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Foreign Policy
Clouds on the Horizon
Global market-opening trends notwithstanding, some forms of protectionism are creeping back.
The use of countervailing duties-tariffs imposed by governments to offset alleged subsidies by foreign producers-is again growing. But these cases affect an extremely small portion of trade: Only 0.7 percent of total U.S. imports over the last decade have been hit with countervailing duties, hardly a major impediment to commerce.
Similarly, countries have taken more legal safeguard actions-restraints on imports-to protect themselves from import surges. But the cases affect only 0.25 percent of the total imports of the countries initiating the cases.
Antidumping actions-duties imposed to offset alleged selling of a product below the cost of production-are also on the rise. Such cases are particularly pernicious because the accused is generally found guilty. And the mere threat of an antidumping action is often sufficient to cause exporters to curtail shipment of their product. The total number of antidumping cases brought by all World Trade Organization members has increased since 1995. More nations (notably, smaller developing countries) now resort to antidumping as a means of trade protection, increasingly against other developing economies.
But this “protectionist trend” must be seen in context. The total number of antidumping cases worldwide is still only three quarters what it was in 1992 and 1993 and about the same number as in 1986. Moreover, the widely predicted onslaught of antidumping cases in the aftermath of the Asian crisis has not materialized. Finally, insidious new forms of protectionism are emerging. There is a widespread belief in trade circles that rather than resort to formal trade barriers, the European Union often has “gentlemen’s agreements” with other nations limiting sensitive imports. In 1999, under the threat of American antidumping actions, Russia “voluntarily” agreed to limit its steel exports to the United States. Japan intends to label all imports of genetically modified products, ostensibly for health reasons, a move that will discriminate against imports of American soybeans. The EU has banned imports of hormone-treated beef, even though there is no scientific evidence that it poses a threat to human health. Labor unions and consumers in Europe and the United States have organized boycotts against rugs, soccer balls, and clothing allegedly produced by children or in unsafe working conditions. And developing nations see opportunities for protectionism in the demands of some European and American environmentalists that trade sanctions be imposed whenever a nation produces a product in an environmentally unacceptable manner.
–B.S.