In face of the financial crisis, some Americans complain that the government has overplayed its role. Others argue that the government needs to do more. Indeed, for trade policy making, domestic politics, rather than government, have been playing a key role in imposing trade measures for industry protection. This year's rising imposition of antidumping and safeguard duties has provided good evidence of these domestic political forces.

Domestic industries and constituents have been involved in the whole process of US antidumping and safeguard applications. In the recent tire case against China, United Steelworkers, which represents American tire workers, led the initial filing, testimony, lobbying, and alliance building efforts to protect the US tire industry.

According to the special safeguard provision, it is expected that China will eventually have stiff US import tariffs imposed on its automobile and light-truck tire exports to the U.S. However, it was a shock to China and the rest of the world when President Obama made the decision to protect the US tire industry this way. The timing was wrong, as the G20 submit was quickly approaching. But the reason was simple. Due to domestic health care reform, Obama needed critical support from domestic constituents, and United Steelworkers is just one such constituent.

Ample research in the field of antidumping and trade protection makes it clear that domestic forces in the U.S. have been leading trade protection processes for years. As a consequence, there has been a continuation in the compromising of American free trade and fair trade commitments. In actuality, the US trade policy derived from the complex interactions of many features of the American political and institutional landscape.

First, the US political system has made political leaders very sensitive to the voices and policy advocacy actions from domestic constituents, such as interest groups, industry associations and district voters. It is also very often that internal interests can become entangled with seemingly unrelated facets, for instance, it has been suggested that Obama intends to favor the United Steelworkers as he pushes Congress to overhaul the nation's healthcare system.

Second, the US lobbying system provides a useful political regime for domestic forces to make their voices heard by trade policy-makers. Interest groups are highly motivated to pursue congressional lobbying. Interest groups are predisposed to deploying millions of US dollars in lobbying investment to influence legislation. Domestic industries appear to regard lobbying as a routine expense. The common understanding is that, without lobbying, favorable legislation would not be promoted and unfavorable legislation would be enacted. This provides huge incentives for domestic players to be significantly involved in trade policy making.

Third, the US trade laws and regulations have provided institutional advantages for domestic stakeholders. For example, although frequently criticized by American scholars as the "unfair trade law," the US anti-dumping law has always enjoyed strong political support from both parties. The fact is both parties have gained tremendous political support from interest groups benefited by trade protection legislation.

In the U.S., an industry can easily seek relief under the antidumping law by filing a petition claiming its injury or an injury threat from foreign trade partners. According to the antidumping procedure, it is almost taken for granted that the US Department of Commerce will initiate investigations in favor of domestic constituents, including manufacturers, labor unions, business associations and other special interest groups. When such an investigation is initiated, imports from relevant trading partners are charged a certain percentage potential duty upon arrival at US ports.

Obviously, for the domestic industry, the cost of this kind of institutional protection is pretty low, but the potential advantage is extremely high. This is why various American domestic stakeholders are so highly motivated to initiate new antidumping cases.

As some American scholars argued in their study of the US antidumping law, with "tricks of the trade," the antidumping law is hailed by supporters across the political spectrum as the guarantor of a "level playing field" for US industry and import competition. But in fact, the law systematically discriminates against foreign goods with skewed rules that generate dumping margins out of thin air (Lindsey and Ikenson, 2002).

Since the current world economic recession, China has become the most frequent subject of the new investigations in terms of both "fair trade" and trade protection. This is true in both the WTO regime and bilaterally with the U.S. Over the long recovery of the American economy, domestic constituents will continue to play a key role in US trade policy making. This will no doubt tend to raise trade protection rather than further trade liberalization. There is no question that domestic politics in the U.S. will make the antidumping law a strong and oft-used tool for further trade protection. The question is to what extent trade protection can rescue the domestic industry.

The author: Lijuan Zhang, Ph.D. in Economics, Professor at School of Economics, Shandong University.

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