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Tomatoes, Furniture, and Shrimp: Is Extortion the Main Purpose of the Antidumping Law?

February 4, 2013 in Economics, Foreign Policy

By Daniel J. Ikenson

Daniel J. Ikenson

An entrepreneurial politician is someone who, despite the
public’s demand for greater accountability and transparency,
persists in exploiting hidden channels to dole out pork and
subsidies to favored constituents. That many politicians aspire to
this status explains the enduring popularity of the U.S.
antidumping law in Washington.

Remove the
patriotic, noble-sounding rhetoric that cloaks the antidumping law
and what you see is an expensive racket that benefits the
few.”

Sold by its supporters through an unquestioning media to a
gullible public as a tool necessary to protect upstanding American
producers and their workers from the ravages of predatory
foreigners hell-bent on stealing the U.S. market, the antidumping
law escapes the scrutiny it deserves. By encouraging price fixing
and other forms of collusion among domestic suppliers and between
domestic and foreign suppliers, the antidumping law victimizes U.S.
consumers and downstream U.S. firms under the guise of promoting
“fair trade.” Moreover, certain unique features of the
U.S. antidumping regime — its retrospective assessment of
final duty liability under the direction of a biased and
discretion-wielding administering agency — gives domestic
protection-seeking industries license to extort.

Two antidumping matters recently in the news — Fresh
Tomatoes from Mexico
and Wooden Bedroom Furniture from
China
– make good cases in point. Fresh tomatoes from
Mexico
have been subject to antidumping restrictions since
1996. But those restrictions have taken the form of
“suspension agreements,” which essentially suspend the
antidumping investigation and the imposition of antidumping duties
in exchange for an agreement from the foreign exporters to sell
their products in the United States above a certain minimum
price.

A few months ago, I had
this
to say about the Mexican tomatoes case:

In an antidumping investigation, the Commerce Department
calculates a dumping “margin,” which is purported to be
the average difference between the foreign producer’s home
market prices and his U.S. prices of the same or similar
merchandise sold contemporaneously, allocated over the average
value of the producer’s U.S. sales, which yields an ad
valorem antidumping duty rate. That rate is then applied to the
value of imports, as they enter Customs, to calculate the amount of
duty “deposits” owed by the importer.

So, if a Mexican tomato producer’s rate has been
calculated to be 14.6% and the value of a container of tomatoes
from that producer is $100,000, then U.S. Customs will require the
U.S. importer of those tomatoes to post a deposit of $14,600. Why
is it called a deposit? Because the final duty
liability to the importer is still unknown at the time of
entry
. The 14.6% is an estimate of the current rate
of dumping based on sales comparisons from the previous year. …read more
Source: OP-EDS  

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