Antidumping 101: The Devilish Details of “Unfair Trade” Law

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The U.S. antidumping law enjoys broad political support in partbecause so few people understand how the law actually works. Itsrhetoric of "fairness" and "level playing fields" sounds appealing,and its convoluted technical complexities prevent all but a fewinsiders and experts from understanding the reality that underliesthat rhetoric.

In this study we seek to penetrate the fog of complexity thatshields the antidumping law from the scrutiny it deserves. Here weoffer a detailed, step-by-step guide to how dumping is defined andmeasured under current rules. In addition, we identify the manymethodological quirks and biases that allow normal, healthycompetition to be stigmatized as "unfair" and punished with oftencripplingly high antidumping duties. The inescapable conclusionthat follows from this analysis is that the antidumping law, as itcurrently stands, has nothing to do with maintaining a "levelplaying field." Instead, antidumping's primary function is toprovide an elaborate excuse for old-fashioned protectionism.

We illustrate the antidumping law's serious methodological flawsin a variety of different ways. First, we use simplified examplesto illustrate how particular steps in the dumping calculationoperate to generate phantom dumping findings. Next, we use actualcase records from 18 different dumping determinations to quantifythe effects of methodological distortions in specific, real-lifecases. Finally, we present a detailed hypothetical case study inwhich each step in the dumping calculation is explained andfaithfully recreated. In that case study, we show how a foreignproducer that sells widgets in the United States at prices 13.96percent higher than in its home market nonetheless winds up with adumping margin of 7.37 percent.

Brink Lindsey and Daniel J. Ikenson

Brink Lindsey is director of the Cato Institute's Center for Trade Policy Studies. Dan Ikenson is a policy analyst at Cato's Center for Trade Policy Studies.