Economics and the International Trade Commission

Abstract

negotiated during the 1980s and the U.S. semiconductor agreement with Japan. Because the U.S. antidumping and antisubsidy laws are now one of the most important means used to restrict imports, the administration of these laws has come under considerable scrutiny. Many observers are concerned that these laws are being administered in a way which favors U.S. industries. In this paper, I attempt to address some of these concerns by determining the extent to which the administration of the U.S. unfair trade laws is based on the economic criteria specified in the unfair trade legislation. In particular, this study examines the importance of economic criteria in the antidumping and antisubsidy decisions of the International Trade Commission (ITC). The ITC is one of the most important agencies responsible for administering the U.S. unfair trade laws and its role extends beyond these laws into other areas, including the escape clause. The administrative role of the ITC in unfair trade cases is to determine whether unfairly traded imports are a cause of material injury to a domestic industry. Many other authors have examined the basis for ITC decisions. The results of Baldwin [3] and Goldstein and Lenway [8] provide support for the hypothesis that the ITC uses at least some of the legislated economic criteria appropriately. Both studies examine the escape clause decisions of the ITC and find that industries with declining profitability are more likely to receive favorable ITC decisions. Goldstein and Lenway [8] also find that the ITC is immune to congressional pressures for protection. Both studies, however, focus solely on escape clause decisions, which represent only a small fraction of ITC decisions and do not involve allegations of unfair trade. Escape clause actions are also different from other ITC decisions in that the president must ultimately decide whether relief is warranted.