Anti-dumping Duties Research Articles

Why Don't Foreign Firms Cooperate in Antidumping Investigations?: An Empirical Analysis

Foreign firms face punitive antidumping duties if they do not cooperate with the US Department of Commerce (DOC). For example, 37% of all foreign firms involved in antidumping investigations in the US chose faced facts available margins for the 1995-2002 period, with average antidumping duties of 31% for cooperating foreign firms, compared to 87% for those who do not. The existing literature has focused on how DOC discretion has led to foreign firm non-cooperation. This paper instead examines individual foreign firm's decisions about whether to cooperate during this same period. We find evidence that non-cooperation is consistent with a model of foreign firms rationally choosing not to cooperate, rather than simply a result of investigating authority bias against imports.

Trade deflection and trade depression

This is the first paper to empirically examine whether a country's use of an import restricting trade policy distorts a foreign country's exports to third markets. We first develop a theoretical model of worldwide trade in which the imposition of antidumping and safeguard tariffs, or “trade remedies,” by one country causes significant distortions in world trade flows. We then empirically test this model by investigating the effect of the United States' use of such import restrictions on Japanese exports of roughly 4800 products into 37 countries between 1992 and 2001. Our estimation yields evidence that US restrictions both deflect and depress Japanese export flows to third countries. Imposition of a US antidumping measure against Japan deflects trade, as the average antidumping duty on Japanese exports leads to a 5–7% increase in Japanese exports of the same product to the average third country market. The imposition of a US antidumping measure against a third country depresses trade, as the average US duty imposed on a third country leads to a 5–19% decrease in Japanese exports of that same product to the average third country's market. We also document the substantial variation in trade deflection and trade depression across different importing countries and exported products.

Problems with Dumping and Injury Margin Calculations in Ten User Countries

In addition, de facto a third form of dumping exists: Non-market economy dumping. Where a non-market economy is under investigation, dumping may be established in a special manner. In all three cases, the establishment of dumping nominally2 is a technical mathematical exercise, which focuses on facts, notably the prices and costs of merchandise in two separate markets. If dumping and resulting injury are found, anti-dumping duties may be imposed to offset or prevent injurious dumping in the importing country market. Anti-dumping duties therefore are defensive (and not punitive) in nature. Systematic price dumping assumes separation of markets and existence of a closed home market, through governmental or market activity. These conditions should make parallel imports impossible. It is perceived to be “unfair” not to allow competition in one’s home market, yet to benefit from the openness of other markets to sell at low prices there. This perception of unfairness can be said to form the current basis for most anti-dumping legislation, although the ADA itself does not label dumping as “unfair” and the WTO carefully avoids that assertion. However, price differentiation as a pricing policy (as often used within domestic economies) is a widely used instrument to introduce products to new markets (however, the effect of such a policy is often balanced by parallel imports). Similarly, temporary sales below fixed costs (but above variable costs) are common in many industries during downturns in the business or product cycle. Therefore, it is important that key substantive concepts of the ADA are applied appropriately. Furthermore, some ADA rules may need to be revised to better reflect business realities in a globalized economy. In the areas of price and cost dumping, current WTO rules leave too much leeway for dumping to be found and anti-dumping measures to be applied in circumstances where systematic dumping does not take place (and, indeed, where domestic competition laws would not find objectionable conduct). We characterize such dumping as incidental dumping. A finding of incidental dumping, as opposed to systematic dumping, may result from various factors, including, but not limited to:

Economic Rationale, Trade Impact and Extent of Antidumping – A Case Study of Pakistan

This paper has analyzed the economic and political justification, trade impact and extent of antidumping measures initiated by Pakistan. Screening models for anti-predatory behaviour, Herfindahl-Hireshmann Index (HHI) for concentration and descriptive statistical measures are used to test the antidumping (AD) behaviour. The results are consistent with the earlier literature that AD duties have both a trade reduction and diversion effect. It is evident from the results in half of the cases studied that an economic rationale has been followed in the application of AD duties in Pakistan. Although the number of AD cases is limited, Pakistan has emerged as one of the intensive users of AD, relative to its total import share. It is also evident from the fact that intensive use of AD reduces trade and increases trade barriers, similarly, trade diversion reduces the chances of trade reduction. The key message emerging from this research is that trade diversion persists and in some cases trade diversion is substantial and it offsets the effect of AD measures on named countries to the benefit of non-named countries.

