DumpingandAntidumpingDuties#

BruceA.Blonigen*UniversityofOregon

ThomasJ.Prusa**RutgersUniversity

PreparedfortheHandbookofCommercialPolicy,editedbyKyleW.BagwellandRobertW.Staiger

Thisversion:February25,2016

Abstract:Themajorityoftheworld’scountrieshaveantidumping(AD)statutesinplace,hundredsofADactionsoccurannuallyacrossthesecountries,andADcriteriaandprocedureshavebeencodifiedintheGeneralAgreementonTariffsandTradeanditssuccessor, theWorldTradeOrganization.AD’suniquecharacteristicsalongwith its high incidence of use make it a particularly apt policy for studyingnumeroustradetheoriesandpoliticaleconomymodels. Wereviewtheeconomicsliterature on dumping and antidumping activity, with particular emphasis on theevolution of the literature and themost recent contributions. We also point thereadertoresourcesandrichdataavailabletostudyAD,aswellasourthoughts(inaconcluding section) on where scholars should next focus their attention in thisliterature.

#WewouldliketothankMeredithCrowley,PinelopiGoldberg,DougIrwin,OhyunKwon,Jee‐HyeongPark,NinaPavcnik,andHylkeVandenbusschefortheircommentsandsuggestions.WeareespeciallyindebtedtoChadBownforhisinsightsandverydetailedcommentsonapreliminarydraft.Anyomissionsandmistakesareours.*Correspondingauthor:DepartmentofEconomics,1285UniversityofOregon,Eugene,OR,97403‐1285;Ph:541‐346‐4680;Email:bruceb@uoregon.edu.**DepartmentofEconomics,NewJerseyHall,75HamiltonSt,RutgersUniversity,NewBrunswick,NJ,08901‐1248;Ph:908‐443‐1565;Email:prusa@rutgers.edu.

ContentsI.Introduction.........................................................................................................................................................................................................................................1

II.ABriefPrimerontheHistoryofADLawsandBasicsonImplementation...........................................................................................................5

A.HistoryofADlaws...................................................................................................................................................................................................................5

B.ImplementationofADlaws.................................................................................................................................................................................................8

i)DumpingMarginDetermination.............................................................................................................................................................................10

ii)InjuryDetermination...................................................................................................................................................................................................11

III.FactsandfiguresonADuse...................................................................................................................................................................................................13

IV.Keyissuestraditionallyaddressedintheeconomicsandlawliterature..........................................................................................................21

A.Whenandwhydoesdumpingoccur?..........................................................................................................................................................................22

i)Marketstructureexplanations.................................................................................................................................................................................22

ii)DumpinginducedbyADlaws..................................................................................................................................................................................27

iii)Antidumpingwhenthereisnodumping..........................................................................................................................................................28

B.WhenandwheredoADactionsanddutiesoccur?...............................................................................................................................................30

i)Cross‐industryincidence............................................................................................................................................................................................30

ii)Cross‐countryincidence............................................................................................................................................................................................33

C.HoweffectiveareADactions?.........................................................................................................................................................................................35

i)Directeffects.....................................................................................................................................................................................................................35

ii)Indirectand/orunintendedconsequences.......................................................................................................................................................37

D.Howdoadministrative,legal,andregulatoryprocessesaffectADlawsandtheirconsequences?................................................39

V.RecentResearchDevelopments.............................................................................................................................................................................................46

A.MeasuringtheMyriadEffectsofADDutiesonTrade..........................................................................................................................................46

i)DoesADDistortTradeinThirdMarkets?...........................................................................................................................................................46

ii)WhataretheFirm‐andPlant‐levelImpactsofADDuties?.......................................................................................................................49

iii)DoesAntidumpingHaveaChillingEffectonTradeBeyondtheTargetedProducts?..................................................................51

iv)DoesAntidumpingResultinExit?........................................................................................................................................................................53

B.DoesAntidumpingMatterforDevelopingCountries?.........................................................................................................................................53

C.IsADUsedStrategicallyattheCountryLevel?........................................................................................................................................................56

D.TradeAgreements,theWTO,andAD..........................................................................................................................................................................57

i)DoPTAsAffectthePatternsofADUse?...............................................................................................................................................................57

ii)HasMandatorySunsetWorked?............................................................................................................................................................................57

iii)IstheWTOConstrainingtheUseofAD?...........................................................................................................................................................58

E.AD’sRoleinMaintainingTradeCooperation...........................................................................................................................................................60

VI.ConcludingComments..............................................................................................................................................................................................................64

References.............................................................................................................................................................................................................................................70

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I. Introduction Looselyspeaking,theterm“dumping”denotesasituationwhenafirmchargesa

lowerpriceinaforeignmarketthanitchargesforthesamegoodinitsdomestic

marketorwhenitexportsthegoodatapricebelowcosts.Dumpingmay

significantlyimpactotherfirmsinthedestinationmarket,puttingdownward

pressureonpricesandprofitsforsuppliersinthemarket.Intheearly20thcentury

afewdevelopedcountries,beginningwithCanadain1904,enactedantidumping

(AD)lawstoremedysituationswhereforeignfirmsdumpedproductsintotheir

domesticmarketsduetoworriesaboutitseffectondomesticfirms.1

Today,themajorityoftheworld’scountrieshaveantidumpingstatutesin

place,hundredsofADactionsoccurannuallyacrossthesecountries,andADcriteria

andprocedureshavebeencodifiedintheGeneralAgreementonTariffsand

Trade(GATT)anditssuccessor,theWorldTradeOrganization(WTO).Unlikemany

otherformsoftradeprotection,ADactionsarelegalunderWTOrules.Moreover,

ADactionsareexemptfromthenon‐discriminationclausebecausetheyremedy

whataredeemedtobeunfairtradepractices.

InthischapterwereviewtheeconomicliteraturethathasdevelopedonAD

activity,withparticularemphasisonthepastdecadeofresearchinthisarea.There

areanumberofreasonswhywethinkthestudyofADactivityisimportantfroman

economicandpolicystandpoint,andhasthereforeledtoasubstantialandgrowing

bodyofliteraturethatmeritsitsownchapterinthisHandbook.

1NewZealand(1905),Australia(1906),SouthAfrica(1914)andtheUnitedStates(1916)followedsuitafterCanadawithsimilarantidumpinglaws.

2

Fromatheoreticalpointofview,ADlawsandactivityareinterestingfora

numberofreasons.First,itisacodifiedexceptionintherulesoftheWTOthat

otherwiseworktowardfreertradeamongstWTOmembersandthisleadstoa

numberofthought‐provokingquestions.InwhatsensedoADlawsservethelarger

goalsoftheWTO?ADlawsmaybeanimportantreleasevalveorinsurancepolicy

thatallowscountriestoachievegreatermultilateralgainsonotherfronts.Onthe

otherhand,WTOmembersmaybesubstitutingoneformoftradeprotectionfor

othersandattenuatingfree‐tradegains.

Second,howconsistentareADlawswithgeneralWTOprinciplesand

framework,particularlysinceADlawsweredevelopedwellbeforetheGATTand

WTOcameintoexistence?Forexample,ADactionscanbe(andalmostalwaysare)

discriminatoryacrossWTOmembersanddonothaveallowancesforreciprocityor

(limited)retaliation.ArethemanyAD‐relateddisputesattheWTOanindicationof

theseinconsistenciesorduetootherfactors?

Third,politicaleconomyimplicationsofADactionsarealsofascinating.AD

actionsarequitedifferentfrommanyotherformsoftradeprotectioninthatthey

areadministeredbygovernmentagenciesandtypicallydonotrequireexecutiveor

legislativeaction.DoesthismakeADprotectionmoreorlesspronetopolitical

pressure?Also,ADactionstypicallybeginwithapetitionbyaninteresteddomestic

party(i.e.,competingdomesticproducers)andprovidelittletonovoicefor

consumerswhowillbeaffected.Thesecharacteristicsgenerateauniquepolitical

economysettingtostudy.Finally,therelativeeaseofinitiatingADactionsalso

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makesADsubjecttopossiblestrategicmanipulationbyfirmswhocompeteagainst

eachotherinthemarketplace.

