Last week the trend hit U.S. steelmakers broadside. On Tuesday, a federal ruling found that parts of the U.S. industry had been injured by cheap imports, clearing the way for stiff anti-dumping duties on selected steel products from 16 countries, including Canada. But on Thursday, the U.S. industry’s crusade against foreign unfairness skidded to an embarrassed halt. A Canadian tribunal declared that LTV, Worthington Steel and other U.S. companies are dumping their steel north of the border. That ruling will cost jobs in the depressed Monongahela Valley near Pittsburgh: USX Corp.’s Irvin Works faces an extra 19.6 percent duty on every ton it ships to Canada.
Canada’s is only the latest case in which foreigners have turned the tables by accusing U.S. business of trading unfairly. India created an anti-dumping bureaucracy last year, and promptly assessed $63.54 on each ton of American-made polyvinyl chloride, which is used to make plastic films and pipes. 3M must pay an extra 20 percent anti-dumping duty on telephone connectors in Mexico. Belgian chemical giant Solvay wants the European Community to put anti-dumping duties on American soda ash, a key ingredient in glass–although three big U.S. soda-ash producers are owned by EC companies, one of them by Solvay itself.
Paradoxically, the spread of anti-dumping actions is a result of the opening of world trade. As countries like Colombia and South Korea lower tariffs and eliminate quotas, import licenses and other barriers, local industries may be overwhelmed by imports. Anti-dumping investigations can be a convenient political tool, allowing a government to demonstrate that it will protect businesses and workers from “unfair” foreign competition. Although most economists consider dumping benign because it lowers prices for consumers, governments are more likely to judge that a-high-profile probe covering one industry will stave off pressure to protect other industries. “It’s a good sign, not a bad sign, as it tends to mean they’re opening their markets,” says Washington trade lawyer Terence Stewart.
The political motives behind anti-dumping laws are visible in Mexico, where small businesses complain bitterly that high interest rates and low import barriers have left them unable to compete with goods from Asia. To deflect the criticism, the government launched a sweeping inquiry in April into whether China is dumping products like toys and clothes on the Mexican market. While they investigate, Mexican authorities are requiring Chinese shoe exporters to pay a provisional duty of 1,105 percent–11 times the value of the shoes.
When U.S. exporters face such complaints, they often contend that foreign proceedings are slanted to protect local firms-precisely the complaint importers voice about the American antidumping law. G. Heileman Brewing Co. was hit with duties after Canada found its Seattle brewery to be dumping Rainier beer in British Columbia. Is it possible to dump in just one province? Canadian authorities say it is. Washington wants GATT to overturn the ruling, arguing that Canada should consider prices nationwide. While legal proceedings continue, the higher prices U.S. brewers must charge have decimated their 10 percent share of the B.C. market. Says Heileman general counsel Randy Smith: “I don’t think we have even I percent right now.”
Congress, sensitive to business and labor complaints about imports, has opposed efforts to put new limits on anti-dumping laws. But that tune may change now that anti-dumping laws are costing jobs, not just protecting them. Consider Monsanto. In 1991, the European Community found it guilty of dumping U.S.–made sweetener and tacked on a duty of nearly $13 a pound. “Our main competitor does not operate with such a duty leveled against it,” says a company spokesman. Soon, Monsanto won’t, either. It will cut exports and open a NutraSweet plant in France next month.