NAFTA Panel Dismisses Chapter 11 Challenges to U.S. Administration of Antidumping and Countervailing Duty Laws, Allows Byrd Amendment Claim to Proceed

NAFTA Panel Dismisses Chapter 11 Challenges to U.S. Administration of Antidumping and Countervailing Duty Laws, Allows Byrd Amendment Claim to Proceed

The Impact of Granting Market Economy Status to China on Antidumping Duties and Imports: The Case of Korea

The Korean government has officially recognized China as a full market economy. This paper investigates the impact of grantingThe Korean government has officially recognized China as a full market economy. This paper investigates the impact of granting market economy status to China on antidumping (AD) duties and imports. With regard to non-market economies (like China), it is presumed that prices and costs are influenced by state interference and, therefore, authorities use prices and costs from a third party economy to construct normal values. This, however, leads to higher dumping margins. This paper examines the use of Non-Market Economy (NME) on dumping margins and statistical analysis finds that NME, in fact, raises margins by 18.7∼27.3%. Furthermore, the imposition of AD duties significantly restrains trade; for example, a 10% AD duty causes imports to fall by about 1.5~3.4%.

The returns from rent‐seeking: campaign contributions, firm subsidies and the Byrd Amendment

Abstract This is the first empirical study to examine Congressional support of a new law that distributes antidumping duties to protected firms. Because the law produces a transparent measure of how much each firm was rewarded for its efforts to secure the bill's passage, it provides researchers with a unique opportunity to study the link between the expected financial returns to firms, campaign contributions, and Congressional behaviour. Our results indicate that campaign contributions from beneficiaries increased the likelihood that lawmakers would sponsor the law, while contributions from the law's beneficiaries increased with the rewards they expected to receive.

United States-Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products from Japan, AB-2003-5, WT/DS244/AB/R

The WTO Anti-Dumping (AD) Agreement requires that anti-dumping duties be reviewed at least every five years (Article 11.3); pursuant to this requirement, domestic trade authorities in the US are charged with the task of making a determination as to whether, after five years, revoking the duties would be likely to lead to continuation or recurrence of dumping (Commerce) and of material injury (ITC). This is called a Sunset Review; a negative determination of likelihood, either with respect to dumping or injury, will result in the duties expiring, the ‘sun’ setting, as it were.

Consequences of Neglecting National Product Differentiation in Assessing the Impact of U.S.–Canada Softwood Lumber Disputes

Abstract This study, using the Armington approach, analyzes the consequences of omitting national product differentiation on the impact assessment of U.S.–Canada softwood lumber disputes. Omitting national product differentiation is found to cause differences in the estimated impacts ranging from a 38% underestimation to a 340% overestimation under the quantity-based Canadian export tax, and from a 61.5% underestimation to a 413% overestimation under the value-based (ad valorem) U.S. import tariff. Demonstrated as an approach to alleviating the biases, a computable general equilibrium model is developed to simulate the impacts of the 1996 Softwood Lumber Agreement (SLA) and the countervailing duty (CVD) and anti-dumping duty (AD) imposed under the current round of the dispute. The SLA and the CVD and AD seem more likely to cause the redistribution of welfare than to improve the market share of U.S. domestic softwood lumber. The CVD and AD would be more beneficial to the U.S. in terms of overall welfare but causing greater distortions in both the U.S. and Canada than the SLA.

The United States' Discriminatory Protectionism against China

The article examines the characteristics of the United States’ (US) discriminatory protection measures, especially the antidumping (AD) duties, against China. China has been the most significant target of US trade protectionism in terms of the absolute number as well as the intensity of measures. There exists a positive relationship between the US bilateral trade deficit and the increase in the number of its discriminatory trade protection measures against China. US AD decisions against China have been led by the chemical industry, followed by the iron and steel industry. It is expected that the number of US discriminatory trade protection measures against the Chinese textile products will increase in the coming years, since the ten-year phase-out of the Multi-Fibre Arrangement (MFA) was completed at the end of 2004. Since discriminatory trade restrictions are costly in terms of the welfare of the concerned countries, it would be necessary for them to apply stricter regulations regarding the discriminatory protection measures.

Quality Management in Pakistan's Bedwear Industry

Pakistan's bedwear industry contributes significantly to Pakistan's industry in general and to its textile industrial output and exports in particular. The exports of bedwear have increased steadily. However, its key basis of competitive advantage has been low cost. After greater liberalization from 2005 onwards and due to tariffication of quotas, the bedwear industry will not only have to scale higher tariff walls but will be more exposed to the threat of anti-dumping duties as it relies primarily on low prices to penetrate the export markets. To enhance its competitiveness, it will have to combine better quality with low costs and quick response. Research in quality management in Pakistan's bedwear industry was, therefore, undertaken. A postal self-completion questionnaire was mailed to 38 members of Pakistan Bedwear Manufacturers' and Exporters' Association (PBMEA). The response rate was almost 79%. It was found that this industrial segment was in various stages of development. This study demonstrates both the effectiveness and the limits of quality assurance in improving the levels of quality which remain a moving target in a dynamic liberalizing international trade environment that is more competitive since 2005. The bedwear industry, therefore, needs to graduate to advanced practices in quality management in order to remain competitive in rapidly changing times.

Policy externalities: How US antidumping affects Japanese exports to the EU

This paper investigates the international externalities associated with US use of antidumping (AD) measures by examining the relationship between US AD duties (ADDs) and Japanese exports to the US and EU over the 1992–2001 period. We first examine the trade destruction and trade diversion associated with Japanese exports to the US market resulting from US AD duties. We then investigate whether US ADDs impose externalities on a non-targeted third country by examining the effect of these US policies on Japanese exports to the EU. We document sizable trade deflection and trade depression in the EU market resulting from US ADDs. Model estimates indicate that, on average, roughly one quarter to one third of the value of Japanese exports to the US thought to be destroyed by a US ADD is actually deflected to the EU in the form of a contemporaneous increase in exports. Finally, we present evidence that US ADDs impose terms-of-trade externalities on non-targeted markets. We find that US duties on Japanese exports are associated with substantially lower Japanese export prices in the EU market.

Policy Externalities: How US Antidumping Affects Japanese Exports to the EU

This paper investigates the international externalities associated with US use of antidumping (AD) measures by examining the relationship between US AD duties (ADDs) with Japanese exports to the US and EU over the 1992-2001 period. We first examine the trade destruction and trade diversion associated with Japanese exports to the US market resulting from US AD duties. We then investigate whether US ADDs impose externalities on a non-targeted third country by examining the effect of these US policies on Japanese exports to the EU. We document sizable trade deflection and trade depression in the EU market resulting from US ADDs. Model estimates indicate that, on average, roughly one quarter to one third of the value of Japanese exports to the US thought to be destroyed by a US ADD is actually deflected to the EU in the form of a contemporaneous increase in exports. Finally, we present evidence that US ADDs impose terms-of-trade externalities on non-targeted markets. We find that US duties on Japanese exports are associated with substantially lower Japanese export prices in the EU market.

Tariffs and the Byrd amendment

The Byrd amendment to US anti-dumping law distributes the revenue from anti-dumping duties imposed on foreign firms to the domestic firms that lodged the complaint of dumping. This paper shows that the presence of the Byrd Amendment can yield lower duties and greater welfare than in its absence. This result holds when the US government puts a sufficient weight on the profits of the domestic industry in the welfare function. A sufficient condition for this result is that the market share of the domestic industry exceeds 50%, which applies in most US antidumping cases.

Is Antidumping legislation a threat to competition? a case study of US chemical industry

The U.S. antidumping legislation provides protection to domestic industries that face dumped imports. Restricting imports by imposing antidumping duties protects domestic firms from predatory pricing by foreign firms. At the same time it reduces competition in the domestic market. In cases where the industry consists only of one or two firms, import restriction can drastically reduce competition faced by domestic firms. This paper looks at the cases filed by the chemical industry to illustrate this possibility. The concentration of industries asking for protection and the impact of import restriction on domestic competition is studied.

European Communities–Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India: Recourse to Article 21.5 of the DSU by India

This paper addresses the dispute brought to the World Trade Organization (WTO) by India concerning antidumping duties imposed by the European Communities (EC) on cotton-type bed linen. An earlier complaint brought by India challenged the antidumping duties on a number of points, including the EC practice of ‘zeroing’ for the computation of dumping margins (which had the e.ect of assigning a negative dumping margin a weight of zero when computing a weighted average dumping margin). India prevailed in that dispute, and the EC responded with Council Regulation (EC) No. 1644/2001, amending the original antidumping measure on bed linen from India. India was of the view that the amended measure did not comply with EC obligations under the WTO Antidumping Agreement, and brought the proceeding under Article 21.5 of the DSU that is the subject of this paper.