Fourth,manyofthedetailsofimplementingADlawshaveevolvedovertime.

Inaddition,implementationvariesacrossproductsandcountries,whichcanleadto

awiderangeofpossibleoutcomesdependingontheparticularimplementation.An

obviousandwell‐researchedexampleistheimpactofhowdomesticauthorities

defineandmeasure“dumping”and“injurytothedomesticindustry”,thetwokey

implementationcriteria.Afirmpricingidenticallyintwoexportmarketsmaybe

deemedtobedumpingbyonecountry,butbefoundnottohavedumpedbythe

secondcountry.Also,ADmeasuresaresubjecttofrequentandsystematicreview

todetermineiftheirapplicationisstillmerited.Howagenciesimplementthese

reviewsandthestrategicresponsesoffirmscanleadtoawidevarietyofoutcomes.

Fromanempiricalperspective,ADactionshaveanumberoffeaturesthat

generatecleartestablepredictions.Tobeginwith,AD’sheavyusemakesitanatural

policytostudy.ADremainsthepredominantcontingenttradepolicyinstrument

formostWTOmembers.Prusa(2005)reportsthattherearemoreantidumping

actionsthanallothercontingentprotectionmeasurescombined.Bown(2010,

2011)showsthatantidumpingprotectionaccountsforthevastmajorityofallthe

tradesubjecttoanytemporarytradebarrier.Intermsoftemporarytradebarriers,

ADiswheretheactionis.

Moreover,ADinvestigationsinvolvearelativelyshortadministrativeprocess.

AsaresultADmeasuresoccurfrequentlyandcanrespondfairlyquicklytochanging

economiccircumstances.Forthepastseveraldecadestheseadministrative

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decisionshavebeenfairlywelldocumentedbygovernmentagencies.Inrecent

yearsADactivityacrossallusershasbeenregularlyupdatedbytheWorldBank

(Bown,2014a).Asaresult,ADactivitygeneratessubstantial“datapoints”thatare

abouttheclosestonecangettoreal‐timedataontradeprotectionactions.

TheimplicationoftheintensityofADactivityistwo‐fold.First,becauseAD

actionsaretypicallytargetedtoveryspecificimportsourcesandproducts

researchershavebeenabletopreciselyexaminetheeffectsofthesetradepolicies

onthetargetedsectors.CombininginformationonADactionswithotherdetailed

datarelatedtothosesectorshasresultedinimportanttestsoftradeeffectson

micro‐levelactivity(e.g.,plant,households,etc.).Second,theaggregateand

cumulativeeffectsontheeconomyfromthemanydisparatetargetedactionscanbe

measured.Gallaway,Blonigen,andFlynn(1999)andMesserlin(2001)offer

evidencethatthewelfarecostsassociatedwithADprotectionareamongthelargest

ofallcommercialtradepolicies.

Insummary,ADlawsandresultingprotectionareunusualinmanyways,

whileclearlyintertwinedwithothertradepoliciesandcross‐countryeffortsto

lowertradebarriers.Thevariationinthecountry‐specificimplementationofAD

rulesleadstoavarietyofinterestingresearchpursuitsthatspannotonlythetrade

policyliterature,butalsotheappliedgametheory,industrialorganization,and

politicaleconomyliteratures.Thefrequentandwell‐documentedactivityprovides

empiricalresearcherswithrichdatatoexplorehypotheses.

Intherestofthischapter,wefirstsetthestagebyprovidingaquick

overviewofthehistoryandbasicsofADlaws,followedbywhatwethinkaresalient

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featuresaboutADactivityacrosstime,productsandcountriesintheworld

economy.WethenreviewthefundamentaleconomicissuessurroundingADlaws

andactivitythatresearchershaveexaminedandaddressedinwhatweconsiderthe

traditionalandwell‐establishedliteratureonADthatdatebacksmanydecades.In

sectionV,weturntothemorerecentworkonADthathasoccurredinthepast

decadeorso.2Weconcludewithasectionoutliningwhereweseetheliterature

headedinthecomingyears.

II. A Brief Primer on the History of AD Laws and Basics on Implementation 

A. History of AD laws 

Theoriginsofantidumpinglawsdatebackto1904whenCanadawasthefirst

countrytoadoptlawsthatallowedforspecialdutieson“under‐valuedgoods”,

wherethedutywouldbecalculatedasthedifferencebetweenthepriceinCanada

andthepriceatwhichgoodsweresoldintheexporter’sownmarket.Theimpetus

wascompetitivepressuresontheCanadiansteelindustryfromcheapimportedU.S.

steel,whilesimilarpressuresintheagriculturemachineryindustryfromtheU.S.‐

firmInternationalHarvesterledAustralia(1906)toquicklyfollowwithasimilar

law(Ciuriak,2005).

Thebroadercontexttotheoriginoftheselawswasthepublicresponseto

2Forus,thisroughlycorrespondstotheperiodoftimesincewelastwroteareviewoftheADliterature(BlonigenandPrusa,2003).AnalternativeperspectiveontheliteraturecanbefoundinNelson(2006).WTO(2009)offersabroaddiscussionofthecontingentprotectionliterature,includingantidumping.

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thelargemonopoliesandcartelsthathadariseninthelate19thandearly20th

centuriesinanumberofWesterndevelopedcountries,particularlyintheU.S.

BeginningwiththeShermanAntitrustActof1890andfollowedbyother

refinements,includingtheClaytonActof1914andtheRobinson‐PatmanActof

1936,theU.S.madeillegalmanybusinesspracticesthatharmedorlimitedmarket

competition.OneofthebusinesspracticesmadeillegalwiththeClaytonActof1914

andtheRobinson‐PatmanActof1936waspricediscriminationthatispredatoryin

itsintent;i.e.,pricinglowwiththeintentofdrivingcompetitorsoutofthe

marketplace.ThefirstantidumpinglegislationintheU.S.,theAnti‐dumpingActof

1916largelyappliedthisprincipletoimports,makingitillegaltosellimportsatlow

prices“withtheintentofdestroyingorinjuringanindustryintheUnitedStates,or

ofpreventingtheestablishmentofanindustryintheUnitedStates.”3

Showing(predatory)intentonthepartofafirmtoinjurecompetitorsis

legallydifficultandaU.S.TariffCommissionreportin1919concludedthatthe1916

lawdidnotcoverabroadenoughrangeofdumpingactivitiesthatcouldbeharmful

toU.S.producers,whethertherewaspredatoryintentornot.(Mastel,1998,p.19)

Asaresult,theU.S.enactedtheAnti‐dumpingActof1921,whichprovidesa

considerablydifferentstandard.4AsIrwin(2005)discusses,thechangeisfroma

(1916)lawthatisacriminalstatutewithcriminalpunishmentsforpredatory

pricingpracticestoanadministeredimportpolicythatleviesdutiesonaforeign

firmforsimplycharginglowerpricesintheU.S.thanthefirm’sownhomemarket.

3QuotedinIrwin(2005),p.652.4Curiously,untilrecentlythe1916Actwasstillinforceanditremainedapplicable.In1998theWTOAppellateBodyruleditviolatedWTOrules;in2004theU.S.finallyrepealedthe1916Act.

7

Barceló(1991)providesevidencethatmanyU.S.legislatorsdidnotreally

understandthisconceptualchangeatthetime,thoughothersfearedthatitwould

leadtoaneasierpathtoimportprotection.ItisclearthatthischangemadetheU.S.

lawmuchmorecomparabletothosepassedinCanadaandothercountriesadopting

similarlawsatthetime.

