CONTROLLING DUMPING BRITAIN’S LAWS THOUGHT ADEQUATE AND EFFECTIVE

Press, Volume CIV, Issue 30712, 30 March 1965, Page 12

CONTROLLING DUMPING BRITAIN’S LAWS THOUGHT ADEQUATE AND EFFECTIVE

I By

GEOFFREY OWEN,

, industrial Editor of the ‘‘Financial Times*’]

(Reprinted from the “Financial Times*’ by arrangement J “One means of improving the competitiveness of British goods,” Mr Paul Chambers, chairman of Imperial Chemical Industries, said recently, “is to have a far more efficient system to prevent the dumping into Britain of overseas products at less than the full cost of production and at less than the prices in the country of production. Our anti-dumping laws are slower and less efficient than those of other countries.” Demands for better protection against dumping have been made recently not only by the chemical industry, but by makers of steel, paper and a number of other products. How justified are their complaints, and what, if anything, should be done about them?

Britain’s anti-dumping law —the Customs Duties (Dumping and Subsidies) Act of 1957 —is strictly in accordance with Article VI of the General Agreement on Tariffs and Trade. It authorises the Board of Trade to impose anti-dump-ing duties when the export price of the product concerned is below the fair market price in the exporting country, and when the effect of the dumping is “to cause or threaten material injury to an established industry.” The imposition of duties must also be “in the national interest”— an escape clause which worries some British firms, though it is rarely used. There may be cases where it Is better for a monopolistic producer to be “injured” by dumped imports than for the user to be deprived of a cheap source of supply, or where domestic production is so unprofitable that a duty would make no difference. But there is no evidence that this clause has been used to favour users at the expense of producers. Delays Cut Down

In the early period after the law was passed, the Board of Trade was slow to act on dumping complaints. But the delays were gradually cut down as the board gained experience in implementing the law and the plaintiffs learnt how best to present their evidence. Most cases are now disposed of in three to six months; a complex case involving several domestic producers and several exporting countries cannot be properly investigated in much less than six months. In the United States, where the customs authorities first have to establish the facts of dumping and the Tariff Commission then considers the question of injury, the average time is 15 months. Moreover Britain is one of the most active “anti-dump-ers” in the world. It has investigated more cases of alleged dumping than any other Organisation for Economic Co-operation and Development (0.E.C.D.) country except Canada (which is in a class of its own) and the U.S., and has taken action in more cases than all the O.E.C.D. countries put together, including the U.S., but ' again excluding Canada. Contrast With Canada What, then, are all the complaints about? At the back of many people’s minds, it seems, is the contrast between the British system and the unique and highly protectionist Canadian system. Canada’s I law, which pre-dates the

G.A.T.T., requires antidumping duties to be imposed automatically if the supplier's invoice shows that his export price is lower than his home price; no consideration of injury is required. The law is applied strictly and aggressively. Efforts by other countries to persuade Canada to reform her system in line with the G.A.T.T. have been unavailing. The American system, though contrary to the spirit' rather than to the letter of G.A.T.T., is also protectionist in effect. Its most objectionable feature is that almost as soon as a complaint is received, the customs authorities “withhold appraisement" from the suspected shipment, while the Treasury considers whether dumping is in fact taking place. This means that the exporter continues shipments only at considerable risk: he will have to pay the anti dumping duty if the complaint is upheld, in practice the withholding of appraisement is usually sufficient to halt imports of the suspected product as long as the investigation is in progress. Thus firms like 1.C.1. with Perspex and Stewarts and Lloyds with steel tubes have suffered a severe disruption of trade even though they were eventually cleared of the dumping charge. Complaints from foreign governments about the American system have had little effect and recent changes in the regulations have tended to make things even more difficult for the foreign supplier.

For Britain to move in the Canadian or American direction would not only be a step away from free trade but would almost certainly provoke retaliation from other countries. It is indeed hard to see how the British system, could be tightened without' running foul of G.A.T.T. The only possible change would be to give the Board of Trade stand-by authority to impose interim duties if it had evidence that the exporter was anticipating the outcome of an anti-dumping investigation and shipping large quantities at dumped prices. In practice the formal announcement of an investigation usually has the opposite effect; the exporter tends to raise his prices or cut down on his shipments. But there was a case a few years ago when a shipload of ethylene glycol was on its way from Canada to Europe and when the likelihood both of dumping and of injury was strong; the lack of standby authority was embarrassing for the Board of Trade, even though the cargo, to everyone’s relief, eventually went to France. In cases of this sort temporary duties for

a month or so would enable the Board to check flagrant dumping. Proving “Injur}’" Even when the fact of dumping is established, it is often difficult for a domestic producer to prove that "material injury" is being caused to the industry. Sometimes the industry's difficulties may be due more to internal competition and excess capacity than to imports. It is significant that neither the steel nor the paper industry, where competition from imports, often at dumped prices, has been severe, has yet lodged a formal request for anti-dumping action, though they have both discussed possible applications with the Board of Trade. Sometimes the most effective way of bringing dumping to an end is to retaliate, or threaten to retaliate, in the exporter’s home market; there may be a mutual interest in keeping prices at a remunerative level. Steel is sometimes regarded as a special case, and there have been suggestions, backed at various times by the American, Continental and British industries, for an international code of fair trading which would define the permissible limits of dumping. Interest in this proposal has waned temporarily, since the world’s steelmakers are too busy to worry about dumping, but it may be revived when over-capacity looms once again. It is hard to see how such a code could be effective unless it involved the automatic application of antidumping duties (without consideration of injury) when certain conditions of volume and price had been met. This would be in conflict with [G.A.T.T., and might establish [a precedent for other industries to follow. Effects Of Surcharge

There is always likely to be a significant degree of dumping in international trade, especially from the capitalintensive process industries which have temporary surpluses to dispose of. The problem may become more important if and when tariffs are reduced through the Kennedy Round. For British producers the import surcharge has eased the situation (investigations into several cases have been temporarily suspended), but the dumping problem will reappear. Apart from the lack of authority to impose provisional duties, the British regulations appear to provide adequate and effective protection. What is needed is not a tougher British law, but a determined effort to bring Canada and the U.S. into line with the other G.A.T.T. nations.