Antidumping in the Americas

One of the most sensitive issues confronting countries in a trade negotiation is how to treat economic sectors unable to face import competition. The discussions on this topic have given rise to a vast literature seeking to identify first-best policy practices to assist the process of adjustment of specific economic sectors to import competition. At the present time, addressing this issue is a particularly delicate question in the current negotiations to create the Free Trade Area of the Americas (FTAA);, given the disparities in size, levels of development, and macroeconomic stability of the countries involved in this process. Developed countries, and a growing number of developing ones, have increasingly relied on antidumping laws to provide import relief to particular economic sectors. As practiced today, however, antidumping also entails heavy costs, for the foreign firms targeted by this policy, certainly, but also for consumers in the country applying antidumping legislation. The objective of this paper is to place the debate on antidumping in a wide-ranging context, so as to suggest possible approaches for the treatment of antidumping in the negotiations to create an FTAA. It begins by providing evidence on the importance of antidumping within the Western Hemisphere. This is followed by an analytical discussion of antidumping and by a review of the treatment of antidumping in different regional integration arrangements. The last section of the paper draws the implications of the analysis for the FTAA negotiations and suggests a possible avenue for the design of a cost-efficient import relief mechanism in the FTAA. Specifically, the paper argues that the proper focus of discussions on antidumping should be a broad framework that takes into account the costs and benefits of all import relief measures, including safeguards.