The Effectiveness of the Canadian Antidumping Regime

Abstract

Canada has the oldest antidumping (AD) regime in the world and has to this day been counted among the main users of AD measures. It is an important trade-remedy instrument that affects a relatively large proportion of Canadian imports, although its use and effects on trade could still be better understood. For example, in 2003 there were 92 measures in place affecting around C$1.3 billion worth of Canadian imports. An important question is whether imposing AD duties actually protects the domestic industry from import competition. We analyze the trade effects of AD policy in the manufacturing industry in Canada. We also look at the effect of an AD action on the level of imports from countries not named in the analysis in order to examine the extent of trade diversion. It is possible that imports might be partly diverted away from the alleged source country and to non-alleged countries, rendering AD laws ineffective in terms of benefiting the domestic industry. We construct a database using AD data for the years 1990–2000, and import data disaggregated at the ten-digit Harmonized System (HS) level, and ultimately find that Canadian AD policy is an efficient tool for restricting imports from countries that are “named” in an investigation or alleged to be dumping. When adopting a relatively coarse classification of named cases into two groups—affirmative (affirmative AD decisions and price undertakings) and negative (negative AD decisions)—we also find some evidence of trade diversion and “harassment” effects of AD.