An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. Dumping is a process wherein a company exports a product at a price that is significantly lower than the price it normally charges in its home (or its domestic) market.
China’s recent legislative changes have largely facilitated and promoted foreign trade and investment. The new Anti-Dumping Regulations differ from most other recent trade laws and regulations because they are designed to protect local industries. The Regulations allow China to deliberately protect local industry and yet enjoy the protection of GATT authority.
Since the Regulations are so simple and lack protections for defending parties, or for an appellate process, they are highly favorable to local industries. It is likely that MOFTEC’s mere announcement of an investigation will be sufficient to discourage importers of suspect foreign goods.
After its accession to the WTO in 2001, China established its own trade remedy system in order to safeguard its own markets and industries. China now employs a single agency model in the anti-dumping system and uses a prospective methodology for calculating and assessing anti-dumping duties. In using anti-dumping measures and also by implementing WTO rulings, China has continuously improved its practices.
The variety of Chinese goods brought under anti-dumping measures is on the increase. Since the first anti-dumping case against Chinese exports, Chinese goods under anti-dumping investigations vary from labor-intensive products or easily processed products, such as mineral products and chemical products, to textile products, clothing, light industry products, home electric appliances, hardware, chemical products, mineral products, medicine, and farm produce.
Under the Tariff Act of 1930, United States industries may petition the government for relief from imports that are sold in the United States at less than fair value (i.e., “dumped”) or which benefit from subsidies provided through foreign government programs. Under the law, the United States Department of Commerce (“USDC”) determines whether the dumping or subsidizing exists and, if so, the margin of dumping or amount of the subsidy while the United States International Trade Commission (“USITC”) determines whether there is material injury or threat of material injury to the domestic industry by reason of the dumped or subsidized imports.
Chief among those measures is the U.S. antidumping law, which allows domestic manufacturers and unions to request that the government impose special duties on injurious imports allegedly priced below “fair market value” and has been a (deserving) target of criticism here at Cato for more than four decades. Recent economic research has bolstered these criticisms while demonstrating why any legitimate account of U.S.-China trade policy.