The document discusses antidumping and the escape clause. It defines subsidies and dumping, how dumping margins are calculated, and anti-dumping duties. An example is given of a Korean company dumping USB drives in the US market. The escape clause provides temporary relief for domestic industries injured by imports, and considers economic, political, and security factors. While industries want protection, the document argues protection does not equal improvement and the escape clause could be reformed to gradually remove antidumping measures.

1. Chapter 5
Antidumping and the Escape Clause

2. Chapter 5
Antidumping and the Escape Clause

3. Other unfair trade activities
1. Subsidies
2. Dumping

4. Subsidies
Support from the government to the specific industries
Production cost decreases
Supply curve shifts to the right, increases quantity and decreases price

6. Winners: Foreign producers, Domestic consumers
Losers:Domestic producers, Foreign consumers
Example: USB Drive

7. Dumping
Selling goods below cost, usually inferior goods
Hurting others by hurting themselves in terms of profitability
May result in domestic firms’ bankruptcy
Can be classified as price discrimination

8. Dumping Margin
(Domestic price - export price) / export price
Example: Korean company that sells 64GB portable USB Drives
Price in Korea: $25 Price in U.S.: $20
Dumping Margin: ($25-$20)/$20 = $5/$20 = 25%

9. Anti-Dumping Duties
Protection for domestic producers
International Trade Commission (ITC)
Department of Commerce

10. Example
U.S. dumping steel in 2015
Solution: U.S. imposing 500% import duty on China steel

11. The Escape Clause

12. The Escape Clause
Imports must be the most important cause of Injury
4-8 Year Duration
Applies equally to all import countries

13. Benefits of The Escape Clause

14. Benefits of The Escape Clause
1. No bogus claims of unfair trade
2. Provides flexibility of duration
3. Economic, Political and Security taken into account by
President

15. Make the escape clause more
accessible to gradually remove
antidumping

16. Industries want protection, not
improvement

18. Protection ≠ improvement

19. Other unfair trade activities
1. Subsidies
2. Dumping

20. Subsidies
Support from the government to the specific industries
Production cost decreases
Supply curve shifts to the right, increases quantity and decreases price

22. Winners: Foreign producers, Domestic consumers
Losers:Domestic producers, Foreign consumers
Example: USB Drive

23. Dumping
Selling goods below cost, usually inferior goods
Hurting others by hurting themselves in terms of profitability
May result in domestic firms’ bankruptcy
Can be classified as price discrimination

24. Dumping Margin
(Domestic price - export price) / export price
Example: Korean company that sells 64GB portable USB Drives
Price in Korea: $25 Price in U.S.: $20
Dumping Margin: ($25-$20)/$20 = $5/$20 = 25%

25. Anti-Dumping Duties
Protection for domestic producers
International Trade Commission (ITC)
Department of Commerce

26. Example
U.S. dumping steel in 2015
Solution: U.S. imposing 500% import duty on China steel

27. The Escape Clause

28. The Escape Clause
Imports must be the most important cause of Injury
4-8 Year Duration
Applies equally to all import countries

29. Benefits of The Escape Clause

30. Benefits of The Escape Clause
1. No bogus claims of unfair trade
2. Provides flexibility of duration
3. Economic, Political and Security taken into account by
President

31. Make the escape clause more
accessible to gradually remove
antidumping

32. Industries want protection, not
improvement

34. Protection ≠ improvement