EC told to relax on dumping: Consultants' report warns of damage from protective measures

AN independent report has recommended that the EC be more discriminating in its use of anti-dumping measures, saying that it may have damaged the Community's interest by applying them too widely.

Dumping is the practice of deliberately selling goods at below market prices to gain market share. Countries affected by the practice are allowed to defend themselves by imposing duties, but many economists believe that anti-dumping measures are simply used to keep out cheap imports and are really just protectionism.

The report, made to the European parliament by a partner from Ernst & Young, the consultants, says that anti-dumping measures have an important role but that the EC should examine each action to see whether it is in the Community's interest. It says that some actions over the past few years may have actually damaged Community interests. The consultants conclude that where an industry has high barriers to entry - such as high-technology sectors like computers - anti-dumping duties may do a valuable job. But in less high-tech sectors, such as bicycles, anti-dumping duties are simply keeping out low-cost imports.

The report received a cool reception from the parliament, according to one official. He said it was seen as too obviously influenced by the interests of consulting firms, who want the system opened up, and by the preference of British business for more market-based solutions to trade problems. But defenders of the report say it simply examines alternative and more detailed systems.

The EC is currently considering ways of streamlining its trade procedures by increasing its influence over anti-dumping policy, but a broader re-think is also going on in the Commission. This has been brought about by the completion of the single market, which has removed internal trade barriers without creating a new regime, and the end-game that is being played out in Geneva in the Uruguay round of the General Agreement on Tariffs and Trade.

But it also follows the appointment of Sir Leon Brittan, the British Commissioner, to head the EC's external trade section. It is believed that the influential official who has long headed the anti-dumping section is about to be moved to another post.

According to Gatt, the EC was one of the most active users of anti-dumping policy in the year to June 1992, when it launched 23 inquiries. Gatt also said that the use of such measures is growing. The US, Australia and the EC took final actions in 437 cases in the same period, compared to 372 in the previous year.

The EC has often used anti-dumping legislation against Far Eastern producers, and the European recession is creating pressure for more active trade policy. On Sunday a French parliamentarian urged the use of such measures to curb what he called an 'invasion' of Asian imports. This week, Sharp and Sanyo said they would stop exporting televisions from their South-east Asian plants to Europe, and shift production to Europe, following an EC decision to investigate claims that they were dumping televisions. There are also increasing calls to act against Eastern European exporters.