Dumping: It's a Jungle Out There

Dumping is a topic that only an international trade lawyer could love. The basic concept is simple enough: dumping is selling a product for less than the cost of making it. That has been a world-trade problem ever since mass production made it easy for companies, inadvertently or otherwise, to turn out more goods than customers want. When stuck with anything from too many dolls to excess semiconductors, manufacturers often sell the products in other countries at very cheap prices rather than throw them away.

Dumping, however, can become a jungle of complications once lawyers or government bureaucrats get together and try to figure out what really happened. A trade negotiator in Tokyo says the U.S.-Japan semiconductor agreement, for example, is like the jewel beetle, an iridescent insect whose hue changes depending on which angle it is viewed from. "One guy thinks it's green," he says. "Another says it's blue."

Still, Japan agreed last year to stop dumping chips in the U.S. and not to sell them below production cost in other countries. But after analyzing sales of 4 million chips in 15 countries in February, the Commerce Department concluded that Japanese chips were selling at 40% to 65% of the cost.

The Tokyo government concedes that Japanese chips are still being dumped outside the U.S. But, it argues, the sales are being made not by Japanese chipmakers, who are under government control, but by independent businessmen. Officials claim to be doing everything they can to stop that, as promised. Not good enough, retorts Commerce Secretary Malcolm Baldrige: "If the manufacturers try to get out of their obligation not to dump in third-country markets by using middlemen, that is a deliberate action. It is the government's responsibility."