Antidumping Research Articles

Anti‐dumping Duty and Firm Heterogeneity: Evidence from Korea

AbstractThis study examines the imposition of anti‐dumping (AD) duties on imported products in Korea. We use panel data for Korean firms between 2000 and 2012 and estimate the firm‐level productivity of import‐competing firms before and after AD imposition. Using a difference‐in‐difference framework, we compare firm productivity changes in a treatment group that receives AD protection to a control group that does not. In contrast to recent findings on the effects of AD measures, we find that the average protected firms experience productivity loss during the AD protection period. Examining the changes in external market condition and internal resource allocation during the protection period, such loss appears to be more evident inside highly concentrated import‐competing sectors. Further, we find that protected firms are more likely to reallocate their resources abroad via FDI at the expense of domestic production and investment once they receive temporary protection.

Analyzing China’s Non-market Economy Status: A Focus on Anti-dumping Measures

The Market Economy Status (MES) issue has come to the top of the international agenda, bringing heated discussions on whether or not China will soon be granted this status after December 11, 2016. Until 2014, there has been a total of 1052 Anti-Dumping (AD) investigations initiated against China, ranking it the first in the world. One of the reasons for this is that China is still treated as a Non-Market Economy (NME) by many other countries or politico-economic unions, represented by the United States (U.S.) and the European Union (EU). The U.S. and the EU reserve their own “market economy test” practice for goods from China, which allows the derogation from general price comparability methodology and in turn causes damaging effects to China. To address the problem of whether China should be treated as a Market Economy (ME) in AD investigations, this study tries to examine the ME indicators used both in Chinese domestic studies and foreign studies. Finally, by comparing and combing the U.S. and the EU scholars’ suggestions on what their government should do as the 2016 expiration date approaches, this study presents four scenarios that might unfold by the U.S. and the EU and the corresponding Chinese government alternatives.

Trade Diversion as Firm Adjustment to Trade Policy: Evidence from EU Anti‐dumping Duties on Vietnamese Footwear

AbstractThis paper evaluates the impact of the 2006 European Union anti‐dumping (AD) action on Vietnamese footwear in three markets: imports to the EU, footwear producers in Vietnam, and the trade diversionary adjustment of Vietnamese firms in the US market. We find that the AD action reduced Vietnamese imports to the EU by as much as 65 per cent. Given that the EU makes up almost two‐thirds of Vietnam's footwear exports and footwear is among the top four export industries for Vietnam, this reduction is economically significant. Consistent with predictions of our model, we find evidence of trade diversion by Vietnamese producers from the EU to the US market. Our difference‐in‐difference estimates of the AD actions on the value of Vietnamese footwear imports to the United States ranged from 69 to 71 per cent over the period 2004–07 and 69 to 72 per cent in terms of quantity. These results highlight the spillover effects of trade policy in third markets when firms adjust to trade barriers. Our results are robust to triple‐difference specifications where we adjust for trend differences and a series of placebo specifications.

ANTIDUMPING ECHOING

This article documents that antidumping (AD) “echoing” (i.e., different countries sequentially imposing AD measures on the same product from the same exporter) is common practice among users of AD. We develop a dynamic game where two competing importers can impose AD measures on a third exporting country in one of two periods, if at all. Assuming that governments are politically motivated (favoring their import‐competing industry), AD echoing occurs only for intermediate values of a country's political‐economy parameter. This result is confirmed by our econometric analysis, demonstrating that countries' political‐economy‐driven AD actions are interdependent and should not be analyzed in isolation. (JEL F12, F13, F14)

False Friends? Empirical Evidence on Trade Policy Substitution in Regional Trade Agreements

In this paper, we examine the interplay of regional economic integration and the use of bilateral antidumping (AD) measures. Our empirical analysis brings three central findings to light: (i) We find that regional trade agreements (RTAs) generally reduce the likelihood of AD activity among integration partners. (ii) In addition, an improvement in tariff treatment of trading partners —regardless of whether expressed in absolute or relative terms— generally leads to a lower likelihood of bilateral AD activity. (iii) Regarding the interaction of both events, however, an improvement in the relative tariff treatment among fellow integration partners leads to a higher likelihood of bilateral AD activity than an equal improvement in the relative tariff treatment among non-integration trading partners. The latter effect seems to be primarily driven by those RTAs with a participation of “South” countries.

