Let's dump the 1916 Antidumping Act: why the 1994 GATT provides better price protection for U.S. industries.

• Author: DiSalvo, Nicole

ABSTRACT

The U.S. Congress is currently considering a vote to repeal the 1916 Antidumping Act. The 1916 Antidumping Act makes the importation of foreign goods that were sold below market prices illegal if the foreign company had the "intent [to] destroy or injure an industry in the United States." Few claims have been adjudicated under the 1916 Act since its passage, and no plaintiff has won a case based solely on the 1916 Antidumping Act. Commentators reason that the strict intent requirement or the availability of remedies in other antitrust statutes has contributed to this phenomenon. Recently, there has been debate in the international trade community regarding the Act's compatibility with multinational trade treaties of which the United States is a signatory. The World Trade Organization found the 1916 Act inconsistent with antidumping provisions in 1994 GATT, and its Appellate Body upheld those decisions.

This Note discusses the history of the antidumping legislation and enforcement, the current international controversy surrounding the laws of the United States, and the costs and benefits of using international dispute resolution procedures to counteract foreign dumping in the United States if the 1916 Act is repealed.

TABLE OF CONTENTS I. INTRODUCTION II. 1916 ANTIDUMPING ACT LEGISLATION AND JUDICIAL INTERPRETATION A. Legislative History of the Act B. New Antidumping Legislation--The Government Steps In C. Early Case Law Interpreting the Act D. Interpretation of the Elements of the Antidumping Act of 1916 III. THE INTERNATIONAL APPROACH--ARTICLE IV OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE 1994 A. The Agreement B. The Dispute C. The Appellate Body Findings and Aftermath IV. INTERNATIONAL DISPUTE RESOLUTION AS THE SOLE REMEDY FOR DUMPING A. Discrepancies between the WTO Dumping Dispute Methodology and the 1916 Act B. International Dispute Settlement Procedures Provide the Best Remedy against International Dumping V. CONCLUSION I. INTRODUCTION

On March 4, 2003, Rep. James F. Sensenbrenner, Jr., chairman of the House of Representatives Committee on the Judiciary, introduced in the 108th Congress H.R. 1073, (1) a bill to repeal the 1916 Antidumping Act as enacted in Section 801 of the Act of September 8, 1916. (2) The 1916 Antidumping Act makes the importation of foreign goods that were sold below market prices illegal if the foreign company had the "intent [to] destroy or injure an industry in the United States." (3) The conduct is a misdemeanor punishable by up to a one-year imprisonment and no greater than a $5,000 fine. (4) The Act also creates a private right of action for companies who believe they were victims of "dumping" by a foreign company and provides treble damages and "the cost of the suit, including attorney's fee." (5)

Few claims have been adjudicated under the 1916 Antidumping Act since its passage over eighty-five years ago. Commentators have suggested that the reason no plaintiff has ever won on straight 1916 Antidumping Act grounds is either the strict intent requirement read into the act by the small number of courts which have ruled on the subject, or that there are antitrust statutes that provide more appropriate relief in these situations. (6)

While adjudication of this Act has been light, (7) there has recently been much debate in the international trade community regarding its compatibility with multinational trade treaties of which the United States is a signatory. This concern for the Act's power has increased since a federal court in Utah held that the 1916 Antidumping Act, which had been used unsuccessfully by U.S. companies to sue foreign companies on antitrust grounds, could be used to tackle antidumping complaints. (8) The European Community (EC) and Japan filed separate World Trade Organization (WTO) complaints after Wheeling-Pittsburgh Steel Corporation settled a suit against Dufreco Steel alleging it had violated the 1916 Antidumping Act. (9) Both the EC and Japan argued that the 1916 Antidumping Act is inconsistent with the antidumping provisions set forth in trade agreements of which the United States is a party. (10) They also argued that the preliminary ruling in the Geneva Steel case allows for U.S. companies to blackmail foreign competition and force them to negotiate a settlement for fear of partaking in drawn-out and costly litigation. (11)

The WTO panels found the acts inconsistent with international trade agreements. (12) The WTO Appellate Body upheld the decision. (13) They recommended that the Dispute Settlement Body request that the 1916 Antidumping Act be brought into conformity with the treaties. (14) Legislative action intending to do this resulted over a year later when Ways and Means Chairman Bill Thomas introduced H.R. 3557 and then again in 2003 with the introduction of H.R. 1073 and S. 1155. (15)

If passed, H.R. 1073 would disallow judgments made pursuant to the 1916 Act that are inconsistent with the Act's repeal. (16) Had H.R. 3557 been passed in 2001, it would have ensured U.S. compliance with the treaties in existence when the WTO agreements were reached. For a variety of reasons, this bill was not brought to vote after being referred to the House of Representatives Committee on the Judiciary.

