Argentina—Ceramic Tiles Argentina—Definitive Anti-dumping Measures on Imports of Ceramic Floor Tiles from Italy
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Description
The WTO rules on dumping and anti-dumping reflect a political bargain, negotiated in the context of a fundamental normative dissensus as to whether dumping is a “wrong” practice and why. In the GATT, there is an apparently strong statement against dumping, which can be defined as the sale of a product in the country of importation at a lower price than in the country of exportation, or at below cost. Dumping, the GATT says, is to be “condemned.” However, this is immediately followed by the qualification “if it causes or threatens material injury to an established industry in the territory of a contracting party or materially retards the establishment of a domestic injury”(Article VI.1: emphasis added). Even though dumping with these injurious effects is to be “condemned,” the GATT contracting parties obviously did not agree on making dumping illegal in the GATT. Thus, there is no prohibition on dumping in the GATT, however much it may be “condemned,” and no remedy available under Article XXIII against dumping. Instead, the GATT permits the unilateral imposition of anti-dumping duties against the dumped products, as long as these do not exceed the margin of dumping. It is extremely unclear, on any plausible normative theory of multi-lateral trade liberalization, why price discrimination of the kind “condemned” as dumping undermines the gains from bargained trade concessions. One sort of behavior that is covered by the idea of dumping is predatory pricing, where goods are priced so low as to drive domestic incumbents out of business, thus paving the way for the firm engaged in predation to become a monopolist. Standard economic accounts of anti-trust law consider predation to be welfare-reducing. However, the GATT bargain does not contain a requirement that Contracting Parties ensure that anti-trust rules apply to the behavior of their firms in world markets. This is simply not part of the kind of bargained cooperative equilibrium implied by the GATT, and therefore, even if dumping were a good surrogate for predation, which it is not, there would be no conceptual reason for condemning dumping. Theories have been advanced, for instance by Jorge Miranda that “dumping” may reflect other kinds of behavior inconsistent with the GATT cooperative equilibrium, such as the “exportation” of recession or cyclical economic decline to other States. In a recession it might make sense for a producer to sell above marginal cost but below average cost, in order to recoup as much of its fixed costs as possible in a situation of depressed demand. To the extent that such a strategy can capture a greater part of market share abroad, it could reduce demand for domestic products in those markets, and thus theoretically externalize some of the “costs” of recession. However, there is no consensus that such externalization is incompatible with the GATT cooperative equilibrium. To infer such incompatibility would be tantamount to inferring an implicit obligation on the part of Contracting Parties to adopt appropriate counter-cyclical policies, so as to avoid such externalization. However, the GATT clearly leaves the problem of negative externalities from inappropriate macroeconomic policies for the International Monetary Fund (IMF). Finally, one may understand the function of anti-dumping duties as that of providing some kind of limited reneging from bargained concessions in the face of economic and political pressures. It is arguable that without such a possibility for reneging, far fewer concessions would be made in negotiations, and that the pressures in question might even lead to the collapse of the whole bargain. In other words, there is nothing inherently wrong about dumping, but anti-dumping duties provide a necessary “safety valve”. While there is an explicit “safety valve” in the GATT, that of safeguards or emergency action, it is often viewed as having conditions attached to it that impede its functioning (such as the requirement of compensation, under many circumstances, as well as the application of the duties on a Most-Favored-Nation basis). Set against these controversies at the conceptual level about dumping and anti-dumping, the special legal rules that have evolved through the Tokyo Round Code and which are now reflected in the WTO Anti-Dumping Agreement pose particular problems for a treaty interpreter. Treaty provisions, the Vienna Convention on the Law of Treaties (VCLT) tells us, have to be interpreted in light of purpose and object (Article 31). Many WTO treaties balance multiple purposes, as the Appellate Body acknowledged with respect to the WTO Agreement on Sanitary and Phytosanitary Measures (SPS) in the EC-Hormones decision. However, if we take an Agreement like SPS, one can imagine a consensus among WTO Members that all of the purposes are legitimate if not important, including facilitating trade liberalization as well as allowing Members to protect the health of their citizens. There may be disagreement about how such goals should be balanced where they come into conflict in particular situations, but that is a different kind of disagreement.
Source Publication
The WTO Case Law of 2001: The American Law Institute Reporters' Studies
Source Editors/Authors
Henrik Horn, Petros C. Mavroidis
Publication Date
2004
Recommended Citation
Howse, Robert L. and Neven, Damien J., "Argentina—Ceramic Tiles Argentina—Definitive Anti-dumping Measures on Imports of Ceramic Floor Tiles from Italy" (2004). Faculty Chapters. 877.
https://gretchen.law.nyu.edu/fac-chapt/877
