By GRAINNE HEHIR / Dow Jones Newswires
BRUSSELS -- Free-trade creed aside, countries are blocking imports through legal measures, according to a new report.
"Global use of trade protection measures such as anti-dumping, anti-subsidy and safeguards remains on a clear upward trend," London-based law firm Rowe & Maw states in its 2000 Global Trade Protection report.
Trade protection in 2000 was at its second-highest level since creation of the World Trade Organization in 1995, second only to the protection levels of 1999, according to an advance copy of the report obtained by Dow Jones Newswires.
"Ironically, as world trade becomes more liberal as a result of the WTO, use of legitimate trade protection measures increases," said Cliff Stevenson, head of Rowe & Maw's trade practice.
Still, for developing countries, "it is not that [they are] becoming more protectionist, but rather that trade protectionism is being channeled into a narrower and more transparent arena," he said.
For example, India has reduced trade tariffs and removed import quotas in recent years and is now using more trade protection measures. "When an economy is closed there is no need to use trade protection measures. They are a sign imports are getting into an economy," Mr. Stevenson said.
For the U.S. and European Union -- two relatively open economic blocs that are leading calls for a resumption of WTO talks -- the use of legal trade protection measures is a question of "political realities."
"Certain industries in the EU and U.S. have sufficient lobbying power that can get their narrow interests addressed by governments," Mr. Stevenson said.
Under WTO rules, there are three legal means of trade protection: anti-dumping, anti-subsidy and safeguards. Under anti-dumping measures, duties are levied on imported goods if they are sold at less than their fair value; under anti-subsidy moves, duties are imposed if goods are subsidized by the exporting country; and safeguards are "emergency," temporary import restrictions or additional duties on a product that the country can prove is hurting a domestic industry.
The WTO looks at such statistics as import volumes and pricing to establish whether an industry is being hurt. The test of fair value depends largely on whether an exporter's price is at least as much as in its domestic market.
According to the report, the U.S. topped the tables as the biggest user of trade protection measures in 2000, largely in aid of its steel industry.
Of the 21 countries initiating 251 anti-dumping investigations in 2000, the U.S. launched 46 cases, of which 80% involved the steel industry.
However, the U.S. may be slowly losing the battle over steel. In 2000, the nation lost a crucial case brought by the EU over anti-subsidy duties levied on the privatized U.K. steel industry.
Close behind the U.S. in utilizing anti-dumping as a policy tool are Argentina and the EU. And countries have adopted the U.S. sector-specific approach: The report says 77% of India's anti-dumping cases involved chemicals products. As in 1999, China was the main target of anti-dumping investigations, accounting for 33 of the 251 investigations. The EU as a whole was the second most common target, with 23 anti-dumping investigations directed at the bloc in 2000.
The number of anti-subsidy investigations in 2000 fell compared with 1999, to 16 from 40, mainly due to the EU not initiating any such probes in 2000, according to the report. However, the report anticipates a rise in anti-subsidy cases in 2001 -- partly because once a successful case is brought against a country's duty refund schemes or tax exemptions for one industry, other industries join the bandwagon. "It's not a coincidence that India is one of the principle targets of anti-subsidy investigations. All of these probes have involved principally the same scheme" to refund duty, Mr. Stevenson said.
In light of the political sensitivities of examining another government's behavior, however, countries usually opt for anti-dumping measures over anti-subsidy procedures, the report says.
Meanwhile, safeguard actions rose sharply in 2000, with 26 actions commenced compared with 15 in 1999. However, most safeguard measures are taken by developing countries, which prefer this avenue over the more complex anti-dumping and anti-subsidy procedures.:
