Anti-dumping Duties Research Articles

China – Anti-Dumping and Countervailing Duty Measures on Broiler Products From the United States Reports of the Panel 2 August 2013

China – Anti-Dumping and Countervailing Duty Measures on Broiler Products From the United States Reports of the Panel 2 August 2013

Entering the EU Market in the Face of Anti-Dumping Duties: New Exporter Reviews

This paper identifies the conditions under which new exporters may initiate a new exporter review (NER) under the Basic Anti-Dumping Regulation and thereby avoid the otherwise applicable residual duty, thus making access to the European Union (EU) market more realistic. The paper serves as a guide to new exporters, briefly describing the NER mechanism and the conditions under which the application will be successful in light of the European Commission’s practice, also describing the impact of recent developments. Strategies are described for effectively exercising the applicant’s rights and the available judicial remedies in the event of an unfavourable outcome.

Price Undertakings in EU Anti-dumping Proceedings – an Instrument of the Past?

Price undertakings are alternatives to imposing anti-dumping duties. In the past, almost half of EU anti-dumping measures were price undertakings. This has drastically changed in recent years. We identify four reasons for the decreasing relevance of price undertakings. First, prior to the accession of Eastern European Countries (EEC) to the EU, price undertakings were heavily used vis-a-vis EEC. At the same time, China became frequent subject of anti-dumping proceedings, where undertakings were rarely used due to monitoring issues. Second, unlike anti-dumping duties, price undertakings are often difficult to monitor and can be circumvented more easily. Third, there are reasons related to the suitability of price undertakings to remove dumping practice and injurious effects, particularly in the context of high price volatility. Fourth, price undertakings may have potentially anti-competitive effects, as minimum prices tend to exacerbate competition policies.

United States – Anti-Dumping Measures on Certain Shrimp and Diamond Sawblades from China: never ending zeroing in the WTO?

AbstractDespite many legal rulings to clarify the WTO inconsistency of zeroing practices, in practically all aspects of antidumping proceedings, the United States declined to categorically rectify the illegal antidumping duties based on zeroing calculation methods. This dispute is merely example of a number of disputes where the US government had to exhaust the whole process for proper implementation of the WTO rulings under its domestic legal system. The US approach is starkly contrasted with the position taken by the European Union that categorically terminates zeroing practices pursuant to the WTO rulings. While the WTO system indeed recognizes individual Member's peculiar regulatory systems and policies during implementation phases, the current situation in which WTO Members must individually resort to the dispute settlement system in order to rectify the US zeroing practices raises a serious concern regarding the legitimacy and integrity of the WTO dispute settlement system. Maybe it is time for WTO Members to agree on better implementation mechanisms before more Members try to develop overly burdensome and complicated regulatory processes for compliance.

Does Anti-dumping Enforcement Generate Threat?

The last two decades have witnessed that countries across the world are guided by the rules and regulations of multilateral trading institutions (for example, World Trade Organization [WTO], International Monetary Fund [IMF]) in order to promote free and fair trade through gradual reduction in trade barriers. The world economy has noticed significant reduction in tariffs, yet we find a rise in non-tariff barriers (NTBs). However, we still find dumping and few other trade strategies of the exporting countries as a major hindrance to free and fair trade. Such behaviour has led to ‘contingent protection’ as a tool of new-protectionism. Among the contingent protection measures, anti-dumping (AD) has evolved as the most popular choice of strategy for the trading nations. The AD policy invokes a threat to the exporter and thereby can change its strategic behaviour. We describe the phenomenon of dumping through a price-leadership model and thereby compute the optimal level of AD duty that can offset dumping. Using a sequential game, we conclude that the credible threat of an AD duty restricts dumping and thereby leads to a win-win situation for both the foreign and domestic firms.

The Trade Effects of US Anti‐dumping Actions against China Post‐WTO Entry

AbstractSince China's entry into the WTO, US anti‐dumping (AD) actions against China have increased, particularly with respect to multiple petitions. Distinguishing between US single and multiple petitions, we examine the trade effects of US AD actions against China based on an unbalanced panel of quarterly trade data. The results show that a US single petition investigation greatly restrains US imports of the filed products from China but also causes more significant import diversion from non‐named countries. In the short run, a preliminary AD duty imposed on China via a US multiple petition not only restrains US imports of the filed products from China but also prevents trade diversion from non‐named countries. In the long run, a final AD duty on China resulting from a US multiple petition creates a larger destructive effect on China and causes US import diversion from non‐named countries. Thus, a final AD duty imposed on China following a US multiple petition not only harms China's exports but also fails to help the US achieve import substitution. Furthermore, we have been able to reveal the negative trade effect of a preliminary AD duty even in cases where the ultimate decision is not to impose a final duty.

