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Anti-Dumping: A Growing Problem last advice for business and government

International Trends in antidumping. Antidumping initiations, 1995-2004(note: only first 6 months of 2004). Why is anti-dumping an increasing problem for Vietnam?. Vietnam becoming significant and fast-growing player in some world markets (seafood; footwear; garments; cash crops)Failure of DOHA round and trend to bilateral trade agreements

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Anti-Dumping: A Growing Problem last advice for business and government

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    1. Anti-Dumping: A Growing Problem (last advice for business and government!) Presentation by Dr. Adam McCarty for Ministry of Trade anti-dumping workshop. The purpose of this presentation is a “last chance” by this project to emphasise the urgency of preparing for A-D cases. It is for Vietnamese officials and, more importantly, business associations and large enterprises in “at risk” industries. The purpose of this presentation is a “last chance” by this project to emphasise the urgency of preparing for A-D cases. It is for Vietnamese officials and, more importantly, business associations and large enterprises in “at risk” industries.

    2. International Trends in antidumping The global trend over the past ten years has been fairly stable. Actually, slight global increase in recent years.The global trend over the past ten years has been fairly stable. Actually, slight global increase in recent years.

    3. Increase HAS happened for Vietnam – now total is about 14 cases. Biggest: catfish; shrimps; footwear.Increase HAS happened for Vietnam – now total is about 14 cases. Biggest: catfish; shrimps; footwear.

    4. Why is anti-dumping an increasing problem for Vietnam? Vietnam becoming significant and fast-growing player in some world markets (seafood; footwear; garments; cash crops) Failure of DOHA round and trend to bilateral trade agreements “Spillover” effects (positive and negative) from trade disputes involving China.

    5. Anti-Dumping What do do? = worry, learn, prepare. Understand: That “free trade” is not so free; That NTBs are part of “normal trade” relations; That anti-dumping is NOT the job of Government; That you need to prepare for trade disputes.

    6. So do you “dump”? “But we do not export below cost of production” This does NOT mean you will escape being accused of dumping! The irrational logic of anti-dumping (and other NTBs) needs to be understood.

    7. What NOT to do: Not try; “because we never win” Not prepare before it happens; “because it won’t happen to us” Not take actions when you know it is happening: “The questionnaire has not arrived” Not understand the financial costs and benefits of running a defence Not complain about it being “unfair”: It is.

    8. It is “unfair”, but … what makes no economic sense makes political sense: “Despite this fair trade face, the antidumping proceeding always has been and is increasingly a protectionist device, as various Congresses have amended the underlying statute to make the proceeding and remedy more effective.” (K.W.Dam 2001: 148)

    9. Anti-dumping… …is narrow politically-motivated protectionism that causes winners and losers. Industries: some win, some lose Consumers: always lose BOTH countries can lose!

    10. The winners and losers

    11. Catfish winners and losers

    12. Catfish: What did the USA “win”? Increased sales of Louisiana catfish farmers [+] Increased tax revenues [+] But other industries suffered (fish food exports, importers) [-] And consumers pay more for the same: same effect as a tax on consumers (most as subsidy to USA production) [-] Overall the USA “loses”!!Overall the USA “loses”!!

    13. If the US as a whole can “lose”… Why do it? = narrow industry protection: politics The argument “other countries do it” is NOT an economic argument “Other countries” did and still do central planning.“Other countries” did and still do central planning.

    14. So policy for who? What should be the policy objective for Government? Protect and promote industry? Minimise taxation of consumers?

    15. Answer: Both: National Welfare Maximisation Protecting a declining industry from international competition delays structural change for high immediate costs (normally to your consumers).

    16. The Ministry of Trade therefore… …must remain OBJECTIVE in evaluating applications for industry groups to: determine the prima-face case for material injury; To include the real costs to Vietnamese consumers in the evaluation; decide if it is a “declining industry”…

    17. How? MoT needs to develop a careful methodology for evaluating industry applications that uses a cost-benefit approach from a national welfare perspective.

    18. Vietnam: The trend A rising number of antidumping cases against Vietnam. The need for specialised Government officials and private sector legal and economic expertise to cope with the challenge.

    19. Vietnam: Defending = plan ahead We can forecast industries “at risk” of AD actions and plan defences (but deep lack of pro-active businesses and business associations) Develop integrated pre-researched defence strategies (questionnaires, NM economy) Keep pressure on removal of non-market status.

    20. Thank you. Adam McCarty Chief Economist Mekong Economics Ltd. adam@hn.vnn.vn

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