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Why we shouldn't dump our anti-dumping system

By Vanessa Bell - posted Monday, 9 December 2013


In this age of free trade, should a system that is designed to act as a trade barrier be abolished?

The short answer is no. The anti-dumping system is actually an important mechanism for maintaining free trade because it corrects unfair trading practices.

The WTO says that dumping occurs when a 'company exports a product at a price lower than the price it normally charges in its own home market'. Dumping is not illegal; however it is internationally accepted as a form of unfair trading. This is because it is viewed as an uncompetitive trade practice which distorts the markets.

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The WTO does permit the use of anti-dumping measures to prevent trade distortion. But they must comply with the WTO's strict guidelines. For example, anti-dumping measures can only be implementedwhen it is proven thatthe dumping has caused material damage to the domestic industry.

Australia's anti-dumping system aims to remedy any harmful effects to Australian industry caused by dumped goods. Australian companies are able to lodge an application for anti-dumping duties to be placed on suspected dumped goods. If the goods are found to have been dumped, and to have caused material damage to the local industry, anti-dumping duties will be applied.

Australia recently reformed its anti-dumping system. The reforms were designed to address deficiencies, restore public confidence and relieve pressure on the system. This included establishing an Anti-Dumping Commission, an International Trade Remedies Forum, a new appeals process and time limits for ministerial decisions on anti-dumping matters.

Yet there is still debate over whether anti-dumping systems should continue to be a part of the international trade environment.

Arguments that support its removal focus on the idea that anti-dumping systems can be used as a form of protectionism. Protectionist measures are designed to protect the domestic market from competitive imports. Yet such measures cause producers to become ineffective and unproductive. Performed on a global scale, protectionism leads to market shrinkage.

It has also been argued that anti-dumping measures are ineffective at protecting industries from predatory dumping. Predatory dumping is a type of dumping that aims at eliminating competitors. Once the competition is wiped out, producers are free to set their own high prices. Because the WTO's Anti-Dumping Agreement does not compel nations to investigate the reason why an exporter is dumping, it is not designed totarget cases ofpredatory dumping.

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Despite these criticisms, there are far more benefits for countries having an anti-dumping system than not having one.

One reason is that there is currently no international law that regulates international competition. Until one exists, an anti-dumping system is the only way that a country can prevent unfair trading practices from damaging domestic markets.

The Productivity Commission found in its 2009 review that Australia's anti-dumping system should be continued because the 'removal of an anti-dumping "safety valve" could make it more difficult to address remaining tariff and related reform issues'.

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About the Author

Vanessa Bell is a student at The University of Southern Queensland and is a Global Voices youth delegate to the current WTO Ministerial Conference.

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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