Anti-Dumping Duty and Firm Heterogeneity: Evidence from Korea

In general, AD policy is known to protect domestic producers from dumped products. In terms of “protection,” government implements AD policy by expecting domestic firms to gain competitiveness through increased productivity. Using Korean firm data, this paper analyzed the effects of AD protection on changed firm-level productivity before and after the imposition of AD duties.In contrast to results from recent AD research, we show a negative effect of AD protection on estimated productivity of protected firms during the AD protection period. Estimating the productivity of protected firms by comparison of various types of firms confirms the robustness of our results that AD protected firms experience productivity losses during the imposition of AD duties.Investigating the channels behind our results, we consider two factors; internal firm structure and external market conditions. We first examine the changes of company account variables that influence firm productivity during AD protection period. Using DID specifications, we find that AD protection do not have significant effects on average protected firms’ wages and investments in capital and R&D, implying that firms have no significant movements towards production shift during the protection period. On the other hand, examining the effects of domestic competition in protected industries on firm productivity, we find that firms have different productivity changes depending on the level of concentration intensity among import-competing industries. In particular, concentration reduces firm productivity in highly-concentrated industry clusters, while concentration has an ambiguous effect on firm productivity in moderately-concentrated industry clusters. These results provide evidence that the imposition of AD duties has heterogeneous effects on firm productivity depending on the market structures. All of our analysis implies that the effects of AD policy may lead to different consequences depending on the country characteristics. In particular, we show that if a country is not yet industrialized, such that its economy is affected by small number of large firms, AD policy will not likely be effective in gaining competitiveness among protected domestic firms.

US Imports for Canadian Softwood Lumber in the Context of Trade Dispute: A Cointegration Approach

In this paper, we examine US imports of softwood lumber from Canadian provinces that are covered under various trade restriction measures between the two countries, and from the rest of the world, including other Canadian provinces that are not subject to the trade restriction measures and other countries. Using the cointegration framework, we find that in the long run, housing/construction activity and the US domestic lumber prices have a positive impact, while imported Canadian lumber prices had a negative impact on the quantity of US lumber imports from the covered provinces. In the short run, the last two lumber trade restriction measures, high Countervailing Duty and Anti-dumping Duty from August 2001 to September 2006, and the latest Softwood Lumber Agreement of 2006 from October 2006 to March 2012 (the latest data available), reduced the US imports of softwood lumber from the covered provinces by −12.8% and −11.2%, respectively.

Some New Evidence about the Effects of U.S. Antidumping Orders and Their Administrative Reviews on the Prices of Covered Imports

The present article presents evidence from a sample of U.S. antidumping orders that are followed through as many as 15 administrative reviews. The decline in average antidumping duties over the course of successive reviews is entirely the result of firms with higher dumping duties disappearing from the review process (probably ceasing sales in the United States). For given firms surviving to be named in the next review, the antidumping duty actually increases from one review to the next. This article is the first to report direct information about the unit value of covered imports contained in administrative review reports of the United States International Trade Commission. This article is also the first to present information about the large number of firms—more than one-third of those ever assigned a firm-specific duty—that are named in administrative reviews, but not in original antidumping orders.

Why the Potential for Trade Diversion should Be Examined Prior to Considering Setting an Antidumping Duty Lower than the Dumping Margin

This paper argues that, where the potential for trade diversion is significant, the protective effects of antidumping measures are heavily diluted, as in such circumstances imports can be sourced from non-subject countries at prices lower than the price of subject imports inclusive of an AD duty reflecting the full dumping margin. Therefore, investigating authorities in World Trade Organization (WTO) Members where the 'lesser duty rule' is part of domestic legislation should examine whether the potential for trade diversion is significant prior to considering setting an AD duty at a level lower than the dumping margin.

Anti-dumping Duties and their Impact on Exporters: Firm Level Evidence from China

Summary Despite a dramatic rise in the instances of anti-dumping (AD) duties, their impact on the targeted firms is not clear. Using detailed firm level data we find robust evidence that the US AD duty led to over 12 (or five) percent decrease in labor productivity (or TFP) of targeted Chinese firms. We also find that firms with high initial export intensity experience both a higher decrease in exports (and total sales) and a bigger drop in productivity due to the US AD duties. Our results suggest reduced economies of scale as a possible mechanism for the drop in firm productivity.

