SlideShare a Scribd company logo
Regulating Import Competition and Unfair Trade Chapter 11
Two Main Points  Laws regulate imports when local industries need safeguards against injury; breathing room to retool and retrain workers so they can compete more effectively. Laws that regulate unfair foreign competition, particularly dumping prices here at low prices and subsidies by foreign governments.
Safeguards Against Injury Principally temporary ( 4 year with 4 more possible) tariff increases and quotas. Endorsed by Art. XIX of GATT (1947); the escape clause. Updated in the 1994 WTO Agreement on Safeguards.
The Escape Clause (1994) When imports are increasing so rapidly that a domestic industry is in imminent peril of serious injury. Serious injury is a “significant overall impairment in the position of a domestic industry” (not just a particular company in that industry).
U.S. Escape Clause Procedures The ITC conducts an investigation on its own accord or by a petition by any number of groups. Public hearings take place where all interested parties get to express their views. If other factors are equally to blame, then no escape. U.S. law does not mirror GATT XIX, but it is close.
Escape Clause: Tariff vs. Quota Tariffs are preferred over quotas. If quotas are used GATT says the bottom limit is the 3 year prior import average. Voluntary import restrictions (such as we did to Japan’s autos in the ‘80s) are no longer legal. Tariff concessions to injured nations are expected - to make them whole.
Special Rules for China 	Part of the deal for allowing China into  	the WTO was the U.S.-China Relations Act of 2000, which makes it  easier to protect domestic  	industries from Chinese imports  	that are “a significant cause of  materialinjury.”
Assistance to Workers & Companies Trade adjustment assistance is available to workers put out of work by foreign trade or by having the jobs sent offshore.  This is handled by the Dept. of Labor. Assistance is also offered to companies damaged by imports. This is handled by the Commerce Department.
Unfair Competition
Antidumping Laws Dumping refers to the practice of selling goods in foreign countries for less than they are sold at home. The purpose is generally to drive the domestic companies out of business. Codified in Art. VI of GATT. In the U.S. part of Title 19 U.S.C. & investigated by DOC (& its ITA) and the ITC..
Dumping Margin The ITA looks at the difference between the normal value (home price) versus the export price.  The difference is the dumping margin, which can be the basis for (equal to) antidumping duties.  If the margin is less than 2%, ignore it.  For China normal value is a “surrogate” value as if it were not government controlled in all price and cost areas.
Subsidies and Countervailing Duties Subsidy defined: a government benefit to a firm or industry to achieve some goal or objective. They take many creative forms (see p. 374). Subsidies tend to distort the inter- national trade picture. Regulated by GATT and U.S. law.
Dealing with Subsidies Countries may respond to subsidies in  one of 2 ways. 1) Go to the WTO; 2) Unilaterally impose a counter- vailing duty (a special tariff) equal to the  amount of the subsidy.   Both can be undertaken simultaneously, but only one relief is available.
Prohibited Subsidies A) Export subsidies – payments to foster exports. B) Import substitution subsidies –  	payments contingent on using domestic goods. ---both of these violate WTO.
Domestic Subsidies There are many ways countries can help their domestic industries. One argument in favor of U.S. universal health care is that other countries do it, which lowers the cost for foreign companies such as car makers. These are generally legal.
Adverse Effects Subsidies Domestic subsidies that cause adverse effects are actionable under the WTO or by countervailing duty actions. To be illegal, the subsidy must be specific, not general (i.e. a tax break that favors only one industry, versus one that applies across the board).
Subsidies & Non-Market Economies How can you countervail domestic subsidies in non-market economies like China? It’s tough. Before 2007 we didn’t try, but  	now we do, principally due to 	political pressures.
The Byrd Amendment The Continued Dumping and Subsidy Offset Act of 2000 – countervailing duties were paid over to the damaged companies,  	instead of going to the Treasury. This was declared illegal by WTO and repealed in 2007
For Further Study The 2009 Dept. of Commerce Antidumping Manual for the training of Import Administration personnel. http://ia.ita.doc.gov/admanual/index.html

More Related Content

What's hot

Anti dumping a tool of protectionism
Anti dumping   a tool of protectionismAnti dumping   a tool of protectionism
Anti dumping a tool of protectionism
Debangshu Gangopadhyay
 
Lecture 6 ib 404 institutional framework for international business 1
Lecture 6 ib 404 institutional framework for international business 1Lecture 6 ib 404 institutional framework for international business 1
Lecture 6 ib 404 institutional framework for international business 1
Mahir Jawad
 
