Product Heterogeneity and Cost Allocations in Contingent Trade Protection

Abstract

The WTO allows members to impose contingent protection, including antidumping duties, within agreed constraints. Antidumping proceedings typically name a single captioned product but include large numbers of individual products within that caption. The inclusion of multiple products creates a variety of issues in both antidumping and other contingent protection instruments, issues that have been prominent in national actions and WTO dispute settlements, but have been largely ignored in research. In this work I focus on the most important such area, the allocation of costs among products in antidumping proceedings. I develop a comprehensive economic analysis for allocation issues, and couple it with the accounting tools that must be used for its implementation. I apply this to the most active area of controversy in this area, the inconsistent national practices in allocating costs to individual goods. These results have direct relevance in other contingent trade contexts, such as injury determinations and subsidy pass-through analysis.The appendices for this paper are available at the following URL: http://ssrn.com/abstract=2435413