Resolving the Double Remedy Dispute: A Critique of the WTO Appellate Body’s Decision in United States - Definitive Anti-Dumping and Countervailing Duties on Certain Products from China

On March 29, 2007, the United States Department of Commerce (Commerce) reversed its long-standing policy prohibiting the application of countervailing duties against non-market economy countries. Consequently, Commerce began to apply countervailing duties to products from China and Vietnam that were also subject to antidumping duties. China challenged the new U.S. practice before a World Trade Organization (WTO) panel. China argued that Commerce’s actions were inconsistent with the United States’ WTO obligations under the General Agreement on Tariffs and Trade 1994 (GATT 1994), the Agreement on Subsidies and Countervailing Measures (SCM Agreement), the Antidumping Agreement (AD Agreement), and the Protocol on the Accession of the People’s Republic of China (Accession Protocol). China argued that Commerce’s application of both countervailing and antidumping duties resulted in a “double remedy” for the U.S. industry, specifically that the effect of Commerce’s methodology for determining antidumping duties against non-market economy countries was to offset the same instance of subsidization twice — once through the imposition of the countervailing duty and again through the application of the antidumping duty. Although the Panel found that a double remedy was “likely,” it held that “China did not establish that the United States acted inconsistently with its obligations under … the SCM Agreement.” China appealed the latter conclusion, along with other aspects of the Panel decision, to the WTO Appellate Body (AB). The AB reversed the Panel Report’s conclusion — but haphazardly provided an attempted solution to the double remedy dispute in a section, titled “The Completion of the Analysis”. This Note is about the AB’s decision, particularly the “Completion of the Analysis” section. The AB held that the application of concurrent duties that offset the same subsidization twice is not consistent with Article 19.3 of the SCM Agreement because that article requires that an investigating authority collect countervailing duties “in the appropriate amounts.” But in doing so, the AB concluded that an investigating authority has an affirmative obligation under the SCM Agreement to ascertain the amount by which a countervailed subsidy lowers the export price of a product, which depends on whether and to what extent domestic subsidies have “passed through” to the export price. As such, the investigating authority has to take the necessary steps to adjust its methodology to take account of this factual situation, including the degree of pass-through of the subsidy. The AB’s decision has had a powerful and ongoing effect, leading to the United States Congress’s March 2012 passage of “An Act to Apply the Countervailing Duty Provisions of the Tariff Act of 1930 to Nonmarket Economy Countries, and for Other Purposes” and extensive changes in Commerce’s administrative practice for extant and newly filed trade cases. The new controversial practices are now again before the WTO’s AB to determine their consistency with the decision that this Note addresses. The AB’s Completion of the Analysis poses several questions. Must an investigating authority adjust for pass-through in both the countervailing and antidumping calculations, the countervailing duty set equal only to the portion of the subsidy passed through to export price, the antidumping calculation then adjusting for the double remedy still represented in a diminished countervailing duty? Does the AB’s decision account for the U.S. law that requires that the amount of the countervailing duty must be equal to the amount of subsidy that is found to exist, making a countervailing duty adjustment under U.S. law impossible? In order to meet its WTO obligations, should the United States return to its long standing policy of prohibiting the imposition of countervailing duties to non-market economies? This Note argues that the Completion of the Analysis neither factually nor legally solves the double remedy dispute. Part II provides background on U.S. countervailing and antidumping duty law. Part III introduces the double remedy dispute in greater detail, examines the AB’s analysis of the double remedy issue, and illustrates its failure to factually and legally solve the double remedy dispute. Part IV suggests three adjustments to the United States’ countervailing and antidumping methodologies that might resolve the double remedy dispute. Part V concludes.

Caught in the Crosshairs: CBP Enforcement of Antidumping and Countervailing Duty Orders

Given the myriad of government regulations governing the import of merchandise into the United States, many companies are struggling to keep 'ahead of the curve' and effectively identify the 'landed cost' of imported merchandise so that planned profit margins turn into actual ones. Although regular US Customs duties may often be a small part of that calculation (or even not a part at all because many products are duty-free), another 'hidden' cost can be antidumping and countervailing duties. This article examines that issue and why importers need to focus on this increasingly important financial aspect of trade compliance and cost planning. US Customs and Border Protection (CBP or Customs) has identified the enforcement of Antidumping and Countervailing Duties (AD/CVD) as one of eight Priority Trade Issues (PTI) to receive heightened scrutiny from the agency and its personnel in 2013. CBP's designation of AD/CVD duties as a PTI indicates that CBP believes the area presents a high risk of significant revenue loss - a key concern for the agency given its current focus on 'protecting the revenue'. Pursuant to this designation, CBP has been vigorously investigating importations of goods suspected to be covered by current AD/CVD orders in an effort to ensure maximum compliance by US importers and to collect AD/CVD on covered products. CBP's enforcement efforts present a significant compliance risk for importers which have not enacted any AD/CVD controls beyond relying solely on their customs broker to flag potential AD/CVD imports. Importers - in coordination with their in-house trade compliance professionals and/or outside advisors - should implement a robust AD/CVD compliance regime to monitor and flag the presence of any potential AD/CVD obligations prior to importing goods into the United States. Failure to do so can have catastrophic consequences for uninformed importers; if not previously accrued for, the draconian nature of some AD/CVD rates, when combined with potential penalties for failing to report such rates, presents many importers with insurmountable duty liabilities.

