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US anti-dumping laws - a hurdle to free trade in Americas

by Gustavo Gonzalez

Santiago, 27 Apr 2001 (IPS) - The United States’ abundant anti-dumping legislation is currently seen as the biggest hurdle to finalizing negotiations on the Free Trade Area of the Americas (FTAA) by January 2005, as agreed by 34 heads of state and government a week ago at the Quebec summit.

US anti-dumping legislation is a particularly touchy question in the ongoing talks on the creation of the FTAA, warn Jose Tavares de Araujo Jr., Carla Macario and Karsten Steinfatt, in a study by the Economic Commission for Latin America and the Caribbean (ECLAC). Measures against supposed dumping practices - involving the export of products at prices deemed artificially low - represent heavy costs not only for the companies and countries accused of the practice, but also for consumers in the nations that apply the sanctions, states the report, “Antidumping in the Americas”, available in English at the ECLAC web site: www.eclac.org.

If Washington fails to dismantle its anti-dumping laws, it will be impossible to meet the target of signing the FTAA treaty and getting the 34 participants to ratify it by December 2005, said Brazilian President Fernando Henrique Cardoso after the third Summit of the Americas in Quebec, Canada.

Chile, which has a privileged relationship with the United States due to the current negotiations of a bilateral free trade deal, also sees anti-dumping laws as the biggest obstacle for abiding by the timetable agreed by the hemisphere’s leaders, Foreign Minister Soledad Alvear said this week.

Santiago’s worries are well founded. Farmers in the United States are pressing for sanctions against Chile’s grape exports, just as other farm, fishing and forestry products from this Southern Cone nation have faced legal action from US producers in the past.

US President George W. Bush sees the treaty with Chile as a kind of test case that could demonstrate to the rest of Latin America, his government’s real interest in making fast progress towards the FTAA.

The agreement with Chile could also help persuade the US Congress to grant the Bush administration “fast-track” authority that would enable it to negotiate with the rest of the hemisphere without fear of US congressional disapproval.

Fast-track authority means that US lawmakers are unable to amend trade agreements, which they must merely vote up or down. Lack of such authority since 1995, has hindered the FTAA talks.

But as The Wall Street Journal and other financial publications warn, anti-dumping laws have strong defenders in Congress, where business and labour, as well as the interests of specific cities and states, have a heavy influence.

The most common definition of dumping is that it involves exporting a product at a price below cost, or lower than the price at which it is sold in the country of origin, by means of mechanisms like subsidies, tax exemptions or other practices seen as constituting unfair competition.

Anti-dumping measures hurt the competitiveness of imports, says the study written in Santiago by Tavares de Araujo, Macario and Steinfatt for ECLAC’s Integration and International Trade Division.

Disputes over supposed dumping practices, which began to break out in the early 1980s, especially among industrialised economies, later spread to the developing world and became a factor of strain in North-South as well as South-South relations.

The question of anti-dumping measures is especially complicated within the context of the FTAA talks, given the disparities in size, development level and macroeconomic stability of the countries involved in the process, says the report.

Countries in Latin America accuse the United States as well as the European Union of justifying new forms of protectionism that mainly favour farmers and industries facing competition from emerging economies, such as anti-dumping measures.

The ECLAC study notes that from 1980 to 1988, anti-dumping suits in the western hemisphere mainly involved Australia, Canada, the European Union and the United States.

During that period, 58% of the cases were between industrialized countries, 15% involved eastern Europe, 18% involved the newly industrialised countries of southeast Asia, while just 9% involved the developing world, including Latin America.

But the panorama has changed since 1993, when Argentina, Brazil, India, South Korea, Mexico and South Africa emerged as leading applicants of anti-dumping measures, accounting that year for 54% of appeals for investigations into supposed practices of unfair competition.

With respect to the Americas, the study by the Santiago-based regional UN agency compiled information on 18 of the 34 countries involved in the FTAA talks, which took part in anti-dumping cases, either as accusers or accused, from 1 January 1987 to mid-2000.

The 18 countries on which information was compiled were Argentina, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Paraguay, Peru, Trinidad and Tobago, the United States, Uruguay and Venezuela.

In the period in question, the 18 countries filed 1,744 complaints about dumping, 485 of which involved conflicts within the future FTAA zone, and 1,259 of which represented cases filed against countries outside the region.

Between them, the United States, which was accused of dumping practices in 182 lawsuits, and Brazil, in 104, were the target of 63% of the suits filed against FTAA countries.

Argentina, Canada, Mexico and Venezuela, meanwhile, were targeted in 30% of anti-dumping investigations, while the remaining 12 countries were involved in just 7% of the cases.

In the same period, Argentina, Brazil, Canada, Mexico and the United States were responsible for 93% of the anti-dumping probes launched in the FTAA zone.

The remaining 7% of the cases were filed by 10 nations: Chile, Colombia, Costa Rica, Ecuador, Guatemala, Nicaragua, Panama, Peru, Trinidad and Tobago, and Venezuela.

The other 19 countries taking part in the FTAA talks did not use anti-dumping mechanisms in that time period.

From 1987 to mid-2000, the United States lodged 147 anti-dumping suits in the Americas: 14 against Argentina, 30 against Brazil, 42 against Canada, five against Chile, four each against Colombia and Ecuador, 34 against Mexico, two against Peru and 12 against Venezuela.

The report points out that the use of anti-dumping laws is permitted by most integration accords and multilateral or bilateral trade deals in the hemisphere.

In the North American Free Trade Agreement (NAFTA), Canada, Mexico and the United States have provided for bilateral dispute settlement panels.

In the Southern Common Market (Mercosur), the four full members - Agentina, Brazil, Paraguay and Uruguay - have discussed the eventual elimination of anti-dumping laws and regulations, but have not yet done so, the authors observe.

The only case of a free trade agreement in the Americas in which the parties to the accord have abolished the application of anti-dumping measures among themselves was the trade deal signed by Canada and Chile in 1996.

With respect to the elimination of the use of anti-dumping measures, Canada and Chile were following the lead of the European Union, the European Economic Area, the European Free Trade Association and the trade agreement between Australia and New Zealand.

The report’s authors cite what they see as an interesting innovation in the Chile-Canada trade deal: the decision to replace anti-dumping mechanisms with a system of safeguards to deal with possible cases of unfair competition, to remain in effect throughout the transition period during which tariffs are gradually lifted.

The report recommends the incorporation of a scheme of safeguards in the FTAA talks, as recommended by the World Trade Organisation, which suggests mechanisms for compensation between countries. – SUNS4886

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