Inthedecadesthatfollowed,specialformsofprotectionlikeantidumping

wererarelyusedascountriesbegantoimplementsubstantialincreasesintariffs

andquotasafterthecrashof1929andtheonsetoftheGreatDepression.Butsuch

specialformsofprotectionwerenotforgottenintheinitialnegotiationsand

adoptionoftheGATT.ArticleVIoftheoriginalGATTin1947enshrinesgeneral

languageallowingsignatoriestoemployantidumpingandcountervailingduty

policiesandcloselyfollowstheprovisionsofthe1921U.S.Anti‐dumpingAct.

TheearlyroundsofGATTwerefocusedonreducingtraditionalformsof

tradeprotectionanddidnotmakeanysubstantivechangesoradditionstotheAD

provisionsinArticleVI.TheTokyoRound(1973‐1979)includedthefirstsignificant

changestoGATTADrules,broadeningtherulesfordeterminingdumpingtoinclude

“salesbelowcosts”andclarifyingwhatconstitutesmaterialinjury(essentially

codifyingevolvingEuropeanCommunityandU.S.practices).

TheUruguayRound(1986‐1994)madethemostsubstantivechangestoAD

provisionsintheGATTbyrewritingArticleVIfromasetofgeneralguiding

principlestoaverydetaileddescriptionofhowADactionsaretobeimplemented

8

byWTO‐membercountries.5Whilethereweresomerefinementsandinnovations

toADrulesinthisre‐writing,thefundamentalconceptsofapplyingADmeasures

wereunalteredandcontinuedtobequiteconsistentwiththeexistingnationallaws

ofthe“traditionalusers”ofADlaws(Australia,Canada,EU,andU.S.).6

WestressthatsinceatleastGATT1947,thelegalbasisforimposing

antidumpinghashadnothingtodowithaneconomicunderstandingofdumping.

Forinstance,economistsoftenarguethatdumpingisonlyeconomicallymeaningful

ifimperfectcompetitionexists,productsarenothomogeneous,andmarketsare

segmented(e.g.,limitedpricearbitrage).Noneoftheseeconomicallymeaningful

conceptsappearintheGATT(andlaterWTO)ADrules.Thelackofeconomic

principlesmakesADverydifferentfrommostotherGATTprovisions7andis

perhapsthegreatestfrustrationofeconomistswithrespecttoantidumping.

Finger(1993)states“antidumpingisjustordinaryprotectionwithagoodpublic

relationsprogram.”

B. Implementation of AD laws 

WhilecountriescanvarysomeintheirimplementationofADlaws,thereis

significantcommonality,particularlyduetothesubstantialcodificationofAD

practicesinArticleVIoftheGATTintheUruguayRound.Acknowledgingthatthere

5Thechangestotherulesweresubstantialenoughtowarrantmovingtheantidumpingtexttoanewagreement,oftencalledtheAnti‐DumpingAgreement.ArticleIoftheAnti‐DumpingAgreementrefersbacktoArticleVIofGATT.6SeeMastel(1998)forfurtherdetails.7BagwellandStaiger(2016)reviewtheliteraturestudyingeconomicexplanationsforWTOrules.

9

aredifferencesacrosscountries,inbroadtermsanADinvestigationproceedsas

follows.

Ifadomesticindustrybelievesthatitisbeinginjuredbydumpedimports,it

filesapetitionwiththerelevantgovernmentagency(‐ies).Innearlyallcases

domesticfirmsand/orlaborunionssubmitthepetition.Thoughmorerare,

governmentagencieschargedwithimplementingADlawsarelegallyabletoinitiate

investigationsoftheirownvolition.

Withthepetitionfiledthefirststepfortheadministrativeagency(ies)isto

determinewhetherthepetitionsatisfiesallrequirementsunderthelawtoinitiate

aninvestigation.Forexample,isthepetitionsufficientlysupportedbytheindustry,

istheproductpreciselydefined,isthebasisfortheallegedexistenceofdumping

plausible,isthenatureoftheinjuryexplained,etc.

Onceitisdeterminedthatapetitionsatisfiesallrequirements,the

investigationproceedsonastatutorilydefinedtimetable.Formostcountriesthe

investigationlasts12‐15months;thetimelinessofthepotentialdutymakesADa

veryattractivepolicyforindustriesseekingimportprotection.

GATT/WTOrulesspecifytwocriteriamustbemetinorderforanAD

measuretobeapplied.Thefirstisthepresenceofdumpingdefinedaswhenthe

priceofanimportedgoodisbelowwhatisconsidered“fair”or“normal”value.The

secondcriteriarequiresagenciestoexaminewhetherthedumpingactivity,iffound,

hasmateriallyinjuredthedomesticindustryorthreatenstocausematerialinjury.

Insomecountriesasingleagencyhandlesboththedumpingmargincalculationand

10

injurydetermination,whileinothercountriesthetwodeterminationsarehandled

bytwodifferentagencies.

i) Dumping Margin Determination 

Dumpingisdefinedaswhenthepriceofanimportedgoodisbelowwhatis

considered“fair”or“normal”value.Datingbacktoeventheveryfirstantidumping

laws,thedefaultmeasureoffairvalueisthepricechargedforthesamegoodinthe

exporter’sownmarket,afterbackingouttransportationcosts,bordercosts,

exchangeratetranslations,etc.,sothatoneisultimatelycomparingthetwoprices

fortheproduct(theobservedpriceintheimportmarketandfairvalue)justasthey

leavethefactory(i.e.,exfactoryprices).

Inthemid‐1970sanalternativemethodfordeterminingdumpingevolved,

salesbelowcosts.Underthismethodtheinvestigatingauthoritymustdetermineif

theexporterhassoldasufficientvolumeatpricesbelowaveragetotalcosts.To

makethisdeterminationtheauthoritywillaskfordetailedtransactionprice,cost,

andotherdatafromtheexporters.Complyingwiththeserequestscanbeonerous

forforeignfirms.Ifbelowcostsalesarefound,theagencydoesnotneedtofindany

evidenceofpricediscrimination.Rather,thedumpingdutyisdesignedtobringthe

exportpriceabovefullyloadedcostsplusamarginforoverheadandprofits.This

calculationcanestablishcoststhatexceedthefirm’saveragetotalcosts.Thefact

thatoneofthemostbasicprinciplestaughtinanystandardmicroeconomicclassis

thatfirmscanfinditoptimaltosellbelowaveragetotalcosts(butaboveaverage

variablecosts)isirrelevantforAD–suchpricingisdeemedunfair.Moreover,over

11

theinterveningdecadestherulesgoverningsalesbelowcosthaveevolvedandasa

resultthesalesbelowcostsmethodisnowinvestigatedinnearlyeverycase.8

Whentheexporter’shomemarketisfoundtobetoosmalltobe

representative,investigatingauthoritiescaninsteadmakeitspricecomparisonon

theexporter’spricestothirdmarkets.ThismethodeffectivelymeansADdutiesare

leviedbecausetheexporterchargesalowerpriceinonedestinationmarketthanin

another.

Underallthreemethodsifforeignfirmsdonotcooperatewiththe

investigatingauthorities’datarequests,theauthoritiesmayuse“factsavailable”to

determinefairvalueanddumpingmargins,whichcanincludeinformationobtained

fromthedomesticfirmsrequestingtheinvestigation.Notsurprisingly,calculations

basedonfactsavailablegenerallyresultinimplausiblylargedumpingmargins.

ii) Injury Determination 

Thesecondcriteriarequiresagenciestoexaminewhetherthedumping

activity,iffound,hasmateriallyinjuredthedomesticindustryorthreatenstocause

materialinjury.Thisinvolvesexaminingchangesinmarketshareandimport

penetration,aswellastheindicatorsofthedomesticindustry’sperformancefrom

outputandemploymenttocapitalinvestmentandfirmbankruptcies.Whilethere

hasbeengrowingemphasisonestablishingcausality,notnecessarilycorrelation,

doingsoisclearlydifficultinmostcasesandcurrentapproachesdonotsatisfy

economists’standardsforidentifyingacausaleffect.

8Clarida(1996)documentsthatapproximatelytwo‐thirdsofU.S.antidumpinginvestigationsinvolvethecost‐baseddefinitionofdumping.

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UndertheUruguayRoundrules,theremustbeapreliminaryandfinal

determinationforboththedumpingandinjurytests.Ifbothfinaldeterminations

areaffirmative,thenantidumpingmeasurescanbeimposedonimportsofthe

productconcerned.Thesemeasuresusuallytaketheformofanadvaloremduty,but

couldalsobespecificdutiesorprice/quantityundertakings9,oracombinationofall

oftheabove.Ifdutiesarelevied,theyarepaidbytheimporternottheexporter.

Inaddition,mostcountriesimposeapreliminarydumpingdutyoncean

affirmativepreliminarydumpingdeterminationhasbeenmade.Thesepreliminary

dutiesareheld“ondeposit”untilthefinaldeterminationandarereimbursedifthe

finaldeterminationisnegative.

Manycountriescalculateindividualdumpingmarginsfortheforeignfirms

responsibleforthelargestshareoftheinvestigatedproduct,withanyremaining

firmsexportingtheinvestigatedproductsubjecttoanADdutythatisa(trade‐

weighted)averageofthefirm‐specificdumpingmarginsfoundbytheantidumping

authority.

WhiletheWTOrulesdoprovidebroadguidance,countries(or,more

specifically,theagenciestaskedwiththeinvestigations)havebroadlatitudeonhow

tointerprettherules.Inatypicalcasethereareliterallyhundredsofapparently

smalldecisionsthatcansignificantlyaffectthefinaldetermination.Thisdiscretion

isakeyreasonwhyweobservesomanyADactions–acountrycanseeminglymake

dutiesaseasyorasdifficultasitwants.And,italsoexplainswhyweobserveso

9Aprice/quantityundertakingisanagreementbytheexportertoraiseitspricetothemarketand/orloweritsexportvolumetothemarkettoacertainlevel.

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manyWTOdisputesinvolveantidumpingasagencydiscretionisoftenthebasisfor

complaints.

ADdutiesaremeanttobeinplaceonlyaslongasinjuriousdumping

continues.TheUruguayRoundincludedamandatorysunsetreviewprocess.Under

thisprovision,countriesmustreviewwhetherthedutyisstillneededonceaduty

hasbeeninplaceforfiveyears(andeveryfiveyearsthereafter).Nevertheless,

traditionalusersofADlawshavecaseswhereADdutieshavebeeninplacefor

decades.

III. Facts and figures on AD use 

Asmentioned,datacollectionanddocumentationofADactivityisverygood,

particularlyforthepastcoupledecades.TheWTOhastrackedanddocumentedAD

activitybyitsmembercountriessinceitsestablishmentinthemid‐1990s.However,

theinformationreportedbytheWTOissparseandtheWTOaccountingisentirely

dependentontimelyandaccuratememberreporting.Tomakemattersworsethere

isinconsistencyinwhatcountriesreporttotheWTO.

Fortunately,theWorldBankcreatedandmaintainsasubstantiallymore

detaileddatabaseonADactivitybynearlyallcountriesthatatleastoccasionallyuse

ADlaws.ThisdatabaseisknownastheGlobalAntidumpingDatabaseandisjustone

partoftheWorldBank’sTemporaryTradeBarriersDatabase,aprojectledbyChad

Bown(Bown,2014a).MuchoftheempiricalworkwediscussinsectionVusescase

informationcontainedinthisdatabase.TheWorldBankdatabaseislikelythefirst

14

placearesearchershouldconsultwhenbeginningresearchonAD,butitisnotthe

onlysourceofusefulinformationonAD.InTable1weprovidealistofsome

prominentonlineresourcesthatwethinkprovideexcellentinformationonAD.We

alsonotethattheWorldBanksitecontainsadditionallinkstoindividualcountry

investigatingauthorities.

ThereareanumberofimportantpatternsinADactivityofwhichresearchers

studyingdumpingandantidumpingshouldbecognizant.Thefirstistherelatively

recentproliferationofcountrieswithADlaws.AsseeninFigure1,ADlawswerein

existenceforjustahandfulofcountriesfortheinitialfiftyyearsafterCanadafirst

adoptedanADstatutein1904.Therewerethenacouplelargewavesofadoptions

sincethemiddleofthe20thcentury.About30countriesaddedADlawsfrom1950

through1970;anevenmoresubstantialwaveinvolvedapproximatelyanother80

countriesadoptingADfromaround1990totheearly2000s.Theformerwas

mainlydevelopedEuropeancountries,manythatwouldultimatelybepartofthe

EuropeanUnion,aswellassomeAfricanandCaribbeancountries.Thelatterwas

mainlydevelopingcountriesfromallregionsoftheworld,aswellasformerSoviet

andEasternBloccountries.WenotethatthewavesinADlawadoptionoccurred

whenthereweresubstantialmarketintegrationeventsoccurringintheworld

economy.Thefirstwaveoccurredduring,andinthewakeof,anumberofinitial

successfulGATTrounds,aswellasthebeginningintegrationofdevelopedEurope.

Thesecondwavewasinthewakeofsubstantialtradeliberalizationsinthe

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developingworld,thesuccessfulconclusionoftheUruguayRound,andtherising

membershipofcountriestoGATT/WTO.10

AnaturalquestioniswhetherADactivityincreasedasthenumberof

countrieswithADlawsincreased.ThereareseveralwaystomeasureADactivity.

ThenumberofADcasesinitiatedandthenumberofappliedADmeasures(which

couldbedutiesorotheroutcomeslikepriceundertakings)areprobablythemost

commonlyused,primarilybecausetheyaresimpletocalculateandrequiretheleast

amountofinformation.Infact,untilrelativelyrecentlytheyweretheonlymetrics

thatcouldbecalculatedacrossawidesetofusers.Remarkably,eventhesesimple

measuresweredifficulttocomputeinacomprehensivewayuntil1995(post‐

UruguayRound).

Figure2showsADinitiationsandADmeasuresforWTOmembercountries

from1995through2013.11Perhapsnotsurprisingly,ADmeasuresandinitiations

arehighlypositivelycorrelatedatthisaggregatelevel.From1995to2002,onesees

morethanadoublingofADinitiationsandmeasures,whichisasonemightexpect

giventheconcomitantspreadofcountrieswithnewADlaws.However,sincethe

early2000s,ADinitiationsandmeasureshavegenerallyfallenbackto1995levels.

ThisdeclineinADactivityisapuzzlethattheliteraturehasnotfullyaddressedand

isaquestionthatwewillreturntolater.

10Inaddition,memberswerenotrequiredtosigntheGATTantidumpingcodethroughtheToykoRound.BecausemanyGATTmembers,especiallydevelopingcountries,didnotsigntheseparateGATTADcode,theydidnothaveanimpetustoenacttheirowndomesticADlegislation.TheUruguayRoundintegratedtheAntidumpingAgreementintothesingleWTOundertaking.ThisencouragedcountriesfinallyenactingtheirownADstatute.11TheWTO’s“measuresineffect”isanoisymetricofADprotection.Countriesaresupposedtoreportundertakings,butitisnotcleartheydosoinaconsistentfashion.Moreover,measures“ineffect”capturesneitherthesizeoftheADduty,northebreadthofcoverage.