India And GATT
India And GATTIndia And GATT
India And GATT
Vivek Ranjan
 
Tariff and non tariff barrier
Tariff and non tariff barrierTariff and non tariff barrier
Tariff and non tariff barrier
StudsPlanet.com
 
Doha round 2001
Doha round 2001Doha round 2001
Doha round 2001
Karun Mahajan
 
Trade barriers-zuki
Trade barriers-zukiTrade barriers-zuki
Trade barriers-zuki
zuki patel
 
WTO and GATT
WTO and GATTWTO and GATT
WTO and GATT
Jeetendra Khilnani
 
Tariffs and quota
Tariffs and quotaTariffs and quota
Tariffs and quota
TintoTom2
 
Tariffs & non tariffs
Tariffs & non tariffsTariffs & non tariffs
Tariffs & non tariffs
shibom
 
Dealing With Low Priced Imports
Dealing With Low Priced ImportsDealing With Low Priced Imports
Dealing With Low Priced Imports
Ritesh Kumar Singh
 
What is gatt
What is gattWhat is gatt
What is gatt
nitinsoni02
 
Presentation on international business laws (1)
Presentation on international business laws (1)Presentation on international business laws (1)
Presentation on international business laws (1)
abhinavkapoor29
 
Chap007
Chap007Chap007
Gats
GatsGats
Trade barriers final
Trade barriers finalTrade barriers final
Trade barriers final
Ruchir Shukla
 
Tariff and Non Tariff Barriers
Tariff and Non Tariff Barriers Tariff and Non Tariff Barriers
Tariff and Non Tariff Barriers
Gaurav Kamboj
 
Trade barrier
Trade barrierTrade barrier
Trade barrier
Salman Ahmed
 
Nciec trade remedies
Nciec trade remediesNciec trade remedies
Nciec trade remedies
tamlinh
 
WTO AGREEMENTS
WTO AGREEMENTSWTO AGREEMENTS
WTO AGREEMENTS
kranthi MSD
 
Lesson Three | Principal Legal Obligations under WTO Law
Lesson Three | Principal Legal Obligations under WTO LawLesson Three | Principal Legal Obligations under WTO Law
Lesson Three | Principal Legal Obligations under WTO Law
Simon Lacey
 

What's hot (20)

Anti dumping a tool of protectionism
Anti dumping   a tool of protectionismAnti dumping   a tool of protectionism
Anti dumping a tool of protectionism
 
Lecture 6 ib 404 institutional framework for international business 1
Lecture 6 ib 404 institutional framework for international business 1Lecture 6 ib 404 institutional framework for international business 1
Lecture 6 ib 404 institutional framework for international business 1
 
India And GATT
India And GATTIndia And GATT
India And GATT
 
Tariff and non tariff barrier
Tariff and non tariff barrierTariff and non tariff barrier
Tariff and non tariff barrier
 
Doha round 2001
Doha round 2001Doha round 2001
Doha round 2001
 
Trade barriers-zuki
Trade barriers-zukiTrade barriers-zuki
Trade barriers-zuki
 
WTO and GATT
WTO and GATTWTO and GATT
WTO and GATT
 
Tariffs and quota
Tariffs and quotaTariffs and quota
Tariffs and quota
 
Tariffs & non tariffs
Tariffs & non tariffsTariffs & non tariffs
Tariffs & non tariffs
 
Dealing With Low Priced Imports
Dealing With Low Priced ImportsDealing With Low Priced Imports
Dealing With Low Priced Imports
 
What is gatt
What is gattWhat is gatt
What is gatt
 
Presentation on international business laws (1)
Presentation on international business laws (1)Presentation on international business laws (1)
Presentation on international business laws (1)
 
Chap007
Chap007Chap007
Chap007
 
Gats
GatsGats
Gats
 
Trade barriers final
Trade barriers finalTrade barriers final
Trade barriers final
 
Tariff and Non Tariff Barriers
Tariff and Non Tariff Barriers Tariff and Non Tariff Barriers
Tariff and Non Tariff Barriers
 
Trade barrier
Trade barrierTrade barrier
Trade barrier
 
Nciec trade remedies
Nciec trade remediesNciec trade remedies
Nciec trade remedies
 
WTO AGREEMENTS
WTO AGREEMENTSWTO AGREEMENTS
WTO AGREEMENTS
 
Lesson Three | Principal Legal Obligations under WTO Law
Lesson Three | Principal Legal Obligations under WTO LawLesson Three | Principal Legal Obligations under WTO Law
Lesson Three | Principal Legal Obligations under WTO Law
 

Similar to International Business Law Ch 11

2. International trade has grown rapidly in the recent years, yet tra.pdf
2. International trade has grown rapidly in the recent years, yet tra.pdf2. International trade has grown rapidly in the recent years, yet tra.pdf
2. International trade has grown rapidly in the recent years, yet tra.pdf
udit652068
 
