1. Dumping, antidumping duties, import surges, safeguards, export subsidies and countervailing duties

2. Preview Dumping Dumping, substitutes, competition and price elasticity Antidumping duties Import surges and safeguards Export subsidies  when prices in international markets do not decrease  when prices in international markets do decrease Production subsidies Countervailing duties 10-2

3. Dumping Dumping is selling in one market at a price that is less than “normal value”, which could mean a.the price charged to comparable buyers in another market. b.the average cost of production, including fixed costs and “normal” profit (accounting for the opportunity costs of time and other resources used in the production process). c.the average cost of production, including fixed costs but excluding “normal” profit. d.the marginal cost of production including “normal” profit (but excluding fixed costs). 10-3

4. Dumping According to one of these definitions, dumping might occur when 1.a firm wants to bankrupt competitors, after which it plans to raise prices: predatory dumping.  Similarly, dumping can be used to introduce a new product made by a market entrant, so that it can increase market share by causing buyers to switch to the new product. 10-4

5. Dumping  But for predatory dumping to remain profitable, barriers to entry must exist to prevent new firms from entering the market  as prices and profits rise after competing firms go bankrupt.  Otherwise, high prices and profits will fall as new, competing firms enter the market. 10-5

6. Dumping  Predatory dumping can occur domestically as well as internationally.  In fact, because free trade allows more competition, predatory dumping is easier domestically than internationally.  Predatory dumping is really an issue of anti-trust (anti- monopoly) policy instead of trade policy.  But anti-trust policy is defined and enforced in national courts, not international courts, and national courts have different jurisdictions. 10-6

7. Dumping 2.lower demand caused by lower income of buyers.  Firms should respond to lower demand by decreasing prices so that they can avoid surpluses.  This can occur in the domestic market as well as foreign markets.  A firm should continue to produce and to sell at a low price in the short run as long as revenue earned pays for operating (variable) costs, o after accounting for opportunity costs (alternative uses) of time and other variable productive resources, o with the hope that demand, prices and profit will increase over time. 10-7

8. Dumping 3.lower demand and higher supply from seasonal changes.  Some industries, like clothing and agriculture, are heavily influenced by seasonal changes in demand and supply.  Sales tend to occur at the end of seasons for clothing and in the middle of the harvest for agriculture when sellers want to decrease surplus inventory.  If holding inventory is costly and/or goods in inventory can spoil, then selling below the marginal (and average) cost of production is economically prudent. 10-8

9. Dumping 4.firms can price discriminate among consumers or among markets.  Consumers in one market (country) with a higher willingness to pay face a higher price; consumers in another market (country) with a lower willingness to pay face a lower price. 10-9

10. Dumping 5.firms have different amounts of competition in different markets.  If competition is high, firms are not able to charge more than the marginal (opportunity) cost of production.  If competition is absent, a firm can maximize profit by producing relatively few products and charging up to the willingness to pay by consumers: more than the marginal (opportunity) cost of production.  The degree of competition is related to the ability to discriminate based on price or willingness to pay (see 4.). 10-10

11. Dumping, substitutes, competition and price elasticity Markets can be separated when transportation costs are significant or when trade barriers exist. With different amounts of competition in separate markets, dumping according to definition a. can appear to occur due to reasons 4. and 5. 10-11

12. Dumping, substitutes, competition and price elasticity We can represent the degree of competition in separate markets by different slopes for the demand function or different price elasticities of demand.  If little competition exists (few substitutes are available), then the price elasticity of demand is very low and the demand function is very steep. 10-12

13. Dumping, substitutes, competition and price elasticity 10-13 Supply = marginal cost of production Demand with low price elasticity (because few substitutes are available) Marginal revenue: less than price (the willingness to pay) and falls faster than price when a firm charges all buyers in the market a single price. High price at which profits are maximized Quantity produced and sold by a firm with little competition in market 1 Price and cost 0

14. Dumping, substitutes, competition and price elasticity 10-14 Supply = marginal cost of production Demand with high price elasticity (because many substitutes are available) Marginal revenue: less than price (the willingness to pay) and falls faster than price when a firm charges all buyers in the market a single price. Low price at which profits are maximized Quantity produced and sold by a firm with much competition in market 2 Price and cost 0 High price at which profits are maximized in market 1