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CountriesusingADlawsareoftenseparatedintotwogroups–thetraditional

users(Australia,Canada,theEuropeanUnion,andtheUnitedStates)andthe

leading“new”userslikeArgentina,Brazil,China,India,andTurkey.Prusa(2001)

reportsthatuntilthemid‐1980s,thefourtraditionalusersaccountedformorethan

95%ofallADactions.Prusa(2001)andVandenbusscheandZanardi(2008)show

thatanumberof“new”adoptersofADlaws,particularlyArgentina,Brazil,China,

India,andTurkey,arelargelyresponsiblefortherisingshareofactivityaccounted

forbynewusers.IfonecomputestheshareofADactivityduetonewusersone

findsthatatnotimeduringthepost‐UruguayRoundperiodhavethenewusers

accountedforlessthanhalfofworldwideADactivity,andinmostyearstheyhave

accountedformorethan70%ofthecases.Interestingly,mostoftheADdisputes

initiatedbynewusershavetargetedimportssuppliedbyotherdeveloping

countries–South‐Southprotectionism(Bown,2013).TheemergenceofADuseby

developingcountryusersisarguablythemostsignificantdevelopmentinADinthe

lasttwodecadesandremainsatopicinneedofadditionalstudy.

Bown(2011a,2011b)hasarguedthatthenumberofinitiationsand

measuresmaynotaccuratelyportraythemagnitudeandeffectofADactivity.AD

measurescanvarysubstantiallyfromnarrowlytargetedactionstocasesthatimpact

alargersetofproducts;somecasesinvolvejustasingleHSlinewhileothersinvolve

dozensanddozensoftarifflines.Bown(2011a)offerstwoalternativemetricsfor

evaluatingADcoverage.Onesimplealternativeisthefractionofacountry’sHS

codesunderADorder.BownarguestheHScountmoreaccuratelycapturesthe

scopeofADprotectionthanasimplecasecountbecausecoveragevarieswidely

17

acrosscases.However,eventheHScountmetricwillnotproperlycapturethevast

differencesintradevalueacrosscases.Bown’ssecond(andinourview,preferred)

metricistotrade‐weighteachHSlineineachcase.Underthislattermetric,acase

involvingasingleHScodewhichentailsalargevalueoftrade(e.g.,U.S.importsof

freshsalmon)wouldbeappropriatelymeasuredasbeing“moreimportant”thana

caseinvolvingmanyHScodeswithamodestamountoftrade(e.g.,U.S.importsof

wirehangers).Likeallvalue‐basedmeasuresofprotection,however,thissecond

metricwillbeaffectedbythesizeoftheduty.Forinstance,tradeinacasewitha

125%ADdutymightfalltozero.Asimplevaluebasedmetriccouldleadoneto

infernotradevalueisaffectedinthatcase,anobviousmismeasurement.To

accountforthisissueBown(2011a)offersasensibleapproachtocreateacounter‐

factualmeasureofwhatthetradevalueintheaffectedHSlineswouldbe“butfor”

theADduty.Hisapproachhasbeenwidelyfollowed.12WebelievebothofBown’s

metricshavemerit,especiallyhistradeweightedmeasure,andacademicsare

increasinglyusinghismetricstocapturetheextentofADprotection(e.g.,Ludema

andMayda,2011;Prusa,2011;VandenbusscheandViegelahn,2011).

InTable2wereportADactivityforeachofthetopADusersusingthe

alternativemetrics.Thecountriesaresortedusingthecasecountmetric(column2).

ThetoptencountriesusingADaccountforover75%ofallADmeasuresapplied

duringthisperiod,sothereissubstantialconcentrationinADactivityacross

countries.BesidestheEuropeanUnionandtheUnitedStates,thetopusersofAD

12AllofthecountryspecificanalysesinBown(2011b)usetheHSlinemetricsofADprotection.

18

measuresarethenewuserswithIndiaattheverytopofthelistwithover500AD

measuresfrom1995through2013.

Bown’sHSmetricsarereportedincolumns3and4.13Thereareseveral

commentsworthmaking.First,allthreemetricsshow(roughly)similartrends:

countrieswithhighcasecountsalsotendtohavelargerHScoverage(correlation

greaterthan0.70).However,therelationshipisnoisy.Forexample,compareBrazil,

China,andTurkey.Allhaveasimilarnumberofcases,buttheBowncoverageratios

differsignificantly.ThissuggeststhatTurkey’sADcasestendtoincludealarge

numberofHSlines,butthevalueofimportscoveredinTurkey’scasesislessthanin

China’scases.Second,allthemeasuresshowADtobeaverysignificantformof

protection.Usingthecountmetric,thelargestusershave3‐7%oftheirtarifflines

subjecttoADscrutiny.Usingthevaluemetricthecoveragetendstobeabitsmaller,

butstillimpliesthatalmost2%ofEuropeanUnion(EU)imports,4%ofU.S.imports,

and6%ofChinaimportsareunderADorders.GiventhesizeoftheADduties

(discussedbelow),itisquitelikelythatADisthelargesttradeprotectionpolicy

usedtodayformanydevelopedeconomies.14

Table2alsoreportsthecountriesthataremostfrequentlytargetedbyAD

measures.Chinahasbeentheclearfavoritetargetinrecentdecadesconcomitant

13WewereunabletofindthesimplecountmetricforADprotectionforalltencountriessowereportthecountmetricforallTTBprotection.ThisisatrivialdistortionasvirtuallyallTTBprotectionisduetoADprotection(Bown,2014a).14Gallaway,Blonigen,andFlynn(1999)estimatesimplythatADwasthesecondmostcostlybarriertotradebehindtheMultifibreAgreementthroughtheearly1990s.GiventhattheMultifibreAgreementhasbeeneliminateditislikelythecasethatADandagriculturalprotectionarethetradepoliciesthatimposethelargestwelfarecostsonusingcountries.

19

withitsrapidascendancyintotheglobaleconomy.15ManyotherEastandSoutheast

AsiancountriesareinthetoptenandwereprimarytargetsofworldADmeasures

beforetheriseofChina.Interestingly,fourofthetoptargetsarealsotopusers–

Brazil,China,India,andtheUnitedStates.

BilateralusageofADishighlightedinTable3.Inthistablewereport

bilateralADuseforeachpairwheretheusingcountryhasapplied20ormoreAD

measuresagainstaspecificexportingcountry.Formanyofthesepairswealsohave

theHStradeweightedmetricoftheimportcoverage.TheextentthatADhas

focusedonChinaisapparent.ThesixlargestbilateralpairsallinvolveChinaasa

target.Thecoverageishuge.ForexampleaccordingtoBown(2014a)over23%of

China’sexportstoIndia,9%ofChina’sexportstotheU.S.,7%ofChina’sexportsto

theEU,andalmost19%ofChina’sexportstoBrazilareunderADorders.

Interestingly,thehighestbilateralcoverageisnotalwaysassociatedwitha

largenumberofdisputes.Forinstance,developingcountriesoftenexportonlya

fewHScodes.Forthesecountries,afewADactionscanaffectmostoftheirexports.

Table4reportstheshareofthetargetcountry’sbilateralexportssubjectto

contingentprotection.Welistallcountrypairswherethecoverageexceeds15%.

Forsomedevelopingcountriescontingentprotectionaffectsthemajorityoftheir

exportstotheimportingcountry.

Oneotherimportant“fact”tonoteisthatforbothtraditionalandnewusers

theaverageADdutyisconsiderablylargerthantheaverageappliedMFNadvalorem

tariff.ThisisonereasonwhyADissoattractivetoprotection‐seekingindustries–

15Bown’sHSmetricsarenotavailablebyexportersoweonlyreportcasecounts.

20

thereisabigbangforthebuck!DataonADmarginsaregiveninTable5.Asseen

ADdutiesprovidesubstantiallyhigherprotectionthancurrentaveragetarifflevels.

