The U.S. Antidumping Law: Rhetoric versus Reality

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Representatives of the 134 member nations of the World TradeOrganization will meet in Seattle in November 1999 to launch thenewest round of multilateral trade negotiations. The new roundshould be seen as a "bottom-up" process in which countriesliberalize, not merely to gain "concessions" from other countries,but primarily to reap the economic rewards of their ownliberalization.

The emphasis of the new round should be on reducing tradebarriers; the greatest potential for economic gains is in servicesand agriculture. The United States should seek the globalelimination of agricultural export subsidies, a drastic decline indomestic price supports, and a steep cut in trade barriers,especially the tariff spikes that protect certain favored farmsectors. In services, which now account for almost a quarter ofglobal trade, barriers to foreign competition should be loweredacross sectors, with exceptions kept to a minimum.

Trade barriers against manufactured goods should be loweredaggressively, with tariffs now below a 5 percent tariff ratereduced to zero and higher tariff spikes reduced to 5 percent andeventually phased out. All duties on information technology shouldbe eliminated and international commerce on the Internet keptduty-free. Advanced economies must keep their commitments to phaseout all textile and apparel quotas by 2005. WTO rules onantidumping should be tightened to prevent such laws from beingabused for protectionist purposes. The WTO's dispute settlementmechanism, although on the whole a tremendous success, is in needof reform with respect to the enforcement of WTO rulings.Specifically, countries that refuse to implement adverse rulingsshould be required to offer offsetting liberalization rather thanbe subject to trade-restricting sanctions.

No compelling need exists for adding foreign investment andintellectual property rights to the WTO agenda, given existing WTOrules and ongoing unilateral reforms. The new round of talks shouldavoid entirely competition policy and the enforcement ofenvironmental and labor standards, which could threaten tooverwhelm the WTO administratively while broadening the scope forsanctions.

Brink Lindsey

Brink Lindsey is director of the Cato Institute's Center for Trade Policy Studies.