The Congressional Budget Office (CBO) has just released a short 10 page report on the economic impacts of U.S. anti-dumping legislation. This legislation allows firms to petition the government for tariffs on foreign imports, based on a claim that the foreign goods were "dumped" in the U.S. at an inappropriately low price. If the firms are successful they get to share in the revenues from the tariffs.
Kash, at Angry Bear has a wonderful (hearsay) story about the profit opportunities this creates for entrepreneurs.
Kash's story reminds me of the "Vipers of Abruzzi." As Stephen Rhoads tells it, Abruzzi "...was plagued by vipers, and the city fathers determined to solve the problems by offering a reward for any viper killed. Alas, the supply of vipers increased. Townspeople had started breeding them in their basements." (Rhoads, The Economist's View of the world)
Getting back to the economic impacts of the antidumping law, the report summary says:
"The Continued Dumping and Subsidy Offset Act (CDSOA) of 2000 was enacted on October 28, 2000, as part of the appropriations act for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies programs for the fiscal year ending September 30, 2001. CDSOA requires that the revenues from antidumping and countervailing duties on a given import be distributed on an annual basis to the domestic producers that were either petitioners or interested parties supporting the petition in the case that resulted in the duties being levied 2001, $330 million in 2002, and $293 million in 2003. The Congressional Budget Office (CBO) projects that distributions will total $3.85 billion from 2005 through 2014. On June 16, 2003, the World Trade Organization (WTO) Appellate Body agreed with the ruling of an earlier panel that CDSOA violates the WTO agreement by providing remedies for dumping and subsidies beyond those permitted by the agreement. The United States is therefore vulnerable to retaliation - the amount has not yet been determined - if it does not repeal or modify the law.
In addition to the prospect of foreign retaliation against U.S. exports, the distributions mandated by CDSOA are detrimental to the overall economic welfare of the United States because (1) they encourage the filing of more antidumping and countervailing-duty cases, resulting in more duties that on balance harm the economy; (2) they subsidize the firms receiving them, preventing resources from flowing to higher-value activities in other firms and industries; and (3) they increase the private and public cost associated with the operation and implementation of the laws. They also discourage settlement of cases by U.S. firms, which has mixed effects on the economy..."
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