Duty as a Cost in EU Anti-Dumping Refunds: The Triple Jump and Other Obstacles to Success

The issue of duty as a cost in European Union (EU) anti-dumping refunds has been dormant for some time now. However, there are many reasons why this issue has resurfaced in recent times as a bone of contention between the European Commission and refund applicants. This article examines one of the main obstacles for EU related importers obtaining full entitlement to refund payments, namely the deduction of EU anti-dumping duties from constructed export prices to reach revised dumping margins for the purposes of awarding refunds. It also examines and questions some of the Commission's current practices and interpretations of this concept.

Product Heterogeneity and Cost Allocations in Contingent Trade Protection

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

Foreign Trade in April 2013

A complicated global economic situation has a negative effect on development of the foreign economic sphere of the Russian Federation. Early in 2013, worsening of the trade balance of the Russian Federation was observed: with reduction of export supplies import has increased. The member-states of the Customs Union keep introducing antidumping duties against goods from China.

Antidumping duties and price undertakings: A welfare analysis

In this paper we examine differences in welfare implications between two trade protection measures: antidumping (AD) duties and price undertakings. Based on a stylized model of duopolistic competition under an effective AD law, we first analyze the case where a foreign firm convicted of dumping is required to pay an AD duty. We then examine the case in which a convicted foreign firm has the option of (i) paying an AD duty or (ii) accepting an undertaking by raising product price to its “normal value.” Taking into account the GATT/WTO policy that an AD duty rate must not exceed the margin of dumping, we show conditions under which a foreign firm chooses to evade its AD fine by a price undertaking. We find that the welfare-maximizing AD duty rate for a dumped product depends crucially on its normal value. If the foreign product's normal value is “critically high,” the optimal AD rate is set to fully reflect the dumping margin. Otherwise, the optimal AD rate is set lower than the dumping margin. From the perspective of social welfare, these findings help to identify the economic conditions under which one policy instrument is chosen over the other against foreign dumping.

Anti-Dumping and Countervailing Duties Double Remedy: The United States’ Pragmatic Approach to Chinese Currency Manipulation

The United States has an alarming trade deficit with China. Many scholars and pundits attribute this trade deficit to China’s efforts to artificially undervalue its currency. While the legal regime of international trade emphasizes liberalized trade, certain protectionist measures are still allowed to combat unfair practices. Rather than addressing China’s currency manipulation directly, the United States has waged a pretextual battle by applying a double remedy of both anti-dumping duties and countervailing duties — both of which are legal under the WTO regime — on certain goods imported from China. Recent actions by the WTO Dispute Settlement Body and the U.S. Congress and Courts have reduced the sting of a double remedy by put in place requirements that a double remedy not double count the dumping margin, but the actual calculation allows a double remedy to remain potent. While not a direct attack, the inherent connection between monetary policy and international trade makes this pretextual double remedy attack a viable alternative to an all-out currency war or ineffective diplomatic efforts.

‘Appropriate’ Price Comparisons in Anti-dumping Investigations: Apples-to-Apples or Starking-to-Starking?

This article considers the facts before the World trade Organization (WTO) panel in China - Definitive anti-dumping duties on x-ray security inspection equipment from the European Union (China - X-rays) and how its findings require a more detailed domestic industry price analysis than currently employed in some countries. It proposes a methodology for the determination of both the price undercutting and the margin of injury and briefly explores how, if the price undercutting exercise has to be done in such considerable detail, the lesser duty rule can be applied with little additional burden.

The Heterogeneous Effects of Trade Protection: A Study of US Antidumping Duties on Portland Cement

For many traded products, high transportation and trade costs can lead to regionally segmented markets, which affect both the pattern of trade and the impact of trade policy. This paper studies the imposition of antidumping duties in the cement industry and finds striking regional variation in their impact on domestic prices, sales and imports. Duties that were imposed on Japanese producers that were shipping cement to the US West-Coast coastal markets led to imperfect substitution to other imports, which allowed domestic prices and production to increase. Imperfect substitution also occurred following duties that were imposed on Mexican producers that were shipping cement to the US Gulf of Mexico coastal markets. But in the US Southwest border markets, the same duties had no impact on the domestic prices of cement. I link the variation in responses across regions to hysteresis that was due to high exit costs.