Dumping, protectionism and free trade

Abstract

This Discussion Paper addresses the issue of anti-dumping actions and presents an evaluation of such measures in the context of the intemational liberalisation of trade. It concerns the recent General Agreement on Trade and Tariffs (GATT) negotiations with respect to anti-dumping and countervailing duty actions and the use by New Zealand of such actions on behalf of New Zealand producers and manufacturers. The Paper presents a brief review of the theoretical basis for anti-dumping actions, examines the concept of discriminatory pricing, looks at the effect on the economy of anti-dumping actions and reviews a recent example of an anti-dumping action in New Zealand. It concludes by asserting that with rare exceptions, anti-dumping actions are protectionist, that countries have more to gain by accepting lower priced imports than by applying anti-dumping duties and that general economic welfare would be enhanced by redefining the basis for anti-dumping actions to include only those actions where predatory dumping is proven to be the reason for the lower than normal import prices. Research on the actual effects of anti-dumping actions in terms of the change in economic welfare is continuing.