The proliferation of anti-dumping and poor governance in emerging economies: case studies of China and South Africa

Through examination of the alleged rationale of the anti-dumping (AD) instrument, this paper argues that it has little to do with fairness or with level playing fields. AD trade protection enjoys broad political support merely because its convoluted technical complexities prevent all but a few insiders and experts from understanding the reality that underlies the rhetoric, thus enabling inefficient but well-organised domestic producers to safely utilise the instrument to protect themselves from foreign competition, at times in collusion with foreign exporters and with the national AD authorities as a broker. While the best option for AD reform, i.e., complete removal, is not practically available, this paper proposes improving AD’s procedural institutions by enhancing the quality of public governance in the formulation of AD decisions by national authorities. It further examines the AD practices and laws of China and South Africa, arguing that poor governance in emerging economies contributes to their prolific use of AD, usually disproportionate to their small share of world imports. These economies already maintain higher tariff barriers than industrial countries, so that without effective steps to ensure better governance to restrain the arbitrary and proliferating use of AD, they may lose out significantly on the gains from the trade liberalisation for which they have been striving for decades. CONTENTS Foreword 1. Introduction 2. Anti-dumping: Rhetoric vs. Reality 2.1 The Rehtoric of AD: To Ensure Level Playing Fields by Offsetting Unfair Competition 2.1.1 The Economic Rationale of Free Trade and Competition 2.1.2 AD: A Competition-Distorting and Protectionist Instrument 2.2 AD: Misundertanding, Ignorance and Indifference 2.2.1 Collaboration between Special Interest Groups and Decision Makers 3. Harnessing Anti-Dumping: A Good Governance Approach 3.1 Good Governance in AD Decision Making 3.2 The Prolific Use of AD by Emerging Economies and the Low Quality of Governance 3.2.1 AD Desicion Making in China 3.2.2 AD Decision Formulation in South Africa 4. Conclusions References