Week 11 MT

Week 11 MT - WEEK 11: Administered Trade Remedies Baldwin...

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WEEK 11: Administered Trade Remedies Baldwin “Imposing Multilateral Discipline on Administered Protection” A. Countervailing-duty (CD) laws – Tariff Act of 1897 When a country subsidizes a dutiable export levy duty equal to net amount of subsidy (determined by Treasury Dpt.) At outset, form of administered protection Later broadened group of subsidies that could be CVed to include subsidies on the manufacture/production of a good B. Antidumping (AD) laws AD act of 1916 Aimed at predatory pricing practices of foreign cartels Illegal for importers of foreign products into the US to sell them at prices below their actual market value, provided their intent to: o Destroy/prevent the establishment of domestic industry o Restrain/monopolize part of trade in that product Enforcement: violators could be sued in federal court system like an antitrust law (therefore, not originally a form of administered protection!!) Action taken: Triple damages imposed on importers AD act of 1921 – made AD enforcement into form of administered protection Enforcement: Treasury Dpt. rather than federal court determines whether injurious dumping has occurred Defines dumping more precisely: selling imported good at price less than foreign market value, or its cost of production (in absence of such value) For a favorable decision for domestic industry, the dumping only has to be found to injure (or be likely to injure) the industry or prevent its establishment (dumper does not have to have intended to destroy industry) Action taken: assess a duty equal to margin of dumping Motivations for creating the 1921 AD act Republican’s ideological commitment to protectionist policies goal of reversing downward trend in tariffs during Wilson administration Declines in price of agricultural goods during recession emergency tariff legislation to raise protection and AD provision to rectify difficulty of proving intent to destroy/injure C. Changes to AD and CVD laws in 1974 and after Developments that made unfair trade a major issue by enabling protectionist interests to be more successful in achieving their policy goals: Increased competition from Japan and newly industrialized countries o In 40s and 50s, most industrial countries had been struggling to regain prewar productive capacities o Surge of imports in late 60s caused US share or world manufacturing exports to fall by > 5% from 1959-1971 Reduction in Cold War tensions
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o Liberal trade policy had been justified as a way to strengthen the “free world” and enable countries to resist Communist influence o Irrelevance of traditional foreign policy argument for free trade Implications: o In 70s and 80s, increasing competitive pressure seen as a result of unfair foreign trade practices o Both parties, at congressional and executive levels, desired to increase protection against unfair trade by foreigners AD and CVD laws and the Trade Agreements Act of 1974
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This note was uploaded on 04/16/2009 for the course POL 173A taught by Professor Chase during the Spring '09 term at Brandeis.

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Week 11 MT - WEEK 11: Administered Trade Remedies Baldwin...

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