Do you support antidumping restrictions? Why or why not? Give examples to explain your stance.
Peng defines dumping as analogous in spirit to predatory pricing. He defines dumping as, “an exporter selling below cost abroad and planning to raise prices after eliminating local rivals” (Peng 2014, 345). Due to US anti-trust laws and domestic competition, it is very difficult to offer protection for those in the midst of predatory pricing and dumping.
Peng defines anti-dumping law as, “law that makes it illegal for an exporter to sell goods below cost abroad with the intent to raise prices after eliminating local rivals” (Peng 2014, 345). The difference between the home-market price and the export-market price is called the ‘margin of dumping.’
I am against antidumping restrictions due to the limitations it puts on creating a truly free world market. It can be argued foreign companies are discriminated against by anti-dumping laws and causing US domestic companies to have no incentive to compete against them. Domestic companies can acuse foreign companies of antidumping and then the US government requests proprietary information from the foreign company using GAAP principles within 30-45 days. (Peng 2014, 345). Many foreign companies are not familiar with the GAAP principles and are stuck and face too big an obstacle to move forward with their business. The proprietary information becomes public evidence and is used against the foreign company. Since foreign workers are not governed by US minimum wage laws they can pay their workers pennies on the dollar to make their product. Very rarely (only 5%) does a foreign company win in the antidumping cases in the United States. As administrative reviews take place of antidumping duties, the foreign entity usually does not remain to appeal successive reviews (Nye 2013, 341). In the US, many antidumping orders, in addition to the requirements of the duties for identified foreign firms, include a duty assigned to “all other” exporting firms from the affected country (Nye 2013, 340). Between 2008-2011, in the 190 antidumping orders, 176 firms named in an original order did not survive to the first administrative review (Nye 2013, 341).
Antidumping laws were designed to protect domestic industry from foreign competition. The problem is the one who assumes higher prices, lower quality products, less consumer choice and general lowering of standard of living is the uneducated consumer (McGee 1993, 491).
Due to the growth of the world economy, it is a very hypercompetitive market. Global and domestic companies need to adjust to this new reality. If the US imposes high tariffs and duties on foreign companies, the same will be done to US companies as they seek to sell their goods in a global economy. Antidumping laws need to be eliminated and the same rules and regulations against domestic predatory pricing needs to be implemented against all competitors (Peng 2014, 353). It is the burden of the foreign competitor to know the rules of the game as they enter a market. It is wise for them to make less of a “splash” and be low key to create less attention from antidumping regulators. Realistically, the US market is not a free market with the number of antidumping laws and duties. Being a savvy manager knowing your market, knowing your products, and knowing your competitors is key in any industry to success (Peng 2014, 357). More global competition will be better for the consumer and create better products, lower prices, and more demand.
McGee, Robert W. “The Case To Repeal The Antidumping Laws.” Northwestern Journal Of International Law & Business 13.(1993): 491. LexisNexis Academic: Law Reviews. Web. 7 June 2015.
Nye, William W. “Some New Evidence About The Effects Of U.S. Antidumping Orders And Their Administrative Reviews On The Prices Of Covered Imports.”International Trade Journal 27.4 (2013): 336-348. Business Source Complete. Web. 7 June 2015.
Peng, Mike W, “Managing Global Competitive Dynamics.” Global Business. (2014): pp 345-357.