A Study of Anti-Dumping Duty under Fair Trade Rule：An Application on the Case of China Towels in Taiwan

Shu-Yuan Lee, Yung-Ho Weng, Peng-Yin Lin, and Sheng-Ti Hung1 Ⅰ、Introduction The World Trade Organization (WTO), its main function is to ensure that trade flows as smoothly, predictably and freely as possible, such as agricultural agreement which is to promote fairness on agricultural trade and service. Other rules such as safeguard agreement, tariff estimation agreement and country of origin agreement are to help fair competition and to achieve efficient trading effects. Only in a few circumstances WTO allows limited competition to maintain the goal of fair trade, for examples, anti-dumping policy and balance taxation policy. From the aspect of conventional economic theory, not only Ncoclassical approach nor Strategic approach considered anti-dumping policy as a protection cover to the development of domestic target industries. From the statistic data of WTO, there were about 20 to 30 cases per year for anti-dumping cases; however, this number increased rapidly up to 200 cases per year since 1995 which indicates that protecting domestic target industries has been an important policy notion for each country. Up to 2007, there were 3,220 cases under investigation for anti-dumping. Unfortunately, loose applying anti-dumping measure causes certain damage to export enterprises, including replying complicate investigation process, losing orders and huge amount of money on lawsuit cases. Under a perfectly competitive market, threatened firms are insured for their profit but cause negative effects on other middle and downstream firms. Anderson(1993) analyzed 8 anti-dumping cases during 1989 to 1990 and found that each consumer has to carry cost up to 113,800 dollars and whole society has to carry cost at least 14,300 dollars for increasing one working opportunity of a