Thirty Years of Being a Respondent in Antidumping Proceedings: Abuse of Economic Relief Can Have a Negative Impact on Competition Policy

Journal of World Trade

Volumn 33, Issue 5, 1999, Pages 31-47

  Yano, Katsuyuki ^a,b,c,d,e  

^a KOBE CITY UNIVERSITY OF FOREIGN STUDIES   (Japan)

^b SANYO ELECTRIC CO LTD   (Japan)

^c Television Sales Department

^d Legal Department

^e SANYO Electric Trading Co Ltd ^*

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0033260816     PISSN: 10116702     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (32)

1. The original paper comprised of sections I to IV of this article.
2. See section III, below. Typically, Zenith and Philips lagged behind the Japanese manufacturers in incorporating the state-of-the art new technology into their products and factories, i.e. the Solid State Single Printed Circuit Board for Colour Television Receivers and Plastic Lens for Laser Pick Up of Compact Disk Players, respectively. Again, Philips was behind the Japanese manufacturers in entering the Personal Fax Machine Market by more than five years.
3. See Agreement on Implementation of Art. VI of the GATT/WTO 1994, Art. 5.10: "Investigations shall, except in special circumstances, be concluded within one year after their initiation, and in no case more than 18 months."
4. See Bellamy, Edward (1996) Looking Backward: 2000-1887 (Vanguard Printing, 1917 edition), Editor's Introduction: "Living as we do in the closing year of the twentieth century, enjoying the blessings of a social order at once so simple and logical that it seems but the triumph of common sense, it is no doubt difficult for those whose studies have not been largely historical to realize that the present organization of society is, in its completeness, less than a century old. No historical fact is, however, better established than that till nearly the end of the nineteenth century it was the general belief that the ancient industrial system, with all its shocking social consequences, was destined to last, with possibly a little patching, to the end of time. How strange and wellnigh incredible does it seem that so prodigious a moral and material transformation as has taken place since then could have been accomplished in so brief an interval!" (Project Gutenburg, A6-1 at http://www.promo.net/pg/_authors/bellamy_edward_.html#lookingbackwardto)
5. Douglas E. Rosenthal, Partner, Sonnenshein Nath & Rosenthal (http://www.sonnenshein.com/), an excerpt from a tape transcript prepared by the author from the Seminar: "To sharpen the discussion, while I don't intend to directly debate Paul and his very intelligent and well articulated position, I will make some comments with which he probably will disagree. But I take as is given by our first two speakers here that any fundamental questioning of antidumping code by those of us in the competition field will find much in the antitrust law with which to disagree. Any fundamental questioning of it would be a moot point and a waste of time and I try not to waste your time. I notice that we have, speakers were given paper by one of our participants, Mr Yano, would be it might be a good idea if we could make copies and reproduce it ... . Mr Yano's paper. Mr Yano, a former business official, now academic in Japan does make a case against dumping laws which is, which joins direct debate with Paul Rosenthal. I think one criticism I have of Mr Yano's paper is, and one point on which I might agree with Paul though I am not sure he wants my support in quite this way is those who are critical of the way antidumping laws have been used and tremendous cost and inefficiency over the years are failing to recognize the extent to which to use the English phrase, the English elocution: 'One must pay the piper.' ... We have in the antidumping laws in significant part, because nations have engaged in extensive, restrictive trade policies, excluding effective competition from their local markets, and this denial of market access to foreign producers inevitably is going to lead to backlash reaction, so that Japan for a leading Japanese business man and scholar to criticize the antitrust law is likely to face return criticism Japan engaged in one of the most systematic exclusionary protectionist set of economic policy throughout the twentieth century and you can't engage in systematic exclusionary trade policies without anticipating the other nations are going to take actions against your exports in return. ... I think the other factors with respect to the antidumping laws is that ... I am definitely expressing the views that are becoming increasingly expressed in the United States and there is no doubt that we in the United States these days are much more enthusiastic about operation of the open markets." (Emphasis added.) If so, it remains a great mystery why the United States still retains a high protective import duty for a majority of industrial products such as 15 per cent ad valorem duty on cathode ray picture tubes, while import duty on industrial products are lifted on virtually all categories in Japan.
6. The futility and the waste of human and monetary resources resulting from the institution of the A/D proceeding cannot be over-emphasized. It goes no way towards revitalizing the complainant industry. Instead, it has served to create a social phenomenon, whereby the only winners are the A/D lawyers. This was acknowledged at the Seminar by Mr Douglas E. Rosenthal, when he stated: "First, there is more sophisticated public opinion all the time. Consumers are more and more knowledgeable about the costs of the antidumping enforcements. Secondly, antidumping is becoming more and more expensive to enforce. In the short run, I don't doubt that antidumping laws will continue to proliferate and expand. But in the long run their economic inefficiency, it seems to me, has got a drag upon their popularity."