U.S. Trade Preferences Extension Act (TPEA) of 2015 Could Lead to Increased Use of “Particular Market Situation” in Calculating Normal Value in Anti-Dumping Cases

At the end of 2016, China’s Protocol of Accession (POA) to the World Trade Organization (WTO) will require a change in the way WTO members calculate normal value in anti-dumping (AD) proceedings involving China.1 Although no organ of the U.S. government has officially acknowledged that Paragraph 15 of China’s POA will require the U.S. Department of Commerce (USDOC) to abandon its current non-market economy (NME) surrogate value method for calculating normal value for Chinese respondents post-2016, there is no question that some change in practice must take place in order to comply with the expiration of a key provision of that Paragraph that occurs effective December 12, 2016. Ultimately, it is quite possible that the WTO Dispute Settlement Body (DSB) will interpret the provision as requiring that members subject China to the “default” rules set forth in Article 2 of the WTO Anti-Dumping Agreement (ADA). What remains a mystery, however, is just what those default rules permit in terms of the flexibility afforded to investigating authorities in dealing with economies like China, where the state’s role in the economy remains pervasive, even if to a lesser degree than it was in the past. It will also be interesting to watch how these new rules might be applied to traditionally market economies (MEs) whose governments, although not formerly communist, may be sufficiently involved in a particular market to also justify application of Article 2 in a manner that, to date, has not been widely adopted by USDOC or any other investigating authorities. These inquiries are not merely the idle musings of the authors, but draw on action already taken by the U.S. Congress and the European Commission. In amendments to its AD laws, known as the Trade Preferences Extension Act (TPEA), passed during the summer of 2015 as part of granting the Obama Administration Trade Promotion Authority,2 the U.S. Congress added language that expands USDOC’s discretion to treat certain transactions as outside the ordinary course of trade (OCOT). Although no legislative history accompanied these amendments, they appear, at least in part, tailored to a post-NME normal value calculation paradigm, in which a respondent’s costs can be disregarded and replaced with an alternative that may well approximate the NME methodology that China hoped would be eliminated as a result Article 15 of its POA. Meanwhile, the European Commission has adopted a practice that uses similar tools—so far only for MEs—where a respondent’s transactions are deemed outside the OCOT. Together, the new U.S. law and recent European action both suggest a movement toward more flexible rejection of AD respondents’ own data and replacement with data that look eerily similar to NME surrogate methodologies—for respondents in any country. But, stay tuned, as these efforts are currently under WTO review, and one dispute settlement panel has indicated that Europe’s practice may have gone too far.

THE HAZARDOUS EFFECTS OF ANTIDUMPING

We investigate the extent to which antidumping actions eliminate trade altogether. Using quarterly 10‐digit HS‐level export data for products involved in U.S. antidumping cases we find that antidumping actions increase the hazard rate by more than 50%. We find strong evidence of investigation effects with the impact during the initiation and preliminary duty phases considerably larger than once final duties are imposed. There are also important differences with respect to the size of duties with cases with large duties experiencing very large investigation effects. We show the antidumping (AD)‐affected countries are less likely to return to the market even after the AD order is removed. (JEL F13, F14)

Differences in the determinants and targeting of antidumping: China and India compared

ABSTRACTDespite both being developing countries, China and India have markedly contrasting patterns in their use and targeting of antidumping (AD) measures. We explore the factors driving AD use by these two countries, considering in turn macroeconomic, strategic and other determinants. We find more regular or systematic features of AD use by China, while India displays a less systematic pattern of AD use. Economic growth, AD club effect and free trade agreement participation are shown to constrain AD use by China. Compared to India, AD use by China is also more sensitive across industries. Furthermore, China targets developed countries more than developing countries, while India is less discriminating with respect to the country type it targets.

