Lao PDR & the WTO Accession Process: Antidumping Measures et al June, 2005

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Lao PDR the WTO Accession ProcessAntidumping
Measures et al June, 2005

• Dean Spinanger
• Kiel Institute for World Economics
• dspinanger_at_ifw.uni-kiel.de

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I. Introduction and Overview

• There is a WTO code...Antidumping,
• Which protectionists say is just thumping.
• With hardly a slip
• Yall be caught in its grip,
• and your exports
• soon will be slumping.
• Thomas Stearns

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Structure

• Introduction and Overview
• The WTO and ADMs What up??
• Summary and Conclusions

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I. Introduction and Overview

• Some of the widely acclaimed achievements of the
  Uruguay Round(UR) were still in the process of
  being implemented when in Doha a new round was
  conceived.
• The question was after the most wide-sweeping
  round ever what to do?

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I. Introduction and Overview

• A glance at the Doha Ministerial Declaration
  quickly reveals that topics were broad- brushed
  ......perhaps in the case of ADMs in order to
  just barely satisfy those who wanted the issue
  covered, but perhaps even more to placate those
  who didnt want the issue on the books.
• .

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I. Introduction and Overview

• Furthermore, this was perhaps also due to the
  Seattle disaster.
• While tariff rates have been decreased noticeably
  across the board, except for sectors like
  agriculture and those in many developing
  countries, non-tariff barriers received only
  veiled attention.

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I. Introduction and Overview

• How else can it be explained that in paragraphs
  28-29 the issues are only vaguely mentioned?
• Talk is made of clarifying and improving
  disciplines, of taking into account developing
  and least-developing countries of indicating
  disciplines on trade distorting issues.

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I. Introduction and Overview

• IT IS AFTER ALL MOST IMPORTANTKeep a level and
  understandable playing field!!That is what the
  WTO is all about!!That is why we have such an
  organization.

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I. Introduction and Overview

• In raising issues in this context this
  presentation heads in the direction of the 2001
  APEC report which dealt with impediments to
  trade and investment.
• There it was straightforwardly stated that, as
  tariffs ..come down, it becomes......
  important... to tackle other impediments to trade

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I. Introduction and Overview

• What this means is very simple
• In the various GATT/WTO rounds of MTNs tariff
  levels have in some areas been reduced to the
  point that they provide little protection.
• Rightly so, but some industries still think they
  deserve protection.

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I. Introduction and Overview

• So what happens??
• In a study done for PECC in 2000 it was concluded
  that recourse to NTBs has grown over time as
  tariff protection fell.
• Was this really the case? Or is this merely the
  litany of do-good free traders?

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I. Introduction and Overview

• Lets take a look at the evidence.
• Let us look at the changing tariff rates of APEC
  countries across the decade of the 90s and
  compare this with the changing number of ADMs
  applied.

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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariff reductions Heading to 2020
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Tariffs down, ADMs up!!
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ADMS EU Imports from E. Eur/PRC

• EU vs EE

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ADMS EU Imports from E. Eur/PRC

• USA VS. EE

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ADMS EU Imports from E. Eur/PRC

• EU VS PRC

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ADMS EU Imports from E. Eur/PRC

• US VS PRC

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I. Introduction and Overview

• If this is the case, then the misuse of such
  measures threatens the core of trade
  liberalization goals, or rather the essence of
  GATT/WTO principles.
• These principles are aimed at allowing all
  economies in the world to profit from the
  potential benefits of freer trade in goods and
  services via liberalization of markets.

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I. Introduction and Overview

• For sure this is the basic reason why economies
  like China, Vietnam, others and now Lao have
  tried so hard in recent years to become WTO
  members
• Surely they were thinking that their industries
  could become more competitive and that
  consumerseconomic welfare could improve by being
  able to purchase more for their money.

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I. Introduction and Overview

• Unfortunately reality looks different.
• Hence, this overview addresses prevailing AD
  policies and looks at how easy it is for
  industries to state that dumping occurred.
• It then offers a solution to eliminate obstacles
  in the current process to determine if dumping
  took place.
• It doesnt touch on other NTBs, but adds some
  closing remarks.

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ADMs by Initiators and Afflicted 1/95-12/02
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Anti-Dumping Measures (ADMs) Initiated by ICS
and DCs 1995 2004
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Who Hit Whom??
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EUs Anti-dumping Measures by Countries/Regions
85-03
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Ratio of Measures (M) to Initiations (I)

• In the following diagrams the ratio of measures
  enacted to initiations announced over the period
  95 02 is shown in the caption.
• The yearly values of measures enacted has been
  lagged by one period.

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And Which Sectors Were Affected?

• Base metals (XV) and chemical products (VI) were
  by far the most affected areas.
• TC products (XI) were hit by a relatively small
  number of ADMs, similar to machinery (XVI) but
  less than plastics (VII).
• Other sectors hit were stone, glass/glassware
  etc (XIII) and agricultural products (I IV).
• However, the ratio of applied measures to
  initiated proceedings (M/I) was by far the
  highest for TC products (72) showing that
  economies were more serious about trying to
  protect the sector.

