US Antidumping Law and Competition in International Trade

Abstract

It is usual to argue that the US antidumping code and legal practice have become a substitute for tariffs now severely limited by GATT and, somewhat like these displaced tariffs, they are intended to limit the extent of price competition by foreign sellers. However, there is one set of conditions under which the regulations and duties, and the accompanying increase in market price they bring about, increases domestic producer surplus more than they decrease consumer surplus and therefore increase domestic welfare. As is shown, these conditions require antidumping duties to exclude foreign manufacturers from the domestic market in a specific inverse relationship to the prevailing market price. While the duties imposed with an antidumping violation implicitly set out an exclusion rate for foreign manufacturers, there is little in the US code or legal practice which suggests that the duties and exclusion rates are established with this specific rule in mind.