7. Mr Mark Dutz, Senior Economist of the World Bank and European Bank for Reconstruction and Development, another speaker at the Seminar, referred to the Photo Album case initiated by the Canadian Government and the subsequent diversion of the subject merchandise to other countries in various stages, each time requiring a fresh investigation in excess often countries, i.e. Japan, Korea, Hong Kong, the United States and other Korean exporters, China, Singapore, Thailand, the Philippines, Germany, Indonesia, Malaysia and Taiwan. The author suspects that the turnover of none of the firms involved in this proceeding could be large enough to warrant bringing the case to the DSP, had the Canadian authorities failed to act to the letter of the A/D Code. Also, compared to the revenue the Canadian government can expect from dumping duties, if collected, the person/hour costs, travelling and out-of-pocket expenses incurred by the authorities will exceed by far the amount of dumping duties so collected. See Dutz, Mark, "Economic Impact of Canadian Antidumping Law", in R. Z. Lawrence (ed.) Brookings Trade Forum 1998 (The Brookings Institution, Washington, D.C.). There are other relevant examples reported there.
8. See note 5, above. Douglas Rosenthal: "The second problem is the problem which I think is a disturbing invasion of competition laws and particularly US competition law. It's so-called talking cartelization where companies issue press releases ... about prices being dumping prices in the United States and that unless foreign manufacturers take some action, the United States or in some cases European, industry will have no choice but to bring a dumping action against them and threaten them with absolute foreclosure from the US or European market. One of the best and most highly publicized example of this took place a couple of years ago when the United States, when two or three big US auto-makers began to make these press statements against Toyota, Mercedes Benz, BMW, Volvo and Nissan, concerning their high end luxury car products and the response of these five producers was to raise their prices of their products in the US market. More statements came from the US firms, the price rises were not enough, there was a second round of price increases, and a third round of price increases each time, the US industry raised its prices on competitive vehicles. Only after, I think, third round of price increases did two US companies issue a statement to the press, saying 'Well, we think dumping still is going on but we decided not to bring a dumping action in the foreseeable future.' Now you take that behaviour out of the context of the dumping clause, and if I was a US government official, I could start a criminal grand jury investigation and seek an indictment based on that conduct. But because that conduct takes place within a framework of antidumping laws, I believe nothing can be done about it at the present time."
9. Among the most active jurisdictions instituting A/D proceedings (personally experienced by the speaker) are included, without limitation, the United States, the EU, Canada, Australia and South Korea.
10. For example, cases included without limitation: (United States) Television Receivers from Japan, Korea and Taiwan, Microwave Ovens from Japan, Bicycle Speedometers from Japan, Flat Panel Displays from Japan; (Australia) Washing Machines from Japan, Vacuum Cleaners from Japan, Microwave Ovens from Japan; (the EU) Hermetic Compressors for Refrigeration Equipment from Japan, Video Tape Recorders from Japan, Home Microwave Ovens from Japan, Plain Paper Copiers from Japan, Compact Disc Players from Japan, Personal Facsimile Machines from Japan and PRC; (Canada) Television Receivers from Japan; and (South Korea) Electric Shavers from Japan and Lithium Batteries from Japan.
11. In complicated cases involving high technology products manufactured and sold in several countries, the legal fees alone could easily snowball into one-eighth to a million US dollars a year, let alone the labour costs and international travelling costs for a respondent project team in defending the case. Typically, such a project team will include 10-20 first-rate, top-hole personnel with expertise in international trade law, cost accounting, financial accounting, design engineering, marketing, sales and servicing both in domestic and export markets, and in operation. Investigating officers typically will comprise of a minimum of two case handlers per respondent, plus senior executives, and will stay in five-star hotels in their on-site verification visits to premises of complainants and respondents, all out of tax-payers' pockets.
12. See note 6, above.
13. See U.S. International Trade Commission, Economic Effects of Antidumping and Countervailing Ditty Orders and Suspension Agreements, Investigation No. 332-344, Publication 2900 (June 1995), at pp. ix-xiii.
14. See Agreement on Implementation of Article VI of the GATT 1994 under Art. 11 (Duration and Review of Anti-Dumping Duties and Price Undertakings).