What is the Effect of U.S. Antidumping Duties on Imports? Some Evidence from the Sunset Review Process

The voluminous literature on the U.S. antidumping laws has a curious lacuna. There is little in this literature about the effects of antidumping duties on the volume of subject imports. One reason this key question has not frequently been investigated is the lack of data. U.S. antidumping duties are firm specific, while information about U.S. imports is collected by commodity and country, but not by firm. This paper avoids this problem by examining a sample of U.S. antidumping orders for which the duties were the same for all firms from a given country, or for which there was only one foreign firm exporting the product from the foreign country in question. Using this sample, the present paper is the first study of which the author is aware that investigates the relation between antidumping duties and subject imports using accurate information about the level of antidumping duties. The paper is also unique in accurately measuring the quantity of imports affected by the antidumping duties. The study uses import quantity data reported by the USITC in its Sunset Review reports, rather than using ten-digit HTUSA categories, which sometimes do not match antidumping product definitions precisely. The price of using this unique dataset is that the current study is restricted to a sample of only 32 of the approximately 350 antidumping orders originating during the relevant years, of which about 188 are still in effect. Some evidence is presented suggesting that the sample of orders used may be representative of the larger universe. For the sample examined, the paper finds an elasticity of subject imports with respect to U.S. antidumping duties of roughly 0.9. The paper also finds some evidence that age of the antidumping order may be a factor in explaining reduction in volume of subject imports. Study of this effect may be complicated by the fact that the initial level of all U.S. antidumping duties was lower during the early 1980s than in the early 1990s; so older orders tend to have lower duties. The study finds inconclusive evidence about the effect of antidumping orders on the price received by the foreign suppliers of subject imports.

European Communities – Anti-Dumping Duties on Imports of Cotton-Type Bed Linen from India (AB-2000-13, WT/DS141/AB/R:DSR 2003: III, 965): Recourse to Article 21.5 of the DSU by India

This chapter addresses the dispute brought to the World Trade Organization (WTO) by India concerning anti-dumping duties imposed by the European Communities (EC) on cotton-type bed linen. An earlier complaint brought by India challenged the anti-dumping duties on a number of points, including the EC practice of “zeroing” for the computation of dumping margins (which had the effect of assigning a negative dumping margin a weight of zero when computing a weighted average dumping margin). India prevailed in that dispute, and the EC responded with Council Regulation (EC) No. 1644/2001, amending the original anti-dumping measure on bed linen from India. India was of the view that the amended measure did not comply with EC obligations under the WTO Anti-dumping Agreement, and brought the proceeding under Art. 21.5 of the DSU that is the subject of this chapter.

United States – Sunset Review of Anti-Dumping Duties on Corrosion-Resistant Carbon Steel Flat Products From Japan (AB-2003-5, WT/DS244/AB/R): A Legal and Economic Analysis of the Appellate Body Ruling

The WTO Anti-Dumping (AD) Agreement requires that anti-dumping duties be reviewed at least every five years (Art. 11.3); pursuant to this requirement, domestic trade authorities in the United States are charged with the task of making a determination as to whether, after five years, revoking the duties would be likely to lead to continuation or recurrence of dumping (Commerce) and of material injury (US International Trade Commission, or USITC). This is called a Sunset Review; a negative determination of likelihood, either with respect to dumping or injury, will result in the duties expiring, the “sun” setting, as it were.

Taxes antidumping et règle des faits disponibles

En raison des hauts niveaux de taxe qu’elle impose, la procedure antidumping est souvent consideree comme un obstacle important au libre-echange. Une explication possible pour ces taxes elevees est la regle des « faits disponibles » qui permet a l’agence en charge de l’antidumping de fixer la taxe sur la seule base de l’information fournie par les firmes domestiques. Cet article integre cette caracteristique importante dans le processus de determination de la taxe. En prenant en compte un possible biais en faveur de la firme domestique dans les preferences de l’agence, nous montrons comment la regle des faits disponibles peut impliquer des taxes elevees a la fois directement et indirectement.