Acoupleofcommentsarewarranted.First,somecountriesreportADdutiesfor

particularcasesasspecificdutiesorasarange(e.g.,20‐50%).Also,manycountries

oftenprefertoresolveADdisputesasundertakings.Theseagreementswill

generallynotinvolveaduty,butratherbeintheformofapriceand/orquantity

restriction.Theequivalentadvaloremdutiesforallsuchoutcomesarenotincluded

inthetable.Second,theaverageADdutyisaverycoarseindicatorofthelevelof

protection.Notonlyistherearangeofdutiesinanygivenyear(andofteninany

givencase),butthedutiescanvaryovertime(Blonigen,2006b).Thus,theaverage

dutiesreportedinTable5areatbestaroughindicatorofactualADdutiesleviedin

anygivenyear.Nevertheless,thesummarystatisticsarecompellingevidencethat

appliedADdutiesareoftenverylarge.Andthisraisestheveryrealpossibilitythat

contingentprotection,ingeneral,andAD,specifically,cansignificantly“undo”hard‐

wontariffconcessions.

AfinalsetofpatternswehighlightistheincidenceofADmeasuresacross

typesofproducts(Table6).Activityisfairlyconcentratedinafewsectors,namely

1)Basemetalsandmetalproducts,2)Chemicalsandalliedproducts,and3)Plastics

andrubberproducts.Thesethreeaccountforover60%ofADmeasuresfrom1995

through2013.Andwhiletheyarelargesectors,thisshareofADactivityisfarlarger

thanthesesectors’shareofworldtradeactivity(eitherbyvalueorweight).While

onemightexpectthatthetraditionaldeveloped‐countryuserswouldtargetvery

differentproductswiththeirADmeasuresthanthenewdeveloping‐countryusers,

21

thissurprisinglyisnottrue.BothnewandtraditionalADusersapplymanyAD

measuresinthesethreetypesofproducts,thoughnearlyhalfofADmeasuresby

traditionalusershavebeeninthebasemetalscategory.Thisconcentrationof

activityincertainproductsisanotherissuethathasnotbeenfullyreconciledinthe

literature.

WestressthattheindustrycountsreportedinTable6arebasedonthe

simplecasecountmetric.Inarelatedchapterinthishandbook,Bownand

Crowley(2016)reportcross‐industryusebycountryusingtheHSlinemetric

(discussedabove).Theyreportinterestingdifferencesacrosscountries.For

example,considerthetextileindustry.Theyfindthatabout70%ofMexicantextile

HSlinesaresubjecttoprotection.Nootherusingcountryhasmorethan15%

coverageintextiles,andmosthavelessthan5%coverage.Similarstarkdifferences

arefoundacrossanumberofsectors.Forinstance,theU.S.,EU,andIndiaallhave

15‐20%oftheHSlinesinthe“steelandmetal”sectorunderorder.Theother

countriesusingADhaveatinyshareoftheir“steelandmetal”tarifflinesunder

order.ThepatternsreportedinBownandCrowley(2016)suggestthatthepattern

ofprotectionisheavilyinfluencedbyspecificsoftheAD‐usingcountries’domestic

industries,ratherthanbysystematicdifferencesin“unfair”pricingbyforeign

suppliers.

IV. Key issues traditionally addressed in the economics and law literature 

Theantidumpingliteratureisfairlymaturewithsignificantcontributionsoverthe

pastthreedecades.Thisestablishedliteraturehasprovidedusimportantevidence

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onanumberofkeyquestionsfromwhenandwhydumpingoccurstoitsoverall

welfareeffects.Inthissection,weprovideanoverviewofthisliteratureandits

mainconclusions,leavingmuchoftherecentresearchcontributionsofthepastten

yearsforsectionV.

A. When and why does dumping occur? 

i) Market structure explanations 

TheoriginalU.S.AntidumpingActof1916wasconcernedwithpenalizingforeign

firmsforpredatorypricingpracticesagainstdomesticfirms,butthiswassoon

replacedbyalawallowingforremedieswithouttheneedtoprovepredatoryintent.

Nevertheless,inthepublicrhetoricsurroundingdumpingandjustificationfor

antidumpingdutiesthepredatorypricingstoryloomslarge.Hartigan(1994)

providesaframeworkforthinkingabouttheconcernforpredatorypricing.Inhis

modelthereisaBertrandduopolyandthedomesticfirmdoesnotknowwhether

theforeignfirm’scostsareloworhigh.Iftheforeignfirmisalowcostproducer,the

domesticfirmwillbeunabletocompetesuccessfully.Bydumping,theforeignfirm

can,irrespectiveofitsactualcosts,actlikealowcostcompetitorandinduceexitby

thedomesticfirm.Hartigan(1996)demonstratesthatinformationissuesincredit

marketsmayalsoprovideanopeningforviablepredatorypricing(dumping)bythe

foreignfirm.

Despiteitsprominenceinthepublicdebate,evidencesuggeststhatmarket

conditionsnecessaryforeffectivepredationarerarelypresentinantidumpingcases

23

(Shin,1998;Tharakan,1999).16Instead,modernlawsandpracticalimplementation

ofADlawssimplylookforevidenceofunfairpricing;i.e.,afirmchargingalower

priceintheirexportmarketrelativetoeither(i)thepriceintheirownmarketor

(ii)someconstructedpricebasedonitsestimatedcosts.

Perhapsthemostbasiceconomicexplanationforafirmchargingdifferent

pricesindifferentmarketsisthatitfacesdifferentelasticitiesofdemandinthetwo

markets.Ingeneral,ifdemandintheexportmarketismoreinelasticthaninthe

homemarket,dumpingwilloccur.Onestarkexampleofthisprincipleinvolvesa

firmthatisamonopolistinitshomemarket,butfacescompetitioninexport

markets.Forinstance,supposecountryJisclosedtoimports(say,duetohigh

tariffs)andtheothermarket,countryF,isperfectlycompetitive.Themonopolist’s

priceinitsprotectedmarketis ,whereistheelasticityofdemandin

countryJandcisthemonopolist’sconstantmarginalcosts.Ifweassumethereare

manysymmetricfirmsservicingcountryFthepriceis andthedumping

margininFwouldbe 0.

Dumpingcanbeeasilyrationalizedbysimplepricediscrimination.For

illustrativepurposes,supposeasinglefirmsellsaproductinitshomemarket

(countryJ)andabroad(countryF).Further,assumethefirmfacesdemandof

incountryJanddemandof 1 intheforeignexportmarket.

Assumingconstantmarginalcostsofproduction(c),profitmaximization,and 1,

itiseasytoshowthat

16Relatedly,theindustrialorganizationliteratureisgenerallyskepticalthatpredatorypricingisacommonoccurrence.SeeKobayashi(2010)forarecentsurveyofthelawandeconomicsliteratureanalyzingpredatorypricingbehavior.

24

1 2

12

.

Asaresult,simplybecauseofdifferencesinmarketsize,theexportingfirmwillbe

dumpingundertheprice‐baseddefinitionoffairvalue.Morebroadly,anyfeatures

ofthemarketthatleadtohighermarketpowerforafirminitsownhomecountry

thanintheexportmarket,willleadtothissamepatternoflowerpricesinthe

foreignmarketandleavethefirmatriskofanantidumpinginvestigation.This

practiceofsimplepricediscriminationdoesnotinvolveanyneworstrategic

distortionsinthemarketplacethatwouldharmwelfare,soeconomists(and

antitrustauthorities)seethisasabenignpractice,notsomethingthatshouldbethe

targetofgovernmentpoliciessuchasAD.Yet,suchpricingissanctionableunderthe

WTOADcode.

