Rethink about stakeholders in the antidumping chain
- By Zhang Lijuan
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E-mail China.org.cn, October 5, 2017
In China, many believe the U.S. is the most open market in the world, but many also believe it is the most frequent user of antidumping laws against China. Antidumping laws have become widely accepted instruments for American trade policy-makers as well as businesses and industries seeking to protect themselves from foreign competition.
As Harvard Professor of Economics N. Gregory Mankiw pointed out a decade ago: "Antidumping is the ‘third rail' of U.S. trade politics, with few politicians of either party willing to point out its broadly negative impact."
He argued that, "rather than promote fairness and competition, the American producers who petition for antidumping tariffs -- a powerful and often unrecognized lobby -- use them to thwart foreign competition."
This explains why discussions on the legitimacy of antidumping laws have been going on for decades among think tanks, industry associations, and trade policy scholars, but their impact on trade policy-making in Washington has been small.
On March 9, the U.S. Department of Commerce issued a preliminary ruling that Chinese exporters were dumping aluminum foil in the American market. Although the Aluminum Association, the petitioner, applauded the decision, other domestic stakeholders like the Flexible Packaging Association (FPA) were not pleased at all.
The FPA testified that no harm could come to the American aluminum foil industry from such imports from China, explaining the Chinese product differed from the domestically-produced version, especially in the thin and ultra-thin gauges.
It added: "In the case of ultra-thin foil, they simply do not make it at all in the quantities and high-quality product demanded by the flexible packaging industry."
In a time when the "America First" doctrine is rising, trade protectionism is a real issue, and job protection has become a top priority for the current administration. When a domestic industry faces foreign competition, stakeholders like producers, labor unions, and trade associations can use antidumping as a convenient vehicle for claiming foreign imports are causing material injury.
According to the antidumping law and its well-designed procedures, such complaints most likely gain support from trade policy agencies.
However, there are many more stakeholders in each antidumping case. Today's world trade is not just about making a product in one country and selling it to an end-user in another. Trade is very much intertwined by the virtue of the complicated supply chain system.
Any product can easily include hundreds of stakeholders along the supply chain, which is why the Aluminum Association may gain from antidumping against China, but it could be at a significant cost to the interests represented by the Flexible Packaging Association.
This is not rare in antidumping cases. Solar panel antidumping charges against China created difficulties and costs to American installers, developers and most balance-of-system operators.
Besides, foreign-invested enterprises in the U.S. like to use local antidumping laws to inhibit competition. Since 2012, SolarWorld, a German company, has complained repeatedly about imports of Chinese solar panel products and it is now indeed involved in a new round of petitions to seek antidumping duties on imported solar cells from China.
The Department of Commerce has been at least twice in favor of the petitioner, despite opposing efforts from the Coalition for Affordable Solar Energy (CASE) and other domestic stakeholders. The cost of applying antidumping duties on China is very high for the U.S. A few jobs may have been saved in the solar panel manufacturing industry, but more jobs were most likely lost among local developer and installation businesses.
Besides, the total effect goes far beyond these visible costs because antidumping tariffs can easily cause retail price increases and inflation, which will add extra costs for American consumers, especially low-income households.
Defending fair trade practice is not the problem. The real problem is to carefully calculate the economic stakes in considering all aspects of the supply chain. At the domestic level, when using a measurement only for American producers, then American users and consumers' interests may suffer. At the international level, needless to say, the antidumping practices have caused and will cause more economic harm to the U.S.-China relationship.
For the aluminum foil case, the Department of Commerce plans to announce a final determination in October. As China and the U.S. today share so many mutual beneficial interests in trade matters, the door for bilateral negotiation has always been open.
In April 2017, President Xi and President Trump established the U.S.-China Comprehensive Economic Dialogue (CED) -- a bilateral economic forum. Consequently, we have reason to hope that the U.S.-China bilateral trade concerns and frictions can be addressed and resolved through negotiation and dialogue.
The author is a columnist with China.org.cn. For more information please visit: http://www.china.org.cn/opinion/zhanglijuan.htm
Opinion articles reflect the views of their authors, not necessarily those of China.org.cn.
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