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AD Initiations By Sector - 01/01/95 to
31/12/04
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AD Initiations By Sector - 01/01/95 to
31/12/02
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Ratio of Measures (M) to Initiations (I)

• In the following diagrams the ratio of measures
  enacted to initiations announced over the period
  95 04 is shown in the caption.
• The yearly values of measures enacted has been
  lagged by one period.

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XIII Products of Stone, Glass, etc M/I 41
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VII - Plastics and Rubber M/I 50  
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I IV Agricultural Products M/I 51
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VI - Chemical Allied Industries M/I 55
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XVI Machinery M/I 55
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Rest M/I 58
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XV - Base Metals M/I 67
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XI - Textiles and Clothing M/I 72
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II. The WTO, ADMs and NTBs Whats up??

• Overview of AD Issues
• Determing the act of dumping
• Determining injury
• Procedures
• Other specific concerns

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II. The WTO, ADMs and NTBs Whats up??

• What can be done????
• Boils down to 2 key questions
• DOES PROCESS PRODUCE ALLEGED EVIDENCE??
• DOES EVIDENCE PROVE CRIME WAS COMMITTED??

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II. The WTO, ADMs and NTBs Whats up??

• Problem Areas
• Determination of dumping (Art. 2)
• Determination of injury (Art.3)
• Investigation procedures (Art.5 6)
• Price undertakings (Art. 8)
• Imposition/Collection of duties (Art. 9)
• Review (Art.11)
• Dispute settlement (Art.17)

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II. The WTO, ADMs and NTBs Whats up??

• Determining Act of Dumping
• a.    Minimum domestic sales test
• b.    Exclusion of sales below cost ordinary
  course of trade
• c.    Constructed normal value, cum
  selling/general/admin. expenses reasonable
  profit
• d.    Fair comparison symmetrical comparisons,
  credit costs, duty drawbacks, level of trade,
  cost accounting methods, zeroing.

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II. The WTO, ADMs and NTBs Whats up??

• Determing Act of Dumping (cont)
• e.  Non-market economy treatment
• f.   Constructed export price, including
  reasonable profit margins
• g.  De minimis dumping
• h.  Exchange rate fluctuations
• i.   Cyclical industries.

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II. The WTO, ADMs and NTBs Whats up??

• Determing Injury
• a.    Negligible imports
• b.    Cumulation
• c.    Definition of industry
• d.    On behalf of industry
• e.    Credibility of information
• f.     Lesser duty rule
• g.    Causation.

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II. The WTO, ADMs and NTBs Whats up??

• Procedures
• a.    Back-to-back complaints
• b.    Sunset reviews
• c.    Questionnaires (language, details, length)
• d.    Independent bodies for determining dumping
  and injury
• e.    Facts available/best information available
• f.     Price undertakings
• g.    Sampling.

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II. The WTO, ADMs and NTBs Whats up??

• Other Specific Concerns
• a.    Investment diversion
• b.    Guilty by association
• c.    Buckshot approach
• d.    Cost of defense, lack of capabilities
• e.    Problems of SMEs
• f.  Post-Agreement on Textiles and Clothing (ATC)
  implications.

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Anti-Dumping vs. Competition Laws

• Objective
• Basic Protects Protects
• (domestic) competition
• competitors
• Actual Protects Generally
• domestic no distinction
• from foreign between domestic
• competitors foreign competition

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Anti-Dumping vs. Competition Laws

• Initiation
• Actions can only In addition
• initiated by executive private litigants
• branch and the can initiate
• relevant industry proceedings.

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Anti-Dumping vs. Competition Laws

• Administration
• Partly/mostly through Subject to full
• executive branch/ supervision
• commerce or foreign by courts.
• trade ministry appeals
• through courts.

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Anti-Dumping vs. Competition Laws

• Standards
• Injury
• Requires only Requires direct
• showing that unfair causation and
• practice contributed showing of
• to material injury reasonable restraint
• above so-called of trade or
• minimum injury substantial
• level (i.e. de minimus) lessening of
• competition

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Anti-Dumping vs. Competition Laws

• Standards
• Pricing
• Requires no Requires showing of
• evidence predatory intent
• on intent re. pricing aimed at
• competitors.
• Does not require Requires showing
• showing of selling below-cost pricing
• below cost. and capability of recoupment
  

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Conclusions

• Because of the uncertainty,
• the unknowns,
• the arbitrary approach,
• the guessing about what to do,
• In most cases not in line with what WTO is meant
  to be

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Conclusions

• WE NEED TO POINT TO THE DIRECTION
• WHICH ALLOWS CLEAR-CUT RULES,
• BASED ON WTO PRINCIPLES, TO PREVAIL..
• NO IFS, ETC ABOUT IT!!!!! OTHERWISE...

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III. Conclusions

• But actually such actions go back much further.
• In 1842 (not 1492) in Germany, Bavarian and
  Württemberg yarn producers complained about
• unfair competition and demanded increased
  import duties ADMS??? on both cotton and linen
  yarn...

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III. Conclusions

• But Prussia protested and complained about the
  selfish clamour for assistance and their
  disregard for the interests of other industries
  and of consumers.
• What this is saying is that ADMs are nothing new
• It can be expected that it will take a long to to
  get rid of them........lets hope not.