Who's dumping on American consumers?

CHICAGO — CHICAGO -- Do you like shrimp but wish it cost more? Need some bedroom furniture but hate getting a good deal on it? If so, you're very different from most Americans. You are, however, one of the few people who can rejoice in our national trade policies.

Politicians know that consumers in this country are more than happy to buy foreign goods if the quality is sufficient and the price is right. They also know that explicit efforts to shut out imports are usually political fool's gold, more likely to bring defeat than victory at the polls.


So how can our leaders cater to corporate executives and workers who resent competition, without looking like hidebound protectionists? Simple: They don't attack trade -- they attack "dumping."

When it comes to trade, many Americans cherish the notion that we are victims of our innocent good-heartedness. In this picture, we're always being cynically exploited by underhanded foreigners while our own companies play by the rules. The laws against dumping are supposed to correct the problem by banning any imports that are sold below "fair value," a baffling concept understood by bureaucrats but not economists.


The Bush administration made use of the law this week when it proposed slapping shrimp producers from China and Vietnam with special import duties of up to 113 percent. Earlier, it had imposed such tariffs on wooden bedroom furniture from China. It's also taken steps toward similar action on all sorts of foreign items, including lumber from Canada, aluminum from South Africa and steel wire strand from South Korea.

A spokeswoman for the Commerce Department's International Trade Administration, when asked how many anti-dumping orders are in effect, can't come up with a tally on short notice, but says the number is "in the hundreds, maybe more than hundreds." And that's not including all the ones that are pending.

For an administration that boasts of its devotion to tax cuts, these efforts represent an unnoticed and unwarranted tax increase, which will come out of the pockets of American manufacturers, retailers and consumers. It's also a violation of the president's supposed faith in free trade, which he touts as a contrast to Democrats who believe that, in his words, "the solution to jobs uncertainty is to isolate America from the world."

The theory behind the anti-dumping laws is that foreign companies get all sorts of subsidies from their governments, which allow them to sell at prices that would bankrupt any legitimate producer. Other countries supposedly solve their overproduction problems by unloading all their excess goods on the U.S. market, helping their workers at the expense of ours.

The concept of "predatory pricing" is not entirely implausible. But you don't need anti-dumping orders to deal with that sort of wrongdoing -- it can already be prosecuted (and punished more sternly) as an antitrust violation. In fact, as the Congressional Budget Office notes, "few dumping cases today involve predatory pricing, and the law makes no attempt to restrict duties to such cases." It's like prosecuting people for grand larceny even though they are not alleged to have stolen anything.

The rules have no visible connection to economic logic. If a company sells an item here below the price it charges in its home market, it's guilty. But companies charge different prices in different markets for all sorts of sound reasons. A grocery chain may offer apples or paper towels cheaper in Barren Flats, N.D., than in Beverly Hills, Calif., and no one from the government will come out to investigate.

Selling below cost is also considered proof that the foreigners are cheating. But U.S. retailers unload stocks below cost anytime they find themselves stuck with unwanted inventories. Foreign producers, however, are punished for marketing tactics that are perfectly legal when they are used by our very own corporations.

The concept of fair value is so incomprehensible that it can penalize foreigners who do exactly what they are supposed to do. As trade specialists Brink Lindsey and Daniel Ikenson pointed out in a 2002 study for the Cato Institute, a company that offers the identical price at home as it does here but changes the price during a given period may be punished for dumping -- even though it has always charged the same amount to everyone.


I'm sure the laws against dumping catch some foreign companies that do things they shouldn't do. But that's mostly by accident. The burden put on American consumers is purely intentional.

Steve Chapman is a columnist for the Chicago Tribune, a Tribune Publishing newspaper. His column appears Tuesdays and Fridays in The Sun.