It's Baaaack: Zeroing, the US Department of Commerce, andUS‒Shrimp II (Viet Nam)

AbstractIn itsFinal Modification for Reviewsthe US DOC announced on 14 February 2012 that it would cease the use of zeroing in the calculation of anti-dumping (AD) margins in all reviews as of 16 April 2012. However, it did not pertain to targeted dumping. In itsFinal Ruleof 22 April 2014, it codified substantial discretion in calculating AD duties, including the use of zeroing, in targeted dumping. Thus the panel inUS‒Shrimp II (Viet Nam)erred in not finding ‘as such’ inconsistency by the US with the AD Agreement, despite this not being a targeted dumping complaint. Given the record of the US in complying with zeroing petitions, it should have incurred the burden of proof, which is not satisfied by these pronouncements. Market structure should be used by panels in ‘as applied’ inconsistency determinations. Viet Nam should have included an Article 3 violation in its complaint.

Import Demand Elasticity and Exporter Response to Anti-Dumping Duties

ABSTRACTThis article investigates exporting firms’ behavior following the imposition of anti-dumping (AD) duties. AD duties tend to increase the prices of imported goods via a mechanism different from any other trade barrier because the AD duty size is endogenously dependent on import prices. Our model accounts for this feature and demonstrates that exporters are more likely to adjust their price upward when they face a less elastic demand. The theoretical predictions are supported empirically by relating product-level U.S. import demand elasticities and exporting firms’ reactions to duties inferred from a dataset on U.S. AD investigations from 1980 to 1995.

The Appellate Body Interpretation of 'Sunset Reviews' Provisions of AD and CVM Agreements: A Critical Analysis

Introduction The World Trade Organization (WTO) Anti-Dumping (AD) Agreement and the Agreement on Subsidies and Countervailing Measures (SCM Agreement) require that AD duties and countervailing measures (CVMs) be terminated no later than five years from their imposition unless domestic authorities determine, with a specific review initiated before the mentioned deadline, that the expiry of the duty would likely lead to continuation or recurrence of dumping (or subsidization) and injury. If domestic trade authorities terminate the review with a negative determination of likelihood, either with respect to dumping (or subsidization) or injury, the duty expires (sunset). However, the WTO sunset reviews rules provided in Article 21.3 of the SCM Agreement and in Article 11.3 of the AD Agreement are vague and do not accurately regulate all of the complex aspects of the sunset reviews procedure. Indeed, in both agreements, the text of the articles regulating the sunset reviews was the result of complex negotiations, and the provision of an expiry deadline was an absolute novelty, as before the Uruguay Round there were no rules providing for the termination of AD and countervailing duties within a predetermined deadline. The relevant articles in the AD and SCM Agreements provide only a generic discipline, which is only partially complemented by the rules applicable to basic proceedings. Indeed, Article 11 of the AD Agreement and Article 21 of the SCM Agreement make a reference, respectively, to Article 6 of the AD Agreement and to Article 12 of the SCM Agreement regulating the procedural part of the sunset reviews.

It's Baaaack Zeroing, the US Department of Commerce, and US Shrimp II (Viet Nam)

In its Final Modification for Reviews the U.S. DOC announced on February 14, 2012 that it would cease the use of zeroing in the calculation of anti-dumping (AD) margins in all reviews as of April 16, 2012. However, it did not pertain to targeted dumping. In its Final Rule of April 22, 2014, it codified substantial discretion in calculating AD duties, including the use of zeroing, in targeted dumping. Thus the panel in Shrimp II erred in not finding “as such” inconsistency by the U.S. with the AD Agreement, despite this not being a targeted dumping complaint. Given the record of the U.S. in complying with zeroing petitions, it should have incurred the burden of proof, which is not satisfied by these pronouncements. Market structure should be used by panels in “as applied” inconsistency determinations. Viet Nam should have included an Art. 3 violation in its complaint.

