Should Developing Countries Introduce Antidumping? / Michael J. Finger.

Format:

Book

Government document

Author/Creator:

Finger, Michael J.

Contributor:

Finger, Michael J.

Series:

Other papers

World Bank e-Library.

Language:

English

Subjects (All):

Trade Policy.

World Trade Organization.

Local Subjects:

Trade Policy.

World Trade Organization.

Place of Publication:

Washington, D.C. : The World Bank, 2000.

System Details:

data file

Summary:

In Global Economic Prospects 1995 it was explained that antidumping is ordinary protection with a good public relations program. In fact, antidumping is often more costly to importing countries than ordinary protection through tariffs. The reason antidumping is such a costly form of protection is that the threat of antidumping action provides leverage to the importing country to force exporters into settled agreements which raise export prices. Exporters are frequently faced with the choice of having a tariff applied against their export sales or agreeing to raise prices (a 'price undertaking') or limit sales (a 'voluntary export restraint' or VER). Since exporters can typically increase their profits with a price undertaking or a voluntary export restraint, they frequently prefer a settled agreement to the imposition of an antidumping duty. Sometimes simply the threat of an antidumping action will induce a settlement because the uncertainty of the antidumping process itself will cause a loss of customers. These settled agreements, however, impose large costs on consumers and importing industries since they do not provide any tariff revenue to the government. The effect on the importing country is similar to the OPEC cartel: the exporting countries charge higher prices to the importing countries through an agreed limitation on sales or minimum prices. The difference between OPEC and antidumping is that with antidumping it is importing country policy that forces up the prices of imports to its consumers and industries.