How Antidumping Duty, Countervailing Duty, and Safeguard Duty Is Different
How Antidumping Duty, Countervailing Duty, and Safeguard Duty Is DifferentHow Antidumping Duty, Countervailing Duty, and Safeguard Duty Is Different
How Antidumping Duty, Countervailing Duty, and Safeguard Duty Is Different
M. S. Pothal & Associates
 
General agreement on tariffs and trade (GATT)
General agreement on tariffs and trade (GATT)General agreement on tariffs and trade (GATT)
General agreement on tariffs and trade (GATT)
Nambi Nam
 
Antidumping34 46 72
Antidumping34 46 72Antidumping34 46 72
Antidumping34 46 72
domsr
 
International trade and domestic political influences.pptx
International trade and domestic political influences.pptxInternational trade and domestic political influences.pptx
International trade and domestic political influences.pptx
GeorgeKabongah2
 
GATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptx
GATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptxGATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptx
GATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptx
SamKuruvilla5
 
Priyanka GATT
Priyanka GATTPriyanka GATT
Priyanka GATT
pinky005
 
Wto And Ep Zs
Wto And Ep ZsWto And Ep Zs
Wto And Ep Zs
gauravkakran
 
208 - Geopolitics & World Economic Systems UNIT 2
208 - Geopolitics & World Economic Systems UNIT 2208 - Geopolitics & World Economic Systems UNIT 2
208 - Geopolitics & World Economic Systems UNIT 2
ASM's IBMR- Chinchwad
 
GATT presentation BY Salman Anjum
GATT presentation BY Salman AnjumGATT presentation BY Salman Anjum
GATT presentation BY Salman Anjum
MD SALMAN ANJUM
 
Lecture -8(HISTORY OF GATT).ppt
Lecture -8(HISTORY OF GATT).pptLecture -8(HISTORY OF GATT).ppt
Lecture -8(HISTORY OF GATT).ppt
CharuNangia
 
#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi; Webinar Jointly Or...
#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi;   Webinar Jointly Or...#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi;   Webinar Jointly Or...
#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi; Webinar Jointly Or...
SN Panigrahi, PMP
 
Instrument of trade policies
Instrument of trade policiesInstrument of trade policies
Instrument of trade policies
Huê Bùi Thị
 
The political economy of international trade
The political economy of international tradeThe political economy of international trade
The political economy of international trade
Jubayer Alam Shoikat
 
IBM Political Economy of Int Trade
IBM Political Economy of Int TradeIBM Political Economy of Int Trade
IBM Political Economy of Int Trade
Muhammad Muavia Khan
 
Tariffnon tariffbarrierstotrade-110223202441-phpapp02
Tariffnon tariffbarrierstotrade-110223202441-phpapp02Tariffnon tariffbarrierstotrade-110223202441-phpapp02
Tariffnon tariffbarrierstotrade-110223202441-phpapp02
Maria Chriselda Gavino
 
Econ 204 week 14 outline b
Econ 204 week 14 outline bEcon 204 week 14 outline b
Econ 204 week 14 outline b
BHUOnlineDepartment
 
Econ214 macroeconomics chapter 18
Econ214 macroeconomics chapter 18Econ214 macroeconomics chapter 18
Econ214 macroeconomics chapter 18
BHUOnlineDepartment
 
Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)
mbamgtjnu
 
Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)
mbamgtjnu
 

Similar to International Business Law Ch 11 (20)

2. International trade has grown rapidly in the recent years, yet tra.pdf
2. International trade has grown rapidly in the recent years, yet tra.pdf2. International trade has grown rapidly in the recent years, yet tra.pdf
2. International trade has grown rapidly in the recent years, yet tra.pdf
 
How Antidumping Duty, Countervailing Duty, and Safeguard Duty Is Different
How Antidumping Duty, Countervailing Duty, and Safeguard Duty Is DifferentHow Antidumping Duty, Countervailing Duty, and Safeguard Duty Is Different
How Antidumping Duty, Countervailing Duty, and Safeguard Duty Is Different
 
General agreement on tariffs and trade (GATT)
General agreement on tariffs and trade (GATT)General agreement on tariffs and trade (GATT)
General agreement on tariffs and trade (GATT)
 
Antidumping34 46 72
Antidumping34 46 72Antidumping34 46 72
Antidumping34 46 72
 
International trade and domestic political influences.pptx
International trade and domestic political influences.pptxInternational trade and domestic political influences.pptx
International trade and domestic political influences.pptx
 
GATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptx
GATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptxGATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptx
GATdaxsdsddfadsfasfasdasdsadsaaersdfvsdadsT.pptx
 
Priyanka GATT
Priyanka GATTPriyanka GATT
Priyanka GATT
 
Wto And Ep Zs
Wto And Ep ZsWto And Ep Zs
Wto And Ep Zs
 
208 - Geopolitics & World Economic Systems UNIT 2
208 - Geopolitics & World Economic Systems UNIT 2208 - Geopolitics & World Economic Systems UNIT 2
208 - Geopolitics & World Economic Systems UNIT 2
 
GATT presentation BY Salman Anjum
GATT presentation BY Salman AnjumGATT presentation BY Salman Anjum
GATT presentation BY Salman Anjum
 
Lecture -8(HISTORY OF GATT).ppt
Lecture -8(HISTORY OF GATT).pptLecture -8(HISTORY OF GATT).ppt
Lecture -8(HISTORY OF GATT).ppt
 
#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi; Webinar Jointly Or...
#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi;   Webinar Jointly Or...#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi;   Webinar Jointly Or...
#Anti-Dumping Duties & Trade Remedies - By SN Panigrahi; Webinar Jointly Or...
 
Instrument of trade policies
Instrument of trade policiesInstrument of trade policies
Instrument of trade policies
 
The political economy of international trade
The political economy of international tradeThe political economy of international trade
The political economy of international trade
 
IBM Political Economy of Int Trade
IBM Political Economy of Int TradeIBM Political Economy of Int Trade
IBM Political Economy of Int Trade
 
Tariffnon tariffbarrierstotrade-110223202441-phpapp02
Tariffnon tariffbarrierstotrade-110223202441-phpapp02Tariffnon tariffbarrierstotrade-110223202441-phpapp02
Tariffnon tariffbarrierstotrade-110223202441-phpapp02
 
Econ 204 week 14 outline b
Econ 204 week 14 outline bEcon 204 week 14 outline b
Econ 204 week 14 outline b
 
Econ214 macroeconomics chapter 18
Econ214 macroeconomics chapter 18Econ214 macroeconomics chapter 18
Econ214 macroeconomics chapter 18
 
Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)
 
Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)Chapter 4 part 1(The Political Economy of International Trade)
Chapter 4 part 1(The Political Economy of International Trade)
 

More from Frank Cavaliere

International business law preface 2011
International business law preface 2011International business law preface 2011
International business law preface 2011
Frank Cavaliere
 
International business law ch. 18
International business law ch. 18International business law ch. 18
International business law ch. 18
Frank Cavaliere
 
International business law ch. 17
International business law ch. 17International business law ch. 17
International business law ch. 17
Frank Cavaliere
 
International Bus Law Ch 13
International Bus  Law Ch  13International Bus  Law Ch  13
International Bus Law Ch 13
Frank Cavaliere
 
International Business Law Chapter 9
International Business Law Chapter 9International Business Law Chapter 9
International Business Law Chapter 9
Frank Cavaliere
 
International Business Law Ch 8
International Business Law Ch  8International Business Law Ch  8
International Business Law Ch 8
Frank Cavaliere
 
Employment Law Harassment
Employment  Law    HarassmentEmployment  Law    Harassment
Employment Law Harassment
Frank Cavaliere
 
International Business Law Ch 3
International Business Law Ch  3International Business Law Ch  3
International Business Law Ch 3
Frank Cavaliere
 
International Business Law Ch. 2
International Business Law Ch. 2International Business Law Ch. 2
International Business Law Ch. 2
Frank Cavaliere
 
Bulw 5380 Ch. 1 Part 2
Bulw 5380 Ch. 1 Part 2Bulw 5380 Ch. 1 Part 2
Bulw 5380 Ch. 1 Part 2
Frank Cavaliere
 

More from Frank Cavaliere (10)

International business law preface 2011
International business law preface 2011International business law preface 2011
International business law preface 2011
 
International business law ch. 18
International business law ch. 18International business law ch. 18
International business law ch. 18
 
International business law ch. 17
International business law ch. 17International business law ch. 17
International business law ch. 17
 
International Bus Law Ch 13
International Bus  Law Ch  13International Bus  Law Ch  13
International Bus Law Ch 13
 
International Business Law Chapter 9
International Business Law Chapter 9International Business Law Chapter 9
International Business Law Chapter 9
 
International Business Law Ch 8
International Business Law Ch  8International Business Law Ch  8
International Business Law Ch 8
 
Employment Law Harassment
Employment  Law    HarassmentEmployment  Law    Harassment
Employment Law Harassment
 