AseminalpaperintheliteraturebyBranderandKrugman(1983)providesa

modelofdumpingbasedonpricediscrimination,oftenreferredtoasthereciprocal

dumpingmodel.Totheextentthatthereisacanonicalmodelofdumpinginthe

literature,thisisit.ThesetuphastwoCournotfirms,eachlocatedinseparate

countries.Themodelassumespositive(iceberg)transportationcosts,g,toexport

thegoodtotheothercountry,butzerotransportationcostswithinacountry.Both

firmshaveidenticalproductioncosts(c)andbothcountrieshaveidenticaldemand

conditions.Transportationcostsimplythatthemarginalcostsofexportingoneunit,

c/g,exceedsthemarginalcostsofsellingthegoodinthefirm’shomemarket.

Solvingthemodel,bothfirmsservicebothmarketsinequilibriumprovided

thattransportationcostsarenottoohigh.Givenidenticaldemandconditions,the

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equilibriumpriceinbothmarketsisidenticalaswell.Foranyonefamiliarwith

Cournotmodels,thisisnotasurprisingresult.Whatisinteresting,however,isthe

observationthatbothfirmsaredumpingintoeachother’scountryaccordingtothe

pricedefinitionofdumping.Thepriceofthegoodbeforeitisexported(i.e.,theex

factoryprice)mustbelowerthanthefinalpricepaidbytheconsumersintheexport

marketonceanadjustmentismadefortransportationcosts.Becausethereareno

transportationcostsforservingdomesticconsumersandthetwomarketshave

identicalequilibriumprices,afirmisdumpingwhenitfullyabsorbsthe

transportationcostneededtoshiptotheexportmarket.TheBrander‐Krugman

modelismorethanatheoreticalcuriosity–inpracticeADauthoritiescompareex

factorypriceswhencomputingdumpingvaluesand,thus,theissueofdifferential

transportationcostsdoesaffectmargins.Thebigtakeawayfromthisentire

discussionisthatitisnotdifficulttoseethatdumpingbasedonpricediscrimination

canariseinmanysituations.

BranderandKrugman’s(1983)analysisalsopointsoutthatthewelfare

consequencesofdumpinginthiscontextofpricediscriminationareambiguousand

perhapsevenbeneficial,whichcontrastswithtypicalwelfareanalysisofpredatory

pricingsituations.Exportinginvolvesincurring(wasteful)transportationcosts,but

theadditionalcompetitionleadstolowerpricesineachmarket.Thus,theimpacton

netwelfaredependsonwhichofthesetwoeffectsislarger.17

17Anderson,Schmitt,andThisse(1995)offeraninterestingextensionoftheBranderandKrugman(1983)modelbyobservingthatthereciprocaldumpingoutcomeresemblesaprisoners’dilemmaproblem.Theyarguethatifbothcountriesadoptantidumpinglawsthenbothcountries’welfarewillsimultaneouslyincreasebyeliminatingpricediscriminationglobally.Theauthorsconjecturethatthespreadofantidumpinglawsworldwidecouldbeseenasacooperativeagreementonthepartofgovernmentstoavoidtheprisoner'sdilemmaproblem.

26

Anotherpossiblereasonfordumpingbehaviorthatcanstemfromabenign

motiveonthepartoftheexportingfirmisexcesscapacity.Staigerand

Wolak(1992)provideamodelwhereaforeignmonopolistservesitsownmarket

andalsoexportstoacompetitiveexportmarket.Thefirmfacesuncertaindemand

initsownmarket,whereitcanexperienceperiodsofbothlowandhighdemand

andmustmakeasunkproductioncapacitydecision.Itcanbeshownthatthereare

conditionsinwhichtheforeignfirmwillpickacapacitywherebyitwilldumpits

excesscapacityintotheexportmarketinlowdemandperiods,butwillalterits

capacitychoicetomakedumpinglesslikelywhentheexportmarkethasADlaws.

ThisexplanationfordumpingandhowADlawshelpmitigateforeignfirmsfrom

exportingpoordemandconditionshasbeenaprimaryargumentforADlawsby

someindustrygroups(e.g.,Howell,etal.,1988).UsingU.S.steelimportdata

BlonigenandWilson(2010)findevidenceforsuchexcess‐capacitydumpingfrom

certainimportsources.

Ethier(1982)suggestsanalternativemechanismbywhichfirmsrationally

dumpincertainperiodsduetoconditionsintheirownhomemarkets.Iftheforeign

firmhasrestrictionsonitsabilitytoadjustitsinputcosts,sayduetopoliciesor

institutionsthatlimittheabilitytoadjustitslaborforcedownward,therewillbean

asymmetryintheadjustmentof(flexible)exportpricesand(inflexible)domestic

productioncosts.Consequently,thefirmwillcyclicallysellbelowcosts.

Finally,thereareacouplepapersthatshowhowlearning‐by‐doingeffects

canleadtobehaviorconsideredtobedumping.Gruenspecht(1988)considers

firmswherecurrentoutputlevelaffectsfutureproductioncosts.Thisinduces

27

domesticandforeignfirmstosetpricesbelowcurrentcoststogainvolume(orwhat

hecalls“experience”).Gruenspechtisoneofthefirsttodemonstratethat

antidumpingruleschangemarketoutcomesevenwhentheydonotappeartobe

bindingexpost.ArelatedexplanationfordumpingisfoundinClarida(1993)who

combinesaRicardianmodeloftradewithamodelofentryandselection.

Productionefficiencyvariesacrosscountries,butthereisscopefortechnological

improvement.InClarida’smodelafirmcanonlyacquiretechnicalknow‐howby

producing(i.e.,exporting).Giventheinformationassumptions,heshowsthathigh

costforeignfirmsmayexportbelowtheircostofproduction.Inthelongrunthe

highcostfirmswillexit,butdumpingwillbeobservedintheshortrun.

ii) Dumping induced by AD laws 

WhiletheinitialmotivationforADlawswastoaddresstheconcernthatfirmswere

tryingtomonopolizemarketsthroughpredatorypricing,anumberofpapershave

establishedthatADlawsmayironicallyhelpfacilitatecollusion,encouragingfirms

touseADlawsstrategically.18StaigerandWolak(1989),Prusa(1992),Panagariya

andGupta(1998),VeugelersandVandenbussche(1999),Zanardi(2004b),and

DaviesandLiebman(2006)providemodelswheremarketconditionscouldpossibly

supportacartelamongstthedomesticandforeignfirmsandADlawshelp

coordinateormaintaincollusion.Inparticular,thefilingofADcaseshelpstopunish

(orthreatenpunishment)todefectorsinthecartelinordertosupportacollusive

18Hartigan(2000)arguesthatantidumpinglawwithaweakinjurystandardunderminescollusionbyprovidingalow‐costmechanismforrenegotiation(incontrastwithcompetitionlaw).

28

outcome.19Inaddition,ADcasescanevenleadgovernmentstocoordinate

“undertakings”orsuspensionagreementswiththeforeignfirmsthatspecify

targetedminimumpricesand/orquantitiesforimportsoftheinvestigatedproduct.

Tharakan(1991)analyzeswhentheseundertakingsaremostlikelyinEUcases.

Thereisarelatedliteratureshowingthatforeignfirmsmaywishtoinitiate

ADcasesinordertotriggerotheroutcomeswithpotentialpositivepayoffsforthem.

Perhapsthemostwellknownexampleofthisisthenotionofdominodumping

introducedbyAnderson(1992;1993),whereforeignfirmsexportaggressivelyin

ordertotriggerADcaseswhich,inturn,triggeravoluntaryexportrestraint

agreementthatyieldsquota/VERrents.20AssumingVERsallocationsarerelatedto

eachfirm’spre‐agreementmarketsharetheforeignfirms’aggressivesalesgenerate

longrunvalue.

iii) Antidumping when there is no dumping 

Afinalandveryrealpossibilityisthatdumpingmaybefoundby

governmentsevenwhenitisnotpresent.FromtheveryintroductionofADlaws,

therewastheworrythatitsimplyopenedanotheravenuetoimportprotection.

