Market Access
on the export market. These may include customs surcharge and services charges. Contingent Protection
The process of establishing antidumping and countervailing duties is also an important cause of distortion of behavior and export flows. Antidumping petitions are particularly disruptive, because in certain sectors such as textiles and clothing that are frequently targeted, back-toback investigations could be initiated over many years (see box 2.4). By the time a verdict is reached, trade flows could be severely curtailed. Often the exporters affected are SMEs in poorer countries, whose ability to “dump” products is questionable in the first place. For example, a series of antidumping actions were imposed by the European Union against bed linen exports from India, Pakistan, Thailand, and Turkey in the 1990s. By the time the imposition by the European Union of antidumping duties on Indian bed linen imports was settled at the WTO in India’s favor in 2001, the disruption was such that exports had fallen from US$127 million in 1998 to US$91 million. This led to job losses for 1,000 workers in the southern city of Pondicherry, where one of the targeted firms was based. Even after the WTO verdict of 2001, the terms of the complaint were altered slightly, and new antidumping duties were applied. This illustrates that trade remedy measures can take a long time to resolve and the cost of arbitration is high (Oxfam 2004). Sanitary and Phytosanitary Requirements and Technical Barriers to Trade
SPS measures are applied by governments to protect human, animal, or plant life or health from risks arising from the entry or spread of pests, from plant- or animalborne pests or diseases, or from additives, contaminants, toxins, or disease-causing organisms in foods, beverages, or foodstuffs.6 This includes checking for pesticide residue in food, or subjecting animals to veterinary examination.
Box 2.4. Catfish and the Politics of Antidumping In the late 1990s, the United States became a major export market for Vietnamese exporters of catfish. Their inroads hurt the domestic producers, represented by the Catfish Farmers of America (CFA). The CFA argued that the Vietnamese catfish were not catfish and lobbied the US Congress to include language in the 2002 Agriculture Appropriations Act that barred Vietnamese exporters from labeling their fish as catfish. The Act stipulated that only catfish of the species Ictalurus Punctatus can accurately be labeled catfish; the Vietnamese fish is of the family Pangasius. The Vietnamese complied by renaming their fish “basa” or “tra.” The change in name, however, had little effect on Vietnamese catfish sales in the United States. The CFA then filed an antidumping petition alleging that the Vietnamese fish were being sold in US markets at unfair prices. The CFA petitioned for the low prices to be redressed with a dumping margin (tax) of 191 percent. The Vietnamese argued that their export prices were competitive because of the attributes of the Mekong River, low labor and feed costs, and traditional knowledge, as well as the fact that state subsidies were not involved. During the investigation, the United States treated Vietnam as a “nonmarket economy” and used prices from surrogate markets (Bangladesh and India). In January 2003, the US Department of Commerce announced a preliminary determination that imports of frozen basa and tra fish fillets were indeed being dumped and that the margins against their imports had to be levied in the range of 38 to 62 percent. Duties on catfish before this investigation were less than 5 percent. Source: Waglé 2003.
Module 2
Contingent protection measures are applied as temporary deviations from a normal import policy and include antidumping measures, countervailing duties, or emergency safeguards.5 Antidumping duties are levied against imports that are believed to be sold at prices below those in the good’s country of origin or other countries. Such practices on the part of foreign exporters could be sporadic, persistent, or predatory, the last of which provides the strongest economic justification for antidumping duties. Countervailing duties are levied on imports from countries that subsidize exports. Safeguard measures are applied when surges in imports temporarily disrupt a domestic industry. Antidumping and countervailing duties are normally an issue that affects only large developing countries, like Brazil, China, and India. Smaller countries seldom have the scale of production to actually engage in dumping or to do it on sufficient scale to affect the domestic markets of trading partners. Contingent protection may be used as a disguised protectionist measure. Although antidumping duties were almost exclusively levied by industrial countries in the 1990s, developing countries are now active users. In the last quarter of 2009, 26 WTO members initiated 26 productlevel investigations under national trade remedy laws. More than three-fourths of the cases were brought by developing countries, of which 71 percent targeted exports from China. In the same quarter, 30 measures were imposed following prior investigations, of which 25 were initiated by developing countries and only five by industrial countries (Bown 2010).
73