By Grimwade, Nigel
Publication: National Institute Economic Review
Date: Thursday, February 1 1996
In December, 1993, the round of multilateral trade negotiations known as the Uruguay Round was at last successfully concluded, seven years after it was launched at Punta del Este in Uruguay and three years later than itwas scheduled to finish. This was the eighth and, almost certainly, the last round of GATT which is likely to take place on a similar basis. Up until the last minutes, it was uncertain whether any agreement would emerge. The final agreement was formally signed by the contracting parties at a gathering of Heads of State at Marrakech, Morocco and amidst great fanfare in April 1994. On January 1st,1995, the provisions of the Agreement took effect, including the establishment of the World Trade Organisation (WTO) as the successor to the GATT.
Now that the ink is dry on the Uruguay Round Final Act and the formalities involved in setting up the WTO are largely complete, attention is bound to focus on the implementation of the Agreement and the effectiveness with which the WTO fulfils itsmandate. The Agreement contains a number of important provisions both for improving existing market access in both industrial and agricultural products, for strengthening GATT rules in several important areas (anti-dumping, safeguards, subsidies) and for extending these rules to new areas (services, intellectual property rights, trade-related investment issues). A key aspect of the Agreement are theprovisions for strengthening the GATT mechanisms for dispute settlement. A litmus test for the WTO in the first few years of its existence will undoubtedly be the effectiveness with which it resolves disputes arising between members and ensures that the recommendations of independent dispute panels are implemented.
One of the issues of outstanding importance will be the effectiveness of the newAgreement on Anti-Dumping Policy. The aim of this note is to assess the implications of the new Agreement for the future of Anti-Dumping Policy. Article VI of GATT defines dumping as a situation in which '...products of one country are introduced into the commerce of another country at less than the normal value of the products...' (GATT, 1979). This is 'to be condemned if it causes or threatensmaterial injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic industry'. To combat dumping, countries may levy either an anti-dumping duty on the dumped product, providing that the rate of duty does not exceed the 'margin of dumping', or a countervailing duty where the product is being subsidised providing that this does notexceed the 'margin of subsidisation'. The margin of dumping is, broadly, the difference between a product's 'normal value' (defined further below) and the export price, while the margin of subsidisation is the amount of subsidisation bestowed on the export product. Anti-Dumping Policy is an aspect of trade policy which has attracted much interest among academic economists in recent years. Anillustration of this was the appearance of a Policy Forum on Contingent Protection in the November 1995 issue of the Economic Journal. This successfully demonstrated why the growing use of contingent protectionist measures such as anti-dumping is so worrying from a policy standpoint. (Contingent protection is the term widely used to refer to Various forms of protection such as anti-dumping,safeguards, voluntary export restraints and other grey-area measures used to offset alleged injury to domestic producers caused by imports.) This note goes a step further and asks whether or not, in the light of the new Agreement on Anti-Dumping, the incidence of anti-dumping is likely to diminish.
The Growth of Anti-Dumping Actions
There is widespread assent among trade economists that, in recent...