Anti-Dumping: A Big Task Ahead For Trade Investigators
Work is just getting a whole lot harder for anti-dumping investigators. Firstly, they can expect more work as businesses and industries explore how they can potentially address the intense competitive pressures emerging from the chaos of the COVID-19 pandemic. Secondly, they can expect their work will be considerably more complex.
They will carry out their work in an environment where protectionist sentiment may well be rising in response to economic havoc wreaked by the pandemic.
Anti-dumping actions can have a significant impact on trade patterns, freight flows and the prices paid by consumers.
A successful anti-dumping action has two distinct elements. An anti-dumping inquiry must establish that goods have been exported from one country to another at a price below the normal price in the exporting or a third country. An inquiry must also establish that the lower pricing of the goods has caused or threatened to cause material injury to a producer of like goods in the destination country.
The first element is not too difficult. Anti-dumping investigators generally have set templates they follow and are experienced in seeking out the pricing information they need to determine whether particular goods have been dumped.
Of course, dumping in itself is not grounds for the imposition of anti-dumping duties.
The critical element in an anti-dumping action is being able to establish a clear causal link between the importing of a dumped product and the material injury suffered by a local producer of like goods.
This work can often be quite complex. Anti-dumping investigators need to clearly establish the material injury suffered by a local producer results from the importation of the dumped product and is not the outcome of other events.
In addition to anti-dumping actions, domestic industries can also pursue countervailing duty investigations where local duties can be imposed to offset the impact of government subsidies in the exporting country.
Anti-dumping and countervailing duty investigations can have a significant impact on trade flows and can be highly contentious.
The Trump Administration, for example, has been very active with investigations forming a key ingredient of its activist and inward-looking trade agenda. It has initiated 286 new anti-dumping and countervailing duty investigations. This is a 267 per cent increase from the comparable period of the previous Obama Administration. Many of these new investigations have been directed toward goods imported from China.
China is also not reluctant to pursue its own anti-dumping and countervailing duty actions. It imposed significant anti-dumping duties earlier this year on barley imported from Australia to the extent that little barley is now being shipped. It is expected Australia will appeal this decision to the World Trade Organization. China has also recently begun an anti-dumping and countervailing duty investigation into wine imported from Australia.
It can be expected that anti-dumping actions and countervailing duty investigations as well as safeguard inquiries will rise in the Asia Pacific region as businesses and industries seek to reduce further economic hurt as they work strenuously to navigate their way out of the commercial havoc wreaked by the pandemic.
Economic harm across the region has been significant with factories shut-down, shops closed, voyages and flights cancelled and consumers showing a deep reluctance to spend. Many economies are already in recession.
A big challenge for anti-dumping investigators in this environment will be dealing with the issue of material injury. Has a local producer been hurt by dumped goods or has the local producer been hurt by the economic downturns and fall-out of the pandemic and the severe carnage which have emerged from it?
This work can be expected to be complex and difficult.
It may well be that anti-dumping duties are imposed in response to investigations only for domestic producers or industries who sought the protection to remain in poor commercial health as a result of pandemic-driven influences.
Trade ministers and regional organizations like ASEAN and APEC have been busy stressing the importance of keeping supply chains functioning and markets open as economies seek to find a way out of the pandemic environment.
This work and careful anti-dumping investigations will be critical if many years of hard work spent opening and integrating regional markets is not to be lost.
ABOUT THE AUTHOR
Russell Scoular
Russell Scoular is Chairman of Chatto Creek Advisory, a Melbourne-based trade advisory and government engagement consultancy. He spent 32 years with Ford Motor Company in senior roles in New Zealand, Australia and China. This included five years as Regional Director of Government Affairs for Asia Pacific. He is a Master of Public Policy graduate from Monash University and a Senior Fellow at the Asian Trade Centre in Singapore.
