Belief Stickiness and Belief Change

Abstract

A series of rule modifications or improvements to the non-market economy anti-dumping law is a second best choice for NMEs. These economies want their transitions to be recognized with full scale country reclassifications as “market economies.” A reclassification would be the ultimate formal rule change to the anti-dumping laws. It catapults a country from the sphere of special anti-dumping trade laws to regular anti-dumping laws. A reclassification is desirable for both political and economic reasons. Politically it is an affirmation of the reforms in NMEs and the first step toward reintegration into the international political economy. Economically it improves the fairness of the application of anti-dumping laws by no longer subjecting NMEs to the constructed value method of determining normal value. Using the actual prices in a reclassified NME instead of price proxies would allow the exporting firms to demonstrate they had a comparative advantage in the production of certain commodities, and should decrease both the size and incidence of protection against NME exports. With country reclassifications there would no longer be recourse to third county price proxies, therefore the economic and political stakes are quite high for both Western trade agencies and non-market economies.

The anti-dumping rules [against NMEs] teach the capitalists to behave like socialists, not the other way around.

—Finger 1993