A Study of Anti-Dumping Duty under Fair Trade Rule：An Application on the Case of China Towels in Taiwan
Shu-Yuan Lee, Yung-Ho Weng, Peng-Yin Lin, and Sheng-Ti Hung1 Ⅰ、Introduction The World Trade Organization (WTO), its main function is to ensure that trade flows as smoothly, predictably and freely as possible, such as agricultural agreement which is to promote fairness on agricultural trade and service. Other rules such as safeguard agreement, tariff estimation agreement and country of origin agreement are to help fair competition and to achieve efficient trading effects. Only in a few circumstances WTO allows limited competition to maintain the goal of fair trade, for examples, ...view middle of the document...
In an aspect of law, it is not necessary to rule all dumping behaviors unless dumping behaviors damage domestic industries and raise prices to consumers.
Shu-Yuan Lee is an assistant professor in the Department of International Trade at Chihlee Institute of Technology, Yung-Ho Weng is the professor in the Department of Economic at National Chengchi University, Peng-Yin Lin is a Ph.D student at National Chengchi University, Sheng-Ti Hung is a Ph. D Student in the Department of Economic at Univ. of Hawaii at Manoa.
Hence, only those dumping which damage relevant industries to import countries should be forbidden (Qiu, 2005). Moreover, anti-dumping produces clockwise-competitive effect towards international trade and has been treated as a new trading barrier on free trade. Up to this point, we conclude that collecting duty from anti-dumping benefits producers but could cause negative impacts on social welfare and violate the belief of WTO in the same time. Thus, our goal is to find out the optimal duty on anti-dumping. We reviewed relevant references and found most of them have difficulties to apply empirical case studies (Webb, 1992; Chen, 2001). Other empirical references are to estimate the impact of anti-dumping duties by using simple statistics. (Hughes, 1997; Zuo, 200). As to the optimal duties, most studies are theoretical. (Schmitz and Seale. 2004; Zhou,2004 ) In this paper, we are applying Commercial Policy Analysis System (COMPAS) developed by United States International Trade Commission (USITC) to analyze data empirically. Since mainland China and Taiwan have been members of WTO now, the reactions between mainland China and Taiwan are becoming frequent, especially under the pressure of low labor cost in mainland China. Assume towel market in Taiwan is perfect competition which satisfies the first condition of COMPAS model and we choose the mainland China towel case to be our objective because this is the first case that we switch on anti-dumping measure. The framework of this paper is as following: the first section is introduction; the second section states the impact of anti-dumping taxation on import countries; section 3 introduces COMPAS model and section 4 provides empirical results and analysis. Section 5 concludes and suggests future works. Ⅱ、The Impacts of Anti-Dumping Duty In the international trade theories, so called optimal tariff, is the tariff which achieves maximum social welfare. According to the Act of Taiwan tariff no. 68, the importing prices of goods are far below the prices of analogous domestic goods and cause damage to domestic industry, then the imported goods need to be taxed not only import duty but also anti-dumping tax. Hence, in our paper we define the optimal taxation of anti-dumping is the tax level which achieves maximum social welfare. Suppose we are small country scale and perfect competition and price taker for
international price, let importing price without dumping is Pw , the...