International Business Law Ch 3
International Business Law Ch  3International Business Law Ch  3
International Business Law Ch 3
 
International Business Law Ch. 2
International Business Law Ch. 2International Business Law Ch. 2
International Business Law Ch. 2
 
Bulw 5380 Ch. 1 Part 2
Bulw 5380 Ch. 1 Part 2Bulw 5380 Ch. 1 Part 2
Bulw 5380 Ch. 1 Part 2
 

International Business Law Ch 11

  • 1. Regulating Import Competition and Unfair Trade Chapter 11
  • 2. Two Main Points Laws regulate imports when local industries need safeguards against injury; breathing room to retool and retrain workers so they can compete more effectively. Laws that regulate unfair foreign competition, particularly dumping prices here at low prices and subsidies by foreign governments.
  • 3. Safeguards Against Injury Principally temporary ( 4 year with 4 more possible) tariff increases and quotas. Endorsed by Art. XIX of GATT (1947); the escape clause. Updated in the 1994 WTO Agreement on Safeguards.
  • 4. The Escape Clause (1994) When imports are increasing so rapidly that a domestic industry is in imminent peril of serious injury. Serious injury is a “significant overall impairment in the position of a domestic industry” (not just a particular company in that industry).
  • 5. U.S. Escape Clause Procedures The ITC conducts an investigation on its own accord or by a petition by any number of groups. Public hearings take place where all interested parties get to express their views. If other factors are equally to blame, then no escape. U.S. law does not mirror GATT XIX, but it is close.
  • 6. Escape Clause: Tariff vs. Quota Tariffs are preferred over quotas. If quotas are used GATT says the bottom limit is the 3 year prior import average. Voluntary import restrictions (such as we did to Japan’s autos in the ‘80s) are no longer legal. Tariff concessions to injured nations are expected - to make them whole.
  • 7. Special Rules for China Part of the deal for allowing China into the WTO was the U.S.-China Relations Act of 2000, which makes it easier to protect domestic industries from Chinese imports that are “a significant cause of materialinjury.”
  • 8. Assistance to Workers & Companies Trade adjustment assistance is available to workers put out of work by foreign trade or by having the jobs sent offshore. This is handled by the Dept. of Labor. Assistance is also offered to companies damaged by imports. This is handled by the Commerce Department.
  • 10. Antidumping Laws Dumping refers to the practice of selling goods in foreign countries for less than they are sold at home. The purpose is generally to drive the domestic companies out of business. Codified in Art. VI of GATT. In the U.S. part of Title 19 U.S.C. & investigated by DOC (& its ITA) and the ITC..
  • 11. Dumping Margin The ITA looks at the difference between the normal value (home price) versus the export price. The difference is the dumping margin, which can be the basis for (equal to) antidumping duties. If the margin is less than 2%, ignore it. For China normal value is a “surrogate” value as if it were not government controlled in all price and cost areas.
  • 12. Subsidies and Countervailing Duties Subsidy defined: a government benefit to a firm or industry to achieve some goal or objective. They take many creative forms (see p. 374). Subsidies tend to distort the inter- national trade picture. Regulated by GATT and U.S. law.
  • 13. Dealing with Subsidies Countries may respond to subsidies in one of 2 ways. 1) Go to the WTO; 2) Unilaterally impose a counter- vailing duty (a special tariff) equal to the amount of the subsidy. Both can be undertaken simultaneously, but only one relief is available.
  • 14. Prohibited Subsidies A) Export subsidies – payments to foster exports. B) Import substitution subsidies – payments contingent on using domestic goods. ---both of these violate WTO.
  • 15. Domestic Subsidies There are many ways countries can help their domestic industries. One argument in favor of U.S. universal health care is that other countries do it, which lowers the cost for foreign companies such as car makers. These are generally legal.
  • 16. Adverse Effects Subsidies Domestic subsidies that cause adverse effects are actionable under the WTO or by countervailing duty actions. To be illegal, the subsidy must be specific, not general (i.e. a tax break that favors only one industry, versus one that applies across the board).
  • 17. Subsidies & Non-Market Economies How can you countervail domestic subsidies in non-market economies like China? It’s tough. Before 2007 we didn’t try, but now we do, principally due to political pressures.
  • 18. The Byrd Amendment The Continued Dumping and Subsidy Offset Act of 2000 – countervailing duties were paid over to the damaged companies, instead of going to the Treasury. This was declared illegal by WTO and repealed in 2007
  • 19. For Further Study The 2009 Dept. of Commerce Antidumping Manual for the training of Import Administration personnel. http://ia.ita.doc.gov/admanual/index.html