Differing WTO, UNCTAD perceptions on use of AD/CV measures

by Chakravarthi Raghavan

Geneva, 8 Dec 2000 -- The Director-General of the World Trade Organization in his annual overview of the multilateral trading system, has raised concerns about the increasing recourse of members to anti-dumping investigations and counter-vailing duty measures.

Though the use of AD/CV measures and instruments figure regularly in the annual overview reports (since such overviews came into being after the 1989 mid-term review), this year’s review, and the briefing to the media on the discussions in the General Council Thursday, were focused on use of these instruments by developing countries.

The WTO’s Director of the Trade Policy Review Division, Dutch national Clem Boonekamp told the press that the Council, sitting as the Trade Policy Review Body, had focused attention on the resort to anti-dumping measures.

“What was worrying was that the large users are developing countries,” he said and quoted approvingly, the criticism of Hong Kong China that this was a “bad thing to do”.

Boonekamp was questioned why the WTO secretariat did not take this view in previous reports, when the AD instruments were being used by the US, Canada, EC and Australia among other industrialized countries, whereas it was raising its voice and concerns that developing countries were now using this instrument.

The AD is a ‘legitimate’ trade instrument under the WTO/GATT, Boonekamp acknowledged and had said that the WTO had taken the view it could be used in terms of the rules. The first users of the AD were industrialized countries and they were still large users.

“The reason for concern is that it is becoming an instrument of choice” and claimed that all that the WTO was saying was it was a legal instrument, but in applying it “make sure it is being done in a legal way.”

The WTO report, in a section under the title ‘Rising trend of anti-dumping and counter-vailing measures’, said that the members had notified 360 initiations of AD investigations in 1999, up 42% over 1998. In 1999, the EU and India each reported the highest number of initiations at 68, followed by the US with 45.

An annex table said among others, Argentina accounted for 24, Australia 23, Canada 18, Brazil and South Africa 16 each, Indonesia 10, Turkey 8 and Korea 6.

The report said that the EU and its members were the most affected by the initiation of AD actions (47), followed by Korea 34, Japan 23.

The report also said that the available data for the first half of 2000 indicated a sharply downward trend. Between mid-1999 and mid-2000, reports had been received of 235 investigations, compared to 313 during th earlier period. Most members reported fewer initiations. The EU continued to be in the lead with 49 initiations, followed by India and the US with 27 each, and Argentina with 23.

On average, half the initiations were terminated without measures being applied, and the rest ended with anti-dumping duty or price undertakings by the exporter.

Despite a sunset clause in the agreement, the accumulated stock of antidumping measures was rising steadily.

At mid-2000, the accumulated stock of anti-dumping measures were rising steadily. There were at that time, an estimated final 1119 measures in place of which the US, with 28%, had the most; followed by the EU 18%; South Africa, 9%; India, 8%; and Canada, 8%.

However, an UNCTAD secretariat background note for an expert meeting on this week (where the US and EC in effect appear to have blocked any conclusions) put the issue in better perspective.

The report that the AD/CV actions were legitimate measures permitted under the GATT/WTO and were now the most frequently used trade remedies. Over the past decade, it says, some 2500 AD actions and almost 300 CV duty actions have been initiated and notified to the GATT/WTO.

The strengthening of the multilateral disciplines on safeguards, including the prohibition and elimination of voluntary export restraints and commitments to phase out the Multifibre arrangement (MFA) quotas under the Agreement on Textiles and clothing (ATC), “appears to have provoked an increasing resort to anti-dumping measures” with some countries and sectors, such as steel and textiles, targeted more than others.

The UNCTAD report also notes that there has been increasing resort to anti-dumping measures by non-traditional users, particularly developing countries, many of which have introduced such legislation since entry into force of the WTO.

But developing countries continue to be the main targets of anti-dumping measures, the report points out, and adds that this has the effect of creating instability and uncertainty for their exports, resulting in reduction in trade volumes and market shares for their goods.

The report brings out that prior to the Uruguay Round, the primary users were developed countries - such as Australia, Canada, the EU and the USA. Over 1990-1999, there were 2483 AD cases initiated and notified. Of thee 50% were by the EU, Australia, Canada and the US. In addition, some non-traditional users have also resorted to such measures, accounting for 965 cases or 39% of the total.

Their increasing use, says UNCTAD, is due to the pressure on their governments to adopt AD legislation to protect domestic industries against from imports following their significant reduction in tariff and non-tariff measures during and after the UR.

Of the 1254 cases initiated during 1990-1994, developed countries accounted for 867 cases or 69% and developing countries, including transition economies, accounted for 387 cases or 31%.

During the first five years of the WTO (1995-1999), there were 1220 AD initiations of which 651 or 53% were by developed countries and 578 or 47% were by developing and transition economies. The AD actions initiated by developing countries increased by 16% in this five year period.

However, developing countries are the main targets of the AD measures.  During 1990-1994, 469 or 37.4% of the 1254 cases were targeted at imports from developed countries, compared with 785 cases or 62.6% targeted at developing and transition economies.

During the first five years of the WTO, 411 cases or 33.4% of the 1229 cases were targeted at developed country imports and 818 or 66.6% against imports from developing and transition economies.

Also, the major victims were China (159 cases), Korea 98, the US 79, Taiwan 60, Japan 58, Germany 50, India 48, Indonesia 47 and Russia 47.

The UNCTAD report brings out that the US has also become one of the major targets of AD actions by its trading partners, including many non-traditional users. As of June 1998, US products were subject to 163 foreign AD and CV measures initiated by 20 trading partners including Chin a and Taiwan.

Another trend is the increase in AD investigations by third countries against the EU as a whole - even where the complaint contains allegations of dumping by companies in one or two EU member states only. In the past, trading partners used to impose AD measures on one or several EU members, but not the EU as a whole.

The report also brings out that there has been a rise in antidumping actions initiated by developing countries against other developing countries.

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

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