Thewaygovernmentagenciesdecidetodeterminedumpingandinjuryisflexible,

19Evidenceforcollusionisnotoriouslydifficulttoestablish,butthereareanumberofpapers,includingPrusa(1992),Taylor(2004),Zanardi(2004b),andRutkowski(2007)thatexaminewithdrawnADcasesasevidenceoftacitcollusionagreementsbyfirms.Irwin(1998)discusseshowthesemiconductordisputesofthe1990sresultedingovernmentnegotiatedcartel‐likeagreements.20Rosendorff(1996)andRosendorffandMilner(2001)discussandmodeltheimplicationsofthehighdiscretioninantidumpingdeterminations.

29

allowingdiscretiontofinddumpinginalmostanysituation.21Kolevand

Prusa(2002)showhowthisdiscretioninducesforeignfirmstorestraintheir

exports,regardlessiftheyareactuallysellingbelowcost,afindingthatharkens

backtotheearlyfindingsofHeranderandSchwartz(1984).

Relatedly,thereisevidencethatexplicitpolicychangeshavemadeiteasier

forinvestigatingauthoritiestomakeadeterminationofharmfuldumping.

Lindsey(2000)andLindseyandIkenson(2002,2003)providenumerousexamples

oftheongoingweakeningofthelegalstandardsfordumpingandinjuryintheU.S.,

andBlonigen(2006b)showsthatchangesinagencydiscretionhasbeentheprimary

driverofincreasingU.S.dumpingmargins.

Oneprominentexampleofthistrendisthechangeinthe1980stoallowthe

practiceofcumulation,wherebyallsubjectimportsourcesarecumulatedto

determineifdumpingbyanyonesourceiscausinginjury.HansenandPrusa(1996)

findthatthislegalchangesignificantlyincreasedthesuccessofpositivedumping

determinationsintheU.S.,aswellastheincentivetoincreasethenumberofimport

sourcesaccusedofdumping.Tharakan,Greenaway,andTharakan(1998)find

similarevidenceforananalogouspolicychangeintheEuropeanUnion.22

Insummary,thereareanumberofalternativereasonsforwhyfirmsmay

engageinbehaviorthatwouldleadtoafindingofdumpingunderADlaws,from

pricediscriminationandbelow‐cost‐salestoexcesscapacityandattemptstotrigger

21Aswediscussbelow,thisflexibilityislikelyanimportantreasonwhysomanyWTOdisputesinvolveantidumping.CountriesappeartohaverealdifferencesovertheproperinterpretationofthediscretionembodiedintheWTOAnti‐dumpingAgreement.22GuptaandPanagariya(2001)offerafreeriderexplanationfortheempiricalfinding.

30

anADactionasawaytofacilitatecollusion.23TheADliteraturehasprovideda

numberofmodelsthattheoreticallyunderpintheseexplanationsandshowsthe

welfareimplicationsofdumpingandtheapplicationofADmeasuresunderthese

variousscenarios.Welfareimplications(bothofdumpingandantidumpingduties)

aretypicallyambiguousanddependonunderlyingmarketcharacteristics,oftenthe

natureofcompetitionamongstfirms.Evidenceforthesemotivesisrelatively

sparseanddeterminingwhichonesarethemostcommonreasonsforobservingAD

activityislackingandalargeempiricalchallenge.Itremainsanimportanttopicfor

futureresearch.

B. When and where do AD actions and duties occur? 

i) Cross‐industry incidence 

Oneofthelongeststandingandmostextensivestrandsintheantidumping

literatureistheempiricalanalysisoftheindustrypatternofADpetitionsand

applicationofADduties.Twokeyfeaturesmotivatetheliterature.First,ADlaws

provideexplicitconditionsunderwhichADdutieswillbeapplied.Second,domestic

industrygroups(firms,laborunions,and/ortradeassociations)initiateADactions,

presumablybecausetheexpectedbenefitforthemisgreaterthantheexpectedcosts.

Thesetwofeaturesprovideanumberofhypothesesaboutwhichindustriesare

morelikelytofileandwhentheyaremorelikelytobesuccessfulingetting

23MiyagiwaandOhno(2007)arguethatsignalingmotivescanexplaindumping.CassingandTo(2008)alsoarguethatsignalingisafactorinexplainingwhetheraforeignfirmwillparticipateintheADcomplaint.

31

favorabledecisionsbygovernmentagencies.Animportantfocusintheliteratureis

theextenttowhich“economic”factorsrelatedtothecriteriaforwhenADdutiescan

beapplieddrivetheincidenceofADactivityversus“political”factorsthatwould

affectwhethertheindustrycanovercomecollectiveactionissuesinordertofilea

petition,orwhetherpoliticalinfluencebykeylegislatorstomakeapositive

determinationinacaseismorelikely.

TheseminalpaperinthisliteratureisFinger,Hall,andNelson(1982),but

thishasbeenfollowedbydozensofworksthathavebroughtincreasinglymoredata

andrefinedhypothesestobearonthisquestion.24Ingeneral,thesestudiesfind

evidenceforbotheconomicandpoliticalfactorsinthepatternofADfilingsand

ultimateduties.Ontheeconomicside,measuresofsizeable(andincreased)import

penetration,aswellasrecentpoorperformancebyfirmsinthedomesticindustry,

aresignificantlycorrelatedwithahigherlikelihoodofADactivity.Suchevidenceis

consistentwiththeempiricalrelationshipsthatgovernmentagenciesevaluatein

determiningwhethertheseisdumpingandthatithasbeeninjurioustothe

domesticfirms.

Thereisalsoevidencethatpoliticalfactorsareimportantforunderstanding

theincidenceofADactivityacrossindustries.Invariably,statisticalevidence

indicatesthatlargerindustries(especiallyintermsofemployment)aremorelikely

tobesuccessfulingettingADduties,consistentwiththenotionthattheseindustries

24OtherearlypiecesonthisincludeFeinbergandHirsch(1989),Hansen(1990),HoekmanandLeidy(1992),Moore(1992),Anderson(1993),DeVault(1993),FeinbergandKaplan(1993),BaldwinandSteagall(1994),LichtenbergandTan(1994),andSabry(2000).

32

willhavegreaterpoliticalleveragethanindustriesrepresentingrelativelylittle

economicactivityintheeconomy(Baldwin,1985).

Anumberofstudieshavefoundstatisticalevidenceforpoliticalinfluence(or

bias)inADdecisions.HansenandPrusa(1996,1997)andMoore(1992)showthat

ADdutiesaremorelikelywhenfiledbyindustriesthathaveproductionfacilitiesin

theregionsofkeypoliticians,whilestudiesbyMoore(1992),DeVault(1993),and

BaldwinandSteagall(1994)showthatCommissionersdecidingtheinjurytestin

U.S.casesdiffersystematicallyintheirvotingrecordsaftercontrollingforeconomic

factors.25

ThefactthatsomanyADactionsoccurinjustafewsectorsisprobablynot

completelyaccountedforintheliterature.Andarelatedquestioniswhywedon’t

seemoreantidumpingfilings.Whilethislargelyremainsanareaofresearchinneed

ofadditionalstudies,thereissomeevidenceforabehavioralexplanation.Morck,

Sepanski,andYeung(2001)andBlonigen(2006a)proposeandfindevidencethat

certainfirmsandindustriessimplylearnandbecomemoreproficientovertimeat

pursuingADactionsthanotherfirmsandindustries.

Aninteresting,butsparse,literatureconsiderspossiblecross‐industry

interdependenceofADactivity.HoekmanandLeidy(1992)provideamodel

wherebyverticalproductionlinkscanleadtocascadingprotectionasADactionsin

onesectorraisescostsfordownstreamsectorsandthenmakesADactionsmore

25WhilethemajorityofstudiