ITC antidumping toward China rulings: Is political factor overwhelming?

Abstract

AbstractAs the U.S.–China trade deficit continues to rise, China has been at the top of the list in terms of the International Trade Commission (ITC) antidumping (AD) cases. In this paper, we ask the question whether the ITC AD prosecution is based on pure economic content or is it somewhat jaded by politics. Utilizing a Probit model, we examine the effect of a set of political and economic variables on the probability of the ITC ruling in favor of the U.S. petitioners that have filed a 731 AD lawsuit. As China has the highest number of cases brought about by U.S. petitioners, combined with the fact that China is the single largest source of the U.S. trade deficit, we also included a binary dummy variable if the case is solely against China. We find that this variable is highly significant. The only other variable that is consistently significant is the political influence of the petitioners measured by the political campaign contribution. In addition, we find that conditioned on China being the sole target, the political influence of the petitioner significantly increases the probability of a favorable ruling by the ITC. We implement a placebo test with cases toward Japan and find no evidence of the ITC's bias in ruling, thus raising the strong possibility that the United States is targeting China outside of pure economic justifications.