Anti-dumping petitions and exports

Purpose– The purpose of this paper is to quantify how the People’s Republic of China’s (PRC) export volume affects the anti-dumping (AD) petitions filed by its major trading partners against the country.Design/methodology/approach– Focusing on the AD petitions at the Harmonized System (HS) Code eight-digit level and the PRC’s exports at the HS two-digit level to its major trade partners during the financial crisis, we construct three instrument variables for export volume within HS two-digit level variation in the variables. These instruments – documents required, time taken and container charges incurred for goods traded across borders – represent trade costs obtained from World Bank’s Doing Business Project. We find rising exports from the PRC lead to rising AD petitions against the country.Findings– Instrumental variable estimates indicate that a 1 percentage point rise in the PRC’s export volume raises the number of AD petitions against the country by about 0.25 percentage points, and the probability of receiving AD petitions by 3.5 per cent. These estimates are about 10 times larger than that found in ordinary least square regressions.Originality/value– Their quantitative significance underlines why it is important to consider the issue of export endogeneity in the estimation, and that the failure of the current trade statistics to account for the true value-added of traded goods particularly disadvantaged the PRC given its position as the factory of the world.

Sustainability of Trade Liberalization and Antidumping: Evidence from Mexico’s Trade Liberalization toward China

A Negative Binomial Regression Model is used to investigate the sustainability of China–Mexico trade liberalization by testing the tariff lines underpinning Mexico’s successful antidumping (AD) measures against Chinese imports from 1991 to 2011. Evidence shows import tariff cutting and consumption growth have a positive impact on consumer goods but a negative impact on intermediaries. This result implies that while the Mexican government has expended considerable energy on the trade liberalization of intermediate and capital goods, the domestic consumer goods market has been protected from Chinese imports. The empirical results indicate that Mexico’s AD use for consumer goods helps to sustain trade liberalization of intermediate and capital goods under the domestic political pressures for trade opening.

Normative Obsolescence of the WTO Anti-Dumping Agreement—Topography of the Global Use and Misuse of Initiations and Measures

The Anti-Dumping (AD) mechanism is susceptible to potential misuse for protectionist purposes, and the current explosion of AD disputes indicate a massive problem in the way international trade rules are implemented. The current World Trade Organisation (WTO) negotiations have identified areas within the Anti-Dumping Agreement (ADA) for possible reform; accordingly, the present analysis discusses these areas of concern relating to the AD provision. First, recent trends in AD practice will be analyzed both quantitatively and qualitatively to show the growing role of Asian economies. In particular, the traditional targets of AD activism, China and India, have initiated a number of AD investigations over the last decade, while imposing final measures on several occasions. Second, the ADA will be examined alongside a discussion of the potential risks of misinterpretation. Third, the paper will analyze all the complaints lodged at the WTO Dispute Settlement Body (DSB) on ADA to date.

The Influence of Firm Global Supply Chains and Foreign Currency Undervaluations on US Trade Disputes

AbstractWe apply insights from “new, new” trade theory to explain a puzzling decline in US firm antidumping (AD) filings in an era of persistent foreign currency undervaluations and increasing import competition. Firms exhibit heterogeneity both within and across industries regarding foreign direct investment (FDI). We propose that firms making vertical or resource-seeking investments abroad will be less likely to file AD petitions, and firms are likely to undertake vertical FDI in the context of currency undervaluation. Hence, we argue, the increasing vertical FDI of US firms makes trade disputes far less likely. We use firm-level data to examine the universe of US manufacturing firms and find that AD filers generally conduct no intrafirm trade with filed-against countries. We also find that persistent currency undervaluation is associated over time with increased vertical FDI and intrafirm trade by US multinational corporations (MNCs) in the undervaluing country. Among larger US MNCs, the likelihood of an AD filing is negatively associated with increases in intrafirm trade. In the context of currency undervaluation, we confirm the existing finding that undervaluation is associated with more AD filings. We also find, however, that high levels of intrafirm imports from countries with undervalued currencies significantly decrease the likelihood of AD filings. Our study highlights the centrality of firm heterogeneity in international trade and investment in understanding political mobilization over international economic policy.

