Answer to Question #51796 in Other Economics for rini
Note on effectiveness of anti- dumping duties.
Anti-dumping suits, along with safeguards and countervailing measures, are tools for protecting domestic industries from surges of cheap foreign imports. Although the WTO strives to eliminate all trade barriers, it recognizes that nations require flexibility to adjust to economic shocks as multilateral agreements increasingly liberalize trade. Thus, these measures allow nations to temporarily protect their economies against fluctuations in trading patterns. Although anti-dumping, safeguards, and countervailing measures share an often uneasy relationship with the WTO’s core principles, many member nations consider them essential to fostering fair and free trade. The three tools of domestic protection target sudden influxes of imports in different ways. In an anti-dumping suit, a nation retaliates against specific trading partners who are found to be exporting goods at prices lower than those dominant in the domestic market. To prove an anti-dumping case, there must be proof of dumped imports, material injury to a domestic industry, and a causal link between the two. Once a nation proves a case, it may levy a compensatory duty to bring the price of the imports up to the domestic level. Safeguards allow nations to erect duties on certain goods when a deluge of imports threatens to damage domestic producers. To put safeguards in place, a nation must demonstrate that the market share of imports would rise substantially in the absence of some kind of domestic protection. Instead of targeting imports from specific trading partners, safeguards set a quantitative restriction on the allowable market share of all imports. Finally, nations use countervailing measures (i.e. import tariffs) to neutralize the effect of foreign subsidy programs.