The Law and Economics of Contingent Protection in the WTO

The Law and Economics of Contingent Protection in the WTO

Elgar International Economic Law series

Petros C. Mavroidis, Patrick A. Messerlin and Jasper M. Wauters

In this important book, three of the leading authors in the field of international economic law discuss the law and economics of the three most frequently used contingent protection instruments: anti-dumping, countervailing measures, and safeguards. When discussing countervailing measures, the authors also discuss legal challenges against prohibited and/or actionable subsidies. The authors’ choice is mandated by the fact that the effects of a subsidy cannot always be confined to the market of the WTO Member wishing to react against it. Assuming there are effects outside its market, an injured WTO Member can challenge the scheme as such before a WTO Panel. Taking the three agreements for granted as a starting point, the book provides comprehensive discussion of both the original contracts, and the case law that has substantially contributed to the understanding of these agreements.

Chapter 2: Section I: dumping

Petros C. Mavroidis, Patrick A. Messerlin and Jasper M. Wauters

Subjects: economics and finance, international economics, law - academic, international economic law, trade law


1. General introduction The notions (if not the terms) of ‘dumping’ and ‘anti-dumping’ have been part of the bilateral trade treaties and domestic regulations since the progressive market opening of the early 1800s. However, the first time that these terms were used in a trade context similar to the current one was in 1904, by Canada’s Liberal government which, although backed by a free trade (in theory) party was facing pressures from domestic manufacturers and farmers to increase import duties in order to protect Canadian industry from foreign dumping (Viner 1923). However, during the 50 years following the end of the First World War, anti-dumping as a trade instrument remained largely a sleeping beauty, mostly because the bulk of protection was ensured by tariffs, quantitative restrictions, subsidies, or a mix of all these instruments. From the early 1900s up to the late 1970s, anti-dumping was thus a relatively minor trade provision allowing Customs to take action in a limited number of cases, despite its introduction in the 1947 GATT text. Things started to change dramatically during the 1970s. From the 1960s to the early 1970s, the US and the EC were mostly using voluntary export restraints (VERs) or minimum prices (trigger price mechanism) for coping with the increasing relative inefficiency of their labour-intensive activities (textile and clothing, shoes and so on) and of the steel sector. However, all these instruments showed major flaws in their capacity to protect. They tend to attract a lot of public attention. They have to...

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