Estimating the Impact of Anti‐dumping and Anti‐cartel Actions Using Intervention Analysis

Abstract

Intervention analysis is proposed as a method for estimating the effects of anti-dumping actions in the presence of a domestic cartel. Data requirements and modelling effort compare favourably with traditional structural model approaches. The method is applied to an antidumping action brought to the European Commission and in which the European producers of the product were fined after an anti-cartel action by the Commission covering an overlapping period. Intervention analysis is applied to distinguish the effects of the anti-dumping action from those of changes in cartel behaviour. It has been argued that in the post-Uruguay-Round world, anti-dumping (AD) actions, as with other contingent protection measures, may become an 'instrument of choice' in place of tariffs to restrict international trade (Messerlin and Reed, 1995). Some reasons for this may be found in the political economy literature (Tharakan, 1991, 1995), where it is argued that such measures, which are typically non-transparent, quasijudicial, GATT-legal and capable of being targeted at the level of an individual supplier, may prove very tempting to both policymakers and those lobbying for protection. If economists are to have an effective input to the debate on such measures then it is essential to be able to estimate the consequences of such protection, preferably in a way that provides reasonable estimates without the need of onerous data or logistical requirements. In this paper we propose a tractable time-series-based method that requires minimal data (the unit value and volume of imports data series). We illustrate the technique by reporting estimates of the costs to the United Kingdom of the price undertaking that resulted from the successful AD action brought to the European Commission in 1982 and directed at four Japanese suppliers of polypropylene (PP) film. The illustration is also of interest because a subset of those European PP producers bringing the AD action were the subject of an anti-trust ruling that resulted in fines for collusive behaviour (Messerlin, 1990). The anti-cartel judgement covered the period during which the industry lodged the complaint of dumping and secured minimum price undertakings from theJapanese producers. Anti-dumping actions in the European Union may be resolved in favour of the complainants by the imposition of AD duties (ADDs) or, more commonly, by the foreign suppliers targeted in the actions 'voluntarily' giving an 'under