Though little litigation has occurred since the introduction of H.R. 3557, one case is of interest for this discussion. Goss Graphic Systems (Goss), a U.S. manufacturer and supplier of "newspaper presses, newspaper press additions and other printing press systems for newspaper, advertising, and commercial printing and publishing markets," sued MAN Roland Druckmaschinen Aktiengesellschaft (MAN Roland) alleging violations of the Antidumping Act of 1916. (17) Goss claimed that MAN Roland was importing their foreign-made presses and other equipment into U.S. markets and selling them at prices far below those in Germany, the company's principal place of business. (18) The defendants, MAN Roland, its associates, and their U.S. subsidiaries, filed a motion to dismiss based on the elements of the violation as well as on jurisdictional issues. (19) The motion was denied by the district court and discovery has proceeded. A motion for summary judgment was also denied in 2003. (20)

This Note discusses the history of antidumping legislation and enforcement, the current international controversy surrounding the laws of the United States, and observations concerning the positive and negative features of using international dispute resolution procedures to counteract foreign dumping in the United States if the 1916 Act is repealed. Section II of this Note discusses the legislative history and passage of the 1916 Antidumping Act, including a brief discussion of later antidumping legislation. Section II also includes a discussion of the limited judicial interpretation of the Act. Section III focuses on the WTO dispute regarding the compatibility of the 1916 Antidumping Act with other international agreements regarding dumping including GATT and the WTO Agreement. Section IV articulates the positive and negative aspects of repealing the 1916 Antidumping Act and advocates international dispute resolution through the WTO as the best remedy for dumping.

2. 1916 ANTIDUMPING ACT LEGISLATION AND JUDICIAL INTERPRETATION

   Since its passage, the 1916 Antidumping Act has not been the subject of many lawsuits. (21) In fact, one district court found that until the 1970s, the 1916 Act was only mentioned in one reported decision, and even that case did not reach judgment on the merits. (22) There also been little scholarship on the Act written prior to 1980. (23) Cases prior to the holding by the Eastern District of Pennsylvania in Zenith Radio Corp. v. Matsushita Electric Co. held only that the 1916 Antidumping Act did essentially the same things as 15 U.S.C. [section] 15, which authorizes treble damage actions for violations of antitrust laws. (24) The court in Zenith, in which a U.S. electronics manufacturer sued several Japanese electronics manufacturers, undertook an extensive study of the Act's legislative and social history. It was the first court to do so in the history of the Act. (25)

   1. Legislative History of the Act

      "Dumping' is defined in the United States as "the sale of commodities in a foreign market at a price which is lower than the price or value of comparable commodities in the country of their origin." (26) The 1916 Act was intended to prohibit international price discrimination that would have injurious effects on U.S. companies. (27) The Act requires a comparison of the price at which the products are sold in U.S. markets with the "actual market value or wholesale price of such articles at the time of exportation to the United States, in the principal markets of the country of the production." (28) Any product which is found to be sold at "substantially less than the market value," after additional expenses such as freight charges and import duties are included, violates the act. (29) Additionally, to prove violation, the defendant company must have the "intent of injuring an industry in the United States." (30) The interpretation of this latter element has most concerned courts, especially the Zenith court and the judges in Geneva Steel v. Ranger Steel. (31) Some commentators believe that the failure of the Act to define intent has rendered its provisions inoperable. (32)

      The 1916 Act has several similarities to both U.S. antitrust statutes and U.S. customs statutes. (33) The most obvious parallel to antitrust statutes is the treble damage award provided to plaintiffs who can prove violations of the 1916 Act. (34) In addition, Section 2 of the Clayton Act prohibits price discrimination between different purchasers of a product in a domestic context. (35) Early courts that addressed the 1916 Antidumping Act also noted that the standing provisions of the Act and of Section 2 of the Clayton Act were similar. (36) Similarities to customs statutes can...