News Release

December 11, 2002

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A Road Map for Antidumping Reform
Cato scholars outline a plan of action to reform the WTO Antidumping Agreement

In November 2001, a new round of multilateral trade negotiations was launched at Doha, Qatar. Despite efforts by the United States to prevent inclusion of antidumping negotiations on the "Doha Round" agenda, the U.S. capitulated after realizing it was diplomatically isolated on the topic. However, the U.S. indicated it would not be amenable to proposals that might violate the "basic concepts, principles, and objectives of the Antidumping Agreement."

In their latest study, "Reforming the Antidumping Agreement: A Roadmap for WTO Negotiations," Brink Lindsey and Dan Ikenson, director and policy analyst, respectively, of the Cato Institute's Center for Trade Policy Studies, set forth a detailed plan for antidumping reform. They begin by explaining that the basic concepts, principles, and objectives of the Antidumping Agreement have never been defined by any GATT or WTO agreement, and that such a definition would be a logical starting place for WTO negotiators. The authors turn to supporters of the antidumping status quo for guidance on these definitions and find the following consensus among them: "The basic objective of the Antidumping Agreement is to allow member states to offset artificial competitive advantages created by market-distorting government policies."

Working from that foundation, Lindsey and Ikenson identify dozens of instances where antidumping laws in practice fail to further this objective. By illuminating the blatant mismatch that exists between justifications for the antidumping law and the very law itself, reform proponents could compel negotiators to "reduce the yawning gap between antidumping's accepted goals and its actual practice."

The authors then outline 21 proposals to improve "antidumping laws' aim and limit the collateral damage inflicted on business practices that have nothing to do with `unfair trade'." Such proposals include requiring evidence of market distortion, eliminating the cost test, revising criteria for the use of "constructed value," prohibiting "zeroing," revising the arm's-length test, and mandating a public-interest test. The authors maintain, "If the new rules proposed here are adopted and incorporated into the WTO Antidumping Agreement, dramatic improvements in antidumping practice would almost certainly ensue."