Dumping on foreign firms.

• Author: Ikenson, Daniel
• Position: WORLD WATCHER

THE OBAMA ADMINISTRATION wants to amend certain aspects of the Commerce Department s oversight of the U.S. antidumping law. Revised methods for estimating major components of the dumping calculation, higher thresholds for foreign companies to exceed in order to demonstrate that they are not "dumping," tighter rules governing methods of paying estimated antidumping duties, and other changes have been put forward, ostensibly to give the law more teeth.

History suggests that if those proposals are implemented, a surge in antidumping action--at great cost to the broader U.S. economy--is likely to follow. The evolution of antidumping is marked by distinct infection points corresponding to legal and administrative changes implemented at the behest of certain import-competing industries and their political allies. As the utility of antidumping became evident to those industries, Wade negotiators, and politicians in the decades following World War II, the law--and its regulatory apparatus--gradually was transformed from one predicated on protecting consumers from collusive or predatory foreign Wade practices into a tool to suppress competition in the name of remedying "injury" experienced by domestic producers. The arcane mix of statutory rules and discretionary whimsy that emerged as contemporary antidumping policy is a far cry from the first antidumping law--in practice and intent. Today, antidumping is little more than an elaborate excuse for ran-of-the-mill protectionism.

No longer are anticompetitive or predatory pricing practices the target of the antidumping law. Rather, its target is price discrimination--specifically, the act of a foreign firm charging lower prices in the U.S. than it does in its home market for the same product even though there is nothing inherently wrong or predatory or unfair about such a strategy. Even if there were, evidence of anticompetitive behavior never is required to initiate an antidumping case or to impose restrictions. Antidumping borrows its rhetoric from the past, but it presently punishes normal, healthy competition that certain domestic producers find objectionable.

Honest debate about the law's purpose and consequences has been stifled by its complexity and the persistence of highly inaccurate rhetoric about the propriety of strong antidumping rules to redress unfair foreign practices. Armed with the pretense of a noble purpose, representatives of labor unions and import-competing industries often cite...