15. Dumping, substitutes, competition and price elasticity In sum, if consumers do not have the opportunity to buy (good) substitutes in a market, firms can charge a high price  and consumers have little choice except to continue buying the expensive product.  But if good substitutes are available in the market, firms will not be able to raise their prices much above the prices of competing products. 10-15

16. Low prices are good for consumers, bad for competitors Except for predatory dumping, low prices are good for consumers,  but obviously bad for firms that must compete with the low prices.  A country, especially consumers, should welcome inexpensive products and dumping that is not predatory.  But import-competing firms and their workers will tend to protest against dumping in an international industry and try to block inexpensive imports. 10-16

17. Antidumping duties To avoid protests by import-competing firms and their workers, WTO rules allow members to impose antidumping duties (tariffs) in markets where 1.dumping has been shown to occur (according to definition a. or b.) 2.“injury” (ex., lower profit or revenue) to the import- competing firms has been shown.  When conditions 1. and 2. are satisfied, the WTO allows governments of injured firms to impose an antidumping duty equal to the difference between the “normal value” according to definition a. or b. and the current price. 10-17

18. Antidumping duties After an import-competing firm files a case, national governments investigate possible dumping and injury.  In the US, analysis of dumping is done by the Department of Commerce and analysis of injury is done by the International Trade Commission.  In Korea, analyses of both are done by the Korea Trade Commission  see http://www.ktc.go.kr/en/pro/pro_anti.jsp?m=m1http://www.ktc.go.kr/en/pro/pro_anti.jsp?m=m1  For political reasons, national governments tend to favor the interests of import-competing firms in these cases instead of consumers or foreign firms. 10-18

19. Antidumping duties Before evidence of injury has been found but after a case has been initiated,  exporting firms sometimes increases their prices and/or decrease the quantity of exports or both.  The case might then be terminated or suspended. But after an antidumping duty has been imposed, if exporters raise their prices to the “normal value”, then the country that imposed the antidumping duty should remove the duty according to WTO rules. 10-19

20. Antidumping duties In antidumping cases today, products most often involved are chemicals, steel and other metals, plastic and rubber products, machinery, textiles and apparel. The number of antidumping cases has increased significantly in the past few decades,  as the number of members and the volume of trade have both expanded: 10-20

21. Antidumping duty cases initiated and duties imposed by WTO members Country1980-19891990-19992000-20092010-2016 cases initiated duties imposed cases initiated duties imposed cases initiated duties imposed cases initiated duties imposed India 008948413318 178155 Brazil 52139105207172 212127 US 7057166139270165 12972 Argentina 00452610366 6461 EU 00002512 8058 China 00372313994 5152 Australia 0051167123 8951 Turkey 00005325 5447 Canada 00126127125 4840 Indonesia 3241328846 4827 Russia 15771528454 2027 Pakistan 00313730 4126 Korea 0013106145 2315 All members 9670838602220315631305888 10-21 Source: WTO, http://i-tip.wto.org/goods/default.aspx?language=en

22. Antidumping duties If an exporting country’s government believes that an antidumping duty case has violated WTO rules,  the exporting country’s government can file a complaint with the WTO.  Up to 2008, there have been 69 such complaints, and 34 of these have been ruled upon.  In most of these cases, the WTO dispute resolution body has found that the importing country’s government violated the rules or was biased when calculating prices, costs and injury.  In some cases, the importing country’s government has modified its policies to make them consistent with WTO rules. 10-22

23. Antidumping duties Despite the costs for consumers and despite the bias by governments of import-competing firms,  the WTO allows antidumping duties primarily to please governments worried about losses for politically powerful import-competing firms. 10-23

24. Import surges and safeguards For similar reasons, WTO rules also allow governments to temporarily protect import-competing firms against surges or large volumes of imports by using safeguard duties or more simply safeguards where 1.a surge in imports occurs: an increase in the absolute number of imports or in the relative number of imports when the total market is shrinking. 2.“injury” (ex., lower profit or revenue) to the import- competing firms has been shown. 10-24

25. Import surges and safeguards As with antidumping cases, the government of import- competing firms investigates whether a surge in imports has occurred and whether an “injury” has occurred.  The volume of imports is usually easier to calculate than the “normal value” needed for antidumping cases. In contrast to antidumping cases, the government must have a public hearing for safeguard cases and must show that safeguards would be in the “public interest”.  Antidumping cases are not public and are not required to consider losses for consumers or for society in general. 10-25