The Welfare Effects of the Byrd Amendment

The Welfare Effects of the Byrd Amendment Nicoleta Iliescu Abstract In this paper, I investigate the domestic welfare effects of the Byrd Amendment, a piece of legislation passed in the US in 2000, which mandated that the tariff revenues collected from antidumping (AD) cases be directly distributed to the American firms that initiated or supported these cases. In response to the amendment, 11 US trading partners filed a complaint with the World Trade Organization (WTO) requesting that the amendment be revoked as it violated the US obligations taken under the WTO. The WTO ruling not only demanded that the law be repealed, but also allowed the complainants to impose retaliatory tariffs against the US exports. This paper demonstrates that the imposition of this law is detrimental to domestic consumers and that foreign retaliation reduces domestic firms’ profitability. Moreover, in the presence of the Byrd Amendment and with no or low retaliation abroad, if the AD tariff level is set to maximize tariff revenue, then petitioning domestic firms gain higher profits compared to the profits earned prior to the passage of the law. Full Text: PDF DOI: 10.15640/jibe.v3n1a1

The signaling power of trade protection

This paper proposes an empirical analysis to provide new insight into the trade diversion effects of antidumping (AD) policy. Trade diversion is the shift in trade from named countries in an AD investigation to non-named countries. Previous studies have concluded that AD action causes a considerable drop in exports from named countries, however the extent to which trade is diverted to non-named countries is still an open debate. This paper examines to see whether AD action on named countries can have signaling effects on non-named countries. To examine the trade effects on non-named countries, a time series data at an 8-digit product level is constructed for all cases initiated between 1997 and 2003 in the European Union. The paper provides evidence that antidumping policy has signaling effects on non-named imports.

Investigation on the Impact of US Anti-dumping Measures during the “Catfish War” on Vietnamese Pangasius Exports

The Vietnamese pangasius industry has faced anti-dumping (AD) measures imposed by the United States of America (USA). This dispute between the USA and Vietnam is known as the “Catfish War”. Based on monthly time series data from January 1999 to December 2011, an econometric approach is considered, in which regression models are taken into account for investigating how the USA AD measures impact on the volume and the value of Vietnam’s pangasius exports. As resulted in the estimation, the paper found that although the anti-dumping taxes imposed on Vietnam pangasius, it is not so seriously problematic for exporters in the long-term. One of the reasons is that Vietnam pangasius exporters are dynamic in developing market diversification by shifting from the USA to the European market.. However, in the short term, the trade dispute between the USA and Vietnam is a warning alarm for Vietnam pangasius exporters. In addition, the paper does not have any evidence to confirm that the upward trend of the real exchange rate between the VND and the USD is causing changes in either the pangasius export volume or the pangasius export value. Also there is no confirmation of a significant relationship between the inflation rate in Vietnam and the export value.

Russiaas Foreign Trade in March 2014

In March 2014, Russia’s foreign trade turnover calculated on the basis of methods of the balance of payments amounted to $74bn which is 1.1% higher than the 2013 index. However, in general in the 1st quarter of 2014 the last year’s trend of reduction of the Russian foreign trade turnover prevailed. The export has fallen due to a drop in contract prices with insignificant growth in physical volumes. On the contrary, the import has decreased due to reduction of physical volumes with weak growth in contract prices. It is to be noted that an advanced reduction of import is observed and as a result there is growth in the trade balance surplus. The European Union has started a new trade dispute with the Russian Federal on within the frameworks of the World Trade Organization calling for a cancellation of the anti dumping duties – introduced in 2013 – on import of German and Italian light commercial vehicles.