Antidumping Reform, Trade Policy Flexibility, and Compensation

Abstract

Antidumping has become the dominant instrument for temporarily restricting imports. There is need for concern, as it represents a particularly distorting trade policy measure. Many observers have made suggestions on how to improve the current situation. These suggestions aim at restraining antidumping by reducing the number of circumstances where it may be applied. In other words, they envisage higher prerequisites for the use of antidumping. Yet, higher prerequisites for temporary import restrictions impair the government's trade policy flexibility. This article assumes that governments are not ready to sacrifice such flexibility by means of an international trade agreement. Therefore, suggestions that merely intend to raise the prerequisites for the use of antidumping are difficult to realise. We propose an alternative solution for antidumping reform. It considers abolishing antidumping and introducing a revised safeguard clause. This clause would permit temporary import restrictions without any prerequisites, but would make these restrictions dependent on full compensation for affected trading partners. In contrast to existing suggestions for reform, this alternative solution preserves the trade policy flexibility provided by the current antidumping regime, but effectively restrains protectionist behaviour.