15. See Matsushita Electric Industrial Co. et al. v. Zenith Radio Corp et al., 475 U.S. 574 (1986) (at http:// caselaw.findlaw.com/scripts/getcase.pl?navby=case&court=US&vol= 475&page=574 or at http://www.ripon.edu/ Faculty/bowenj/antitrust/matsvzen.htm).
16. The author stated at the Seminar: "If you arc a golf enthusiast, you will see what I mean, when the rules are changed AFTER the ball is hit. ... You step up to the tee-off ground, you survey the fairway, you carefully take note of the white out-of-bound sticks on both sides of the fairway, then you have a wag and you get a good solid contact. The white ball marks a beautiful straight trajectory into the blue sky and falls right into the dead centre of the fairway where you intended the ball to go. Feeling happy as a lark, even humming a favourite melody in your mind, you advance toward the direction of the ball. Then, a few moments later, to your big surprise, you find the NEW WHITE STICK right by the ball, telling that you incur penalty strokes because your ball is OUT OF BOUNDS. This is exactly what has happened in the US television case."
17. For example, if you manufacture an iron bar and file an antidumping complaint, manufacturers making bolts and nuts by employing that iron bar as essential material are considered to be "in the downstream" industry of that iron bar.
18. See Special Issue for Flat Panel Display, Nikkei MicroDevice (1999) at pp. 60 and 62.
19. See O.J. 128 30/4/1998.
20. See A-588-837 06/30/95, Large Newspaper Printing Presses from Japan, Rockwell Graphic Systems, Inc.
21. See A-588-841 07/29/96, Vector Supercomputers from Japan, Cray Research, Inc.
22. "Modularized or compartmentalized solid state circuits" mean Chroma Circuit, Video Circuit, Sound Circuit, Horizontal Control, Vertical Control, etc., each housed separately in a module.
23. See hhttp.//www.zenith.com/main/about/history.html/g.
24. It is incumbent upon any manufacturer to update and modernize its manufacturing equipment and facilities at all times before and above anything else.
25. Presumably what this means is that Zenith has been operating "in the red" for 11 years since 1988.
26. At the Seminar, the author stated: "I am also curious to know if Mr Jorge Miranda and his co-authors of the most extensive study, The International Use of Antidumping: 1987-1997 [32 J.W.T. 5 (1998), at pp. 5-71] will next stretch their study to look into the well-being of the complainants in the A/D proceedings. I am no prophet, but from my experience of 30 years related to A/D measures, I am confident that such a study, if conducted, would be supportive of my points contained in the written statement."
27. SANYO had discontinued the export of finished subject merchandise to the United States shortly after starting production in January 1977 at its own plant in Forrest City, Arkansas. SANYO had to submit responses to annual reviews because of the continued export of a limited quantity of projection television receivers with 40-inch screen size not marketed by any party when the investigation was originally started and, thus, being clearly outside the scope of the subject merchandise. However, the DOC expanded the product scope later to include not only projection receivers, but also hand-held small screen television receivers with liquid crystal displays. Prior to concluding the Settlement Agreement, SANYO filed five full responses, and thereafter four full responses in Annual Reviews.
28. The criteria employed by the case handler was that if one or more of the following key components was determined to have originated locally, no circumvention would result (Federal Register, vol. 46, no. 108, Friday, 5 June 1981, Notices 30167/30168 "Television From Japan; Results of Examination of Possible Transshipments"): (1) the cathode ray tube; (2) the chassis assembly; (3) the main printed circuit board; (4) the tuner(s); (5) the deflection yoke; or (6) the flyback transformers.
29. See note 15, above.
30. See note 15, above.
31. The author's statement at the Seminar included the following: "Therefore, it is simply not practicable to isolate Competition Policy from A/D measures. The threshold for price discrimination in the context of A/D measures is non-existent in practice. This is because the authorities have been exercising almost unlimited discretion for calculating normal values. Brazenfacedly, authorities often ignored the A/D Code. I am a live witness to this fact in my 30 years of being a respondent. This threshold cannot be compared to the rigorous test in finding predatory pricing under the Competition Policy. In the international business world, we do not have separate compartments for competition policy and A/D measures. They are both in one single organic compartment called the Earth and they interact to each other. Mr Gary Horlick has just mentioned about the implication of antitrust policy with antidumping when the ITC's decision for price undertaking on steel in 1980 had to be set aside at last minute by opposition of the congress for fear that such price undertaking could be violative of the anti-trust legislation of the United States. I am not here to dispute Mr Bellis's representation that the historical background of competition policy and antidumping policy has a relationship of a twin brother and that the EC competition rules as revised by the Amsterdam Treaty still follow verbatim the words of the Articles 85 and 86 under the Treaty of Rome, which is addressed more to the contractual relationship of business entities, for distribution, licensing, mergers and acquisition rather than for the protection of consumers."
32. See section II, above.