The Ethics of Using Government to Subvert Competition: The Case of the Antidumping Laws

Abstract

This paper examines the question of whether it is ethical for company officials to use the force of government to reduce or eliminate foreign competition, using the antidumping laws as a case study. Antidumping laws are ostensibly aimed at preventing foreign producers from dumping their products on the domestic market at abnormally low prices. Foreign companies run afoul of the antidumping laws if they either sell products on a domestic market for less than the cost of production or for a price that is lower than that charged in the home market. Since the creation of the World Trade Organization, more than 130 countries will likely adopt antidumping laws as part of their trade policy. At the recently failed trade talks in Seattle, one item every country but the United States wanted to place on the agenda was a re-examination of the antidumping laws. The stated purpose of the antidumping laws is to prevent unfair trade and to punish foreign producers for predatory pricing. The practical effect, however, is to prevent foreign producers from selling their products in a domestic market, even when pricing has not been abnormally low or predatory. The way the antidumping laws are structured, domestic producers can enlist the help of government to prevent foreign competition even when there has been no dumping. This paper begins with a brief examination of the antidumping laws, then examines several ethical questions related to the antidumping laws. The main question to be addressed is whether, and under what circumstances, it is ethical for domestic producers to ask government to launch an antidumping investigation against a foreign competitor. Related questions examined include: (1) Whether it is ethical to ask the government to launch an antidumping investigation even when the domestic company making the request knows that dumping has not occurred; (2) Whether it is ethical to ask for an antidumping investigation in cases where dumping (according to the definition of dumping) has occurred, where the effect is to help the domestic producers at the expense of the general public. The paper will examine these questions by applying both utilitarian and nonutilitarian approaches.

Keywords: antidumping, ethics, competition, protectionism, rent-seeking, trade

JEL Classification: D6, F1, K2, L5