26. Import surges and safeguards According to WTO rules, a safeguard duty  should be only to the extent necessary to prevent or to remedy the injury and to help import-competing firms adjust.  should not last more than four years,  although it can be extended up to eight years if evidence continues to exist that it is needed and if evidence exists that the import- competing firms are adjusting.  that is imposed for more than a year must be progressively liberalized (made less strict). 10-26

27. Import surges and safeguards In contrast, antidumping duties have no time limits and do not require import-competing firms to adjust to changing prices and market conditions. Compared the number of antidumping cases, the number of safeguard cases  is significantly smaller.  has not steadily increased during the last 10 years. 10-27

28. Safeguards initiated by WTO members 200120022003200420052006200720082009201020112012201320142015 Total 1995-2015 India 021100011011137241 Indonesia 00011102074703127 Turkey 00050531101013121 Chile 22010100100120419 Jordan 08001112010101017 Egypt 00000001001402213 Ukraine 00000021232010112 Philippines 30300101100020011 United States 10000000000000010 Czech Republic 1500000000000009 Ecuador 0140000001000109 Morocco 0000100011010118 Colombia 0002000000004007 All members 1233151471381025201224182317311 10-28 Source: WTO, http://www.wto.org/english/tratop_e/safeg_e/safeg_e.htm#statistics

29. Export subsidies Governments sometimes indirectly or directly subsidize exports.  The US Department of Commerce provides information about  market demand and contacts of potential buyers in foreign countries.  export and customs procedures.  other foreign government regulations.  The US Export-Import Bank lends subsidized credit to US exporters and to their foreign customers to facilitate buying and selling internationally. 10-29

30. Export subsidies  Some governments allow expedited or duty-free imports of materials and components that domestic firms can use in manufacturing and exporting.  Some governments charge low prices to exporting firms for government-operated transport services.  Income tax rules can include hundreds of deductions for business investment, which act as an implicit subsidy.  Some products receive export subsidies through price supports (guaranteed prices) and guaranteed sales at those prices. 10-30

31. Export subsidies Programs which increase prices in the domestic market or directly subsidize the amount of production by domestic firms encourage over-production:  more products than buyers would freely choose to buy.  Surpluses (unwanted products) result, and these surpluses show that resources are used inefficiently.  Over-production occurs at relatively high (marginal) costs, which are paid for by taxpayers.  Often surpluses are exported to other countries at artificially low prices—through dumping—so that the government can earn revenue to recoup some costs of the program. 10-31

32. Export subsidies Let’s analyze the effect of an export subsidy.  When domestic firms are exporters, they should have a comparative (cost) advantage, so the cost of production is low relative to the price in world markets.  With an export subsidy, domestic firms should be  willing to produce and to export more.  willing to sell less to domestic buyers if they can earn more revenue by exporting to foreign buyers. 10-32

33. Export subsidies  The price in the domestic market should increase with the export subsidy when domestic firms sell less of the product there.  In other words, domestic consumption should decrease with an export subsidy even though domestic production and sales increase. 10-33

34. Export subsidies For export subsidy to function well, the government must also restrict inexpensive imports through a tariff or quota.  Otherwise, import distributors can undermine the export subsidy by importing at a low price in international markets and selling at a high price in the domestic market.  In particular, a price support (market price + subsidy) is a combination of a export subsidy and an import restriction. 10-34

35. Export subsidies With an export subsidy, domestic firms produce more than is purchased by domestic consumers, and the government must pay for the surplus.  The government could then give away the surplus to the poor, but there are limits to this strategy before the free products start to undermine the willingness to buy in the domestic market.  The government could destroy the surplus, but this is wasteful.  The government could pay the full price for the surplus and then export the surplus to foreign buyers at a loss.  The government could pay domestic firms a subsidy and then let them export the surplus at lower prices. 10-35

36. Export subsidies when prices in international markets do not decrease Let’s assume that either the government or domestic firms export the product at a low price.  In either case, the loss for the government/taxpayers would be the difference in the domestic prices and the international prices, which equals amount of the subsidy. Let’s first assume that international prices do not decrease, despite the increased domestic production and exports. Who would gain and who lose under this policy? 10-36

37. An export subsidy when prices in international markets do not decrease 0 J F Domestic demand C Exports with subsidy Exports without subsidy Domestic price with subsidy World price Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q D 1 Q D 2 Gain in producer surplus Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply Q S 1 Q S 2

38. An export subsidy when prices in international markets do not decrease 0 F Domestic demand C Exports with subsidy Exports without subsidy Domestic price with subsidy World price Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q S 1 Q S 2 Q D 1 Q D 2 Loss in consumer surplus Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply

39. An export subsidy when prices in international markets do not decrease 0 D J F Domestic demand Exports with subsidy Exports without subsidy Domestic price with subsidy World price Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q S 1 Q S 2 Q D 1 Q D 2 Total earned from/ paid for subsidy Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply

40. An export subsidy when prices in international markets do not decrease 0 D Domestic supply F Domestic demand Exports with subsidy Exports without subsidy Domestic price with subsidy World price Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q S 1 Q S 2 Q D 1 Q D 2 Because the export market becomes more profitable, less is sold domestically at a higher price. Losses from domestic consumers who are no longer able to afford smart phones. Losses from inefficient (expensive) domestic production relative to efficient (inexpensive) foreign production, paid for by the government/taxpayers.

41. Export subsidies when prices in international markets do not decrease If the export subsidy and import barrier work as the government intends, the gains for domestic firms are represented by areas C + F + J.  Domestic firms can sell at a higher price.  Domestic firms can produce and sell a higher quantity (from Q S 1 to Q S 2 ). The cost to the government to pay for the subsidy is represented by areas F + J + D. 10-41

42. Export subsidies when prices in international markets do not decrease Losses for consumers are represented by areas C + F.  Some consumers buy a product that now has a higher price charged by domestic producers.  The loss for these consumers is represented by area C.  Some consumers can no longer afford to buy the product.  The loss for these consumers is represented by area F.  The quantity bought by domestic consumers decreases from Q D 1 to Q D 2. 10-42

43. Export subsidies when prices in international markets do not decrease The deadweight loss for the country as a whole is represented by areas F + D.  These losses occur because  some consumers can no longer afford to buy the product and  less efficient and more expensive production by domestic firms replaces more efficient and less expensive (that is, at only the world price) production by foreign firms. 10-43

44. Production subsidies In contrast to an export subsidy, which specifically subsidizes exports to foreign markets,  a production subsidy subsidies production and sales in general—either for the domestic or foreign markets. With a production subsidy,  producers are also predicted to produce more, to export more and to earn more revenue.  but prices in the domestic market are predicted not to increase and might even decrease.  consumer losses are predicted to be smaller when prices in the domestic market do not increase. 10-44

45. Production subsidies We represent a production subsidy by increasing the willingness of domestic producers to produce and sell in general,  by moving the domestic supply function right and down: 10-45

46. A production subsidy when prices do not or do decrease 0 D Domestic supply Domestic demand Exports with subsidy Exports without subsidy World price Domestic price Price of smart phones Quantity of smart phones Q S 1 Q D 1 Domestic supply with production subsidy Losses from inefficient (expensive) domestic production relative to efficient (inexpensive) foreign production, paid for by the government/taxpayers. World price Domestic price Prices might decrease if additional production is significant, increasing domestic consumption and decreasing domestic production. Q S 2 (Marginal) cost of production that exceeds price (willingness to pay) represents the magnitude of inefficiency and deadweight loss.

47. Export subsidies when prices in international markets do decrease If the domestic government subsidizes exports,  the larger volume of exports might force exporters to lower their prices charged to foreign consumers.  Prices charged to domestic consumers should also not rise as much as they do when prices charged to foreign consumers do not change.  Because prices fall or do not rise as much, exporters are predicted not to produce as much as compared to the case in which prices charged to foreign consumers do not change.  But exporters should be able to collect the full amount of the subsidy per unit from the government. 10-47

48. An export subsidy when prices in international markets do decrease 0 J F Domestic demand C Exports with subsidy Exports without subsidy Domestic price with subsidy World price without subsidy Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q D 1 Q D 2 Gain in producer surplus Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply Q S 1 Q S 2 World price with subsidy

49. An export subsidy when prices in international markets do decrease 0 F Domestic demand C Exports with subsidy Exports without subsidy Domestic price with subsidy World price without subsidy Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q D 1 Q D 2 Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply Q S 1 Q S 2 World price with subsidy Loss in consumer surplus

50. An export subsidy when prices in international markets do decrease 0 Domestic demand Exports with subsidy Exports without subsidy Domestic price with subsidy World price without subsidy Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q D 1 Q D 2 Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply Q S 1 Q S 2 World price with subsidy Total earned from/ paid for subsidy

51. An export subsidy when prices in international markets do decrease 0 Domestic demand Exports with subsidy Exports without subsidy Domestic price with subsidy World price without subsidy Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q D 1 Q D 2 Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply Q S 1 Q S 2 World price with subsidy Losses for domestic sellers but gains for foreign consumers due to lower prices.

52. An export subsidy when prices in international markets do decrease 0 F Domestic demand Exports with subsidy Exports without subsidy Domestic price with subsidy D World price without subsidy Domestic price without subsidy Price of smart phones Quantity of smart phones Export subsidy Q D 1 Q D 2 Because the export market becomes more profitable, less is sold domestically at a higher price. Domestic supply Q S 1 Q S 2 World price with subsidy Losses from domestic consumers who are no longer able to afford smart phones. Losses from inefficient (expensive) domestic production relative to efficient (inexpensive) foreign production, paid for by the government/taxpayers. Losses for domestic sellers but gains for foreign consumers due to lower prices.

53. Export subsidies when prices in international markets do decrease If the export subsidy and import barrier work as the government intends, the gains for domestic firms are represented by areas C + F + J.  But because prices do not rise as much in the domestic market, these areas are smaller than in the previous case. The cost to the government to pay the subsidy is represented by large red rectangle.  The cost of the subsidy is predicted to be smaller when the quantity of exports is predicted to be smaller, although the per unit subsidy is supposed to be the same. 10-53

54. Export subsidies when prices in international markets do decrease Losses for consumers are represented by areas C + F.  But because prices do not rise as much in the domestic market, these areas are smaller than in the previous case. 10-54

55. Export subsidies when prices in international markets do decrease small orange rectangle.The deadweight loss for the country as a whole is represented by areas F + D + the small orange rectangle.  These losses occur because  some consumers can no longer afford to buy the product (area F) and  less efficient and more expensive production by domestic firms replaces more efficient and less expensive (that is, at only the world price) production by foreign firms (area D) and small orange rectangle  foreign buyers do not need to pay as much to domestic firms, so profits for the domestic firms are smaller than otherwise (small orange rectangle). 10-55

56. Export subsidies when prices in international markets do decrease small orange rectangleAlthough the small orange rectangle represents a loss for domestic firms and a gain for foreign buyers,  it also represents a loss in efficiency when the price (value) of the product is below the (marginal) cost of production, set at the world price.  In other words, when prices are too low, over-consumption can occur.  Over-production in the domestic market also occurs due to the subsidy. 10-56

57. Export subsidies when prices in international markets do decrease We can represent the losses for domestic consumers that are not offset by gains from others and losses of over-consumption by representing 1.the (marginal) cost of production for domestic producers/ sellers, represented by an export supply function. 2.the (marginal) willingness to buy/pay by foreign consumers, represented by an import demand function. 10-57

58. An export subsidy when prices in international markets do decrease H D+F 0 Domestic supply of exports Foreign demand of imports Price of smart phones Quantity of smart phones represents the (marginal) willingness to pay/buy Losses for domestic consumers who no longer buy smart phones that are not offset by gains for others; losses from inefficient (expensive) domestic production relative to foreign production represents the marginal cost of production (lower than for foreign firms) Domestic price with subsidy World price with subsidy World price without subsidy Domestic price without subsidy Quantity of exports with subsidy Quantity of exports without subsidy Represents the cost of over-consumption: the value of the smart phone is lower than the price (cost) without the subsidy Export subsidy

59. Export subsidies If a country initially imports a product, a large enough subsidy can expand production so much that the country becomes an exporter.  This has occurred in with agricultural products that domestic governments have subsidized heavily.  The EU’s Common Agricultural Policy subsidies wheat, butter and other dairy products that are often exported, despite the fact that EU farms are often small and inefficient. 10-59

60. Export subsidies WTO rules distinguish between  prohibited subsidies: subsidies for each unit exported or subsidies for exports that reduce the cost of domestic inputs of production relative to imported inputs to production.  Prohibited subsidies are never allowed, with some exceptions for the very poorest countries.  actionable subsidies: an export subsidy that “injures” firms in importing countries, or firms from other exporting countries or foreign firms in the subsidizing country.  Actionable subsidies are not allowed if evidence of injury is found.  Injury from subsidies is defined in the same way as from dumping and surges. 10-60

61. Export subsidies  allowable subsidies: subsidies that do not stimulate domestic production directly are allowed, such as payments for  basic research  disease control  food safety  transportation infrastructure  communication infrastructure  social insurance independent of the amount production  switching to more efficient production  switching to more environmentally friendly production  relocation of firms/workers  limiting the amount of production due to surpluses  rural “development” in poor countries 10-61

62. Countervailing duties If the WTO finds that a country is using a prohibited subsidy or an actionable subsidy that causes injury,  the plaintiff country may impose a countervailing duty, a duty uses to offset the price or cost advantage created by the subsidy.  The effect is similar to an antidumping duty. 10-62

63. Countervailing duties Because export subsidies encourage over-production and over-consumption, and because countervailing duties can reverse these effects,  WTO rules allow importing countries to impose countervailing duties.  But countervailing duties are less common than antidumping duties and even safeguard measures.  In 2015 only 14 countervailing duties were in use throughout the world. 10-63

64. Countervailing duties imposed by WTO members 200120022003200420052006200720082009201020112012201320142015 Total 1995-2015 United States 10 2202076 3247995 European Union 02321000132032136 Canada 10012013111430024 Mexico 00001000000201213 Australia 00000010011230211 Brazil 0001000100000007 China 0000000002200206 Peru 1010000002000005 South Africa 2200000000000005 Argentina 0000000000000004 New Zealand 0000000000000004 Chile 0000000000000002 Costa Rica 0001000000000001 Total 14 6843211919910131214216 10-64 Source: WTO, http://www.wto.org/english/tratop_e/scm_e/scm_e.htm

65. Countervailing duties The WTO’s Dispute Resolution Body found in 2005 that  EU export subsidies for sugar and US export subsidies for cotton violated WTO agreements.  See http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds283_e.htmhttp://www.wto.org/english/tratop_e/dispu_e/cases_e/ds283_e.htm  http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds267_e.htm 10-65

66. Summary 1.Dumping is selling in one market at a price that is less than “normal value”. 2.“Normal value” can mean  the price charged to comparable buyers in another market.  the average cost of production, including fixed costs and the opportunity costs of time and other resources.  the average cost of production, including fixed costs but excluding “normal” profit.  the marginal cost of production including “normal” profit (but excluding fixed costs). 10-66

67. Summary 3.Dumping can occur because of  anti-competitive (predatory) reasons,  changes in consumer demand across markets  differences in competition that allow price discrimination across markets. 4.WTO rules allow members to impose antidumping duties (tariffs) in markets where  dumping has been shown to occur.  “injury” to the import-competing firms has be shown to exist. 10-67

68. Summary 5.Antidumping cases (duties) have become more popular in the 2000s, with more than 100 new duties imposed per year. 6.WTO rules also allow governments to temporarily protect, or to safeguard, import-competing firms against “surges” (large volumes) of imports. 10-68

69. Summary 7.The government of import-competing firms investigates whether a surge in imports has occurred and whether an “injury” has occurred.  But unlike antidumping cases, safeguard cases require a public hearing to consider losses for consumers/society, are limited to 4-8 years and require that import-competing firms adjust to lower import prices. 8.Export subsidies raise prices in the domestic market, and in order for the policy to function well, the government must also restrict inexpensive imports through a tariff or quota. 10-69

70. Summary 9.Deadweight losses from an export subsidy occur because  some domestic consumers can no longer afford to buy the product.  less efficient and more expensive production by domestic firms replaces more efficient and less expensive production by foreign firms.  over-consumption of the product occurs if the value (price) of the product for consumers decreases below the (free market, marginal) cost of production. 10-70

71. Summary 10.Partially because export subsidies encourage over- consumption, WTO rules allow countervailing duties against  prohibited subsidies, which are directly linked to export targets or require recipients to use domestic components in the production process.  actionable subsidies, which injure firms that compete with the firm receiving the subsidy. 10-71