisms for updating the magnitude of measures
– scope for repeated extensions of measures based on less demanding tests
– insufficient transparency in the investigation process and its outcomes.
• Addressing these deficiencies would reduce the direct detriment of the system, and thereby strengthen the political economy arguments for its retention.
The competition law alternative:
The full report is here.Key points
• A possible alternative to a dedicated anti-dumping regime is to deal with dumping matters through competition law.
– The approach already applies to trade between Australia and New Zealand (though either country can still take countervailing action), and within some other free trade areas and customs unions overseas.
• The approach has some in-principle attractions.
– It would limit the imposition of anti-dumping measures to circumstances where dumping was most likely to be directly detrimental to efficiency.
– Bringing dumping matters within the remit of the Trade Practices Act could increase the scope to take account of inter-relationships with some other competition issues.
• But notwithstanding its use in a trans-Tasman context, the feasibility of using competition law as a general substitute for Australia’s anti-dumping system is highly questionable.
– It would require the cooperation of other countries, which could not be guaranteed.
– It would also require better developed competition institutions in some of Australia’s major trading partners.
– As a court-based approach, it would be much more time consuming and costly.
– The punitive nature of the remedies provided for under competition law would be problematic, especially in countervailing cases.
– It is unclear that there could be adequate recognition of the ‘system preserving’
arguments for taking action against injurious dumping or subsidisation.
