Is anti-dumping a big deal? China and developing country exporters of textiles and clothing

15 December 2008
Comment

This Opinion highlights anti-dumping rules and duties, highlighted by a change in the rules governing China’s textile and clothing exports on 31 December 2008. The expiration of US and EU quotas on Chinese textile and clothing exports could put increased competitive pressure on other producers, leading to more recourse to anti-dumping by developed countries concerned at the threat to domestic producers. 

The Opinion raises concerns about the way in which anti-dumping procedures are carried out. Many governments take action against ‘dumping’ – the export of products at prices lower than those charged in a home market – to defend their domestic industries (see Box 1 for the process). A country that is subject to anti-dumping investigations is classified as either a ‘market economy’ (ME) or a ‘non-market economy’ (NME).

The consequence of being classified as a NME is that the prices from so-called ‘analogue’ countries, are used to determine whether or not dumping has occurred and the appropriate dumping duties to be applied. This often leads to higher dumping duties, and the choice of analogue country is a significant source of bias. The US Department of Commerce requires the choice of analogue country to be based on identifying a market economy at a similar level of economic development that produces comparable merchandise. The European Commission has no detailed rules governing analogue country selection and this lack of criteria often results in the selection of EU countries or the USA as the analogues. The Opinion also finds a lack of transparency in EU processes.

The Opinion calls for measures to tackle the pitfalls within the methodology that is used to determine both NME status and the level of anti-dumping duties, to use more appropriate analogue countries and to ensure greater transparency in decision-making in the case of the EU. 

This would facilitate the independent and well-informed observation of the process, thereby upholding core WTO principles of accountability, transparency and predictability. It would also assist NME countries that are seeking to graduate to market economy status by ensuring that the process is based on realistic comparisons.

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Authors

Senior Research Fellow
Jodie Keane is a Senior Research Fellow with the International Economic Development Group at the [...]