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Old 02-17-2004, 07:24 PM   #1
Dreamer128
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The European Union has taken legal action against the United States in a new trade fight that could spark further sanctions threats.

The European Commission, which looks after trade matters for the 15-nation EU, sought an investigation on Tuesday at the Geneva-based World Trade Organisation into how US antidumping duties are calculated.

"Several hundred million dollars of trade is involved," the Commission said in a statement accompanying the request for a trade panel to decide on the rights and wrongs of the case.

But the investigation, which can take at least six months, will not be launched immediately because the United States exercised its right under WTO rules for a brief delay.

However, it will be automatically triggered after the next meeting of the WTO's disputes settlement body on 19 March .

'Zeroing'

The EU is attacking a practice known as zeroing, which raises the amounts of duties countries have to pay if they are found by Washington to have dumped goods on the US market.

The Commission said products such as steel, ball bearings, chemicals and pasta were being hit by the zeroing method.

The dispute adds to several high profile transatlantic trade fights, one of which comes to a head on 1 March .

That case involves a threat of $200 million of EU sanctions on US goods unless Congress changes legislation which gives tax breaks to exporters, but which was ruled illegal by the WTO.

[Source: http://english.aljazeera.net]
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Old 02-18-2004, 09:31 AM   #2
Timber Loftis
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Unfortunately, "dumping" is not dealt with in the WTO Treaty as well as it is under NAFTA.

Dumping is morally deplorable and any fair trading regime should have rules to prevent it. You do realize what "dumping" is, don't you, Dreamer?

Oh, and your link doesn't work. And, Al Jazeera.net likely has "ZERO" understanding on the issue. If you want to learn about it, try the wto's website or the US Trade Representative's website.

[ 02-18-2004, 09:33 AM: Message edited by: Timber Loftis ]
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Old 02-18-2004, 09:33 AM   #3
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I assume you're talking about selling items far below market value?
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Old 02-18-2004, 09:36 AM   #4
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Hm.. I'm just messenger here, Timber. Whenever I come across something that might be of potential interest to the people here, I post it here. I don't criticially examine everything I post, instead I prefer to trust the expertise of the journalists.

Edit: The full link is http://english.aljazeera.net/NR/exer...04A0A0050A.htm

[ 02-18-2004, 09:37 AM: Message edited by: Dreamer128 ]
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Old 02-18-2004, 12:07 PM   #5
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I understand, Dreamer, and I certainly didn't mean to "shoot the messenger." I just didn't know how much you knew about the topic, that's all.
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Old 02-18-2004, 02:18 PM   #6
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Of course. No offense taken [img]smile.gif[/img] To answer your question, most people here learn basic economics in high school. I took an extended version of that course, though it doesn't really cover much more then the basics. Don't be too quick to dismiss Al Jazeera on topics such as this, by the way. I admit I don't know how it is done in the middle east. But down here, many journalists that specialise in economics are pretty highly qualified. Universities usually offer short courses in journalism. And reporters who specialise in economics or politics can count on a larger pay check then their counterparts. [img]smile.gif[/img]

[ 02-18-2004, 02:21 PM: Message edited by: Dreamer128 ]
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Old 02-19-2004, 04:38 AM   #7
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Quote:
Originally posted by Dreamer128:

I assume you're talking about selling items far below market value?

To be precise, 'dumping' is where a company exports a product at a price that is lower than the price it normally charges on its own home market.



Quote:
Originally posted by Timber Loftis:

Dumping is morally deplorable and any fair trading regime should have rules to prevent it. You do realize what "dumping" is, don't you, Dreamer?

There ARE rules within the WTO which allow for anti-dumping duties to be instigated by member states. Under WTO rules, the US would be allowed to add duties up to the value of the normal market price of the goods in the originating domestic market.

The crux of the issue is that US anti-dumping measures are too severe and actually end up providing US companies with an undue competitive advantage. Not only that, but they do not allow states and companies the right to challenge the measures within the WTO:

In September 2000, the WTO found the US Anti-Dumping of 1916 incompatible with the WTO agreement on anti-dumping.

This Act provides remedies to dumping in the form of fines, imprisonment and damages equivalent to threefold the damages sustained, none of which is permitted under WTO rules. As a result of this condemnation, the US had to repeal the Act, but on the third anniversary of this condemnation, the 1916 Anti-Dumping Act is still in force.

In those three years, the EU has shown its readiness to respond to the US difficulty in complying with the WTO decision.

The EU accepted the extension of the period of time within which the US was to repeal the 1916 Anti-Dumping Act (from July 2001 to December 2001). The EU requested the authorisation to apply retaliatory measures in January 2002. However, it accepted a suspension of the arbitration in February 2002, on the express understanding that a bill that had finally been introduced on 20 December 2001 to repeal the 1916 Anti-Dumping Act would terminate the on-going cases before US courts.

This bill was not even discussed in Congress, nor were two other bills introduced later and the three became void in November 2002, when the then current Congress adjourned as the result of the mid-term elections. The whole process had to restart again in the new Congress that met in January 2003. While three repealing bills are now pending, Congress has so far failed to give any signs that implementation was this time on the right tracks. Again, to date, none of the bills have been even discussed and two would not terminate the pending court cases, which is not acceptable.

Confronted with non-implementation, the WTO Member that prevailed in the dispute may seek the authorisation to suspend tariff concessions or other obligations. The EU has always considered this option as a last resort and favoured all solutions that could bring compliance. But, the persisting inaction of the US leaves the EU no other option than to exercise this right under the WTO.

EU seeks retaliatory and protective measures in US 1916 Anti-Dumping Act dispute
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Old 02-19-2004, 10:07 AM   #8
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Quote:
Under WTO rules, the US would be allowed to add duties up to the value of the normal market price of the goods in the originating domestic market.
This does not punish the wrongdoer in my opinion. Something more punitive is appropriate. I'm not saying the 1916 Act is still appropriate today, but I am saying the WTO Treaty is too weak on this issue.

Quote:
The crux of the issue is that US anti-dumping measures are too severe and actually end up providing US companies with an undue competitive advantage.
A competitive advantage? Surely you jest. You mean the steel industry's competitive advantage or the seamstress unions competitive advantage? Oh, wait, those industries basically LEFT our country due to dumping (in one case) and unfairly-priced labor competition (in the other case). The WTO Treaty has some glaring holes -- there are things that should be accounted for to truly "even the field."

So long as the developed nations have to compete with the poorer nations lower prices, without being able to account for the price differences necessitated by higher labor and environmental standards, the WTO is just more global welfare. And, it plays out directly in a loss of jobs here.

[ 02-19-2004, 10:08 AM: Message edited by: Timber Loftis ]
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Old 02-19-2004, 10:30 AM   #9
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Quote:
Originally posted by Timber Loftis:

This does not punish the wrongdoer in my opinion. Something more punitive is appropriate. I'm not saying the 1916 Act is still appropriate today, but I am saying the WTO Treaty is too weak on this issue.

Well it is punitive - every time he sends his product over, he loses money on the deal without gaining the market share that dumping normally provides.


Quote:
Originally posted by Timber Loftis:

A competitive advantage? Surely you jest. You mean the steel industry's competitive advantage or the seamstress unions competitive advantage? Oh, wait, those industries basically LEFT our country due to dumping (in one case) and unfairly-priced labor competition (in the other case). The WTO Treaty has some glaring holes -- there are things that should be accounted for to truly "even the field.

That wasn't because of dumping but because they simply couldn't compete.

You talk about unfairly priced labour competition - other nations might equally argue that the far superior technological edge combined with the developed transport sector and educated workforce to drive the automated industries provides the US with a competitive edge with which they can not compete.

The cottage industry of X sector of bangladesh might well argue that, without the economies of scale that its US counterpart enjoys, it will never be able to compete either, leading to a loss of jobs and downward spiraling wages there.

But your point about the WTO is well made. Perhaps the US should leave the organisation if it feels that the rules are unfair (although the US govt. has never been slow to action when other nations are found to be in breach). However, I have a feeling that this will never come about as the being in the WTO brings the US far more trade than it would have without.
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Old 02-19-2004, 12:40 PM   #10
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Just because you don't like a Treaty system doesn't mean you leave it. You renegotiate. And, hopefully, the next round of negotiation will not fail so horribly as Cancun did.

On certain externalities -- like my two big ones, labor and environment -- a "race to the bottom" is encouraged by the current WTO provisions.

Where the economies of scale make labor cheaper in Bangladesh, there is little problem -- that's economics. In fact, while it may be painful to make the transition (e.g. a generation of laborers losing jobs in the U.S.), the astute economist would argue that if something is cheaper to make in Bangladesh, the whole world maximizes economic utility by having the thing made in Bangladesh.

But, where something is cheaper to be made in Bangladesh because there are little or no labor standards, that is unfair. Rather than reward the nation that tries to use its prosperity to increase its standards, the system instead rewards the nation with the lower standards. That's the opposite of what we as a world society want, right?

So, the US can't force Bangladesh to adopt its labor standards, but it would be fair to place tarrifs on goods from Bangladesh to make up for the benefit Bangladesh gains by using lower standards. (Note: only the benefits of using lower standards, and not every other factor that may make the product's price lower when coming from Bangladesh.)

This evens the playing field. It allows a country wanting to adopt higher standards (which cost the industries money) to not have those higher standards adversely affect its product sales. This also encourages WTO countries to adopt fair labor standards of some kind to avoid the tarriff. That makes people a bit better off in Bangladesh, quality of life increases a wee bit, and we continue to advance as a global society rather than regress.

BIG NOTE: I don't know the labor standards in Bangladesh, and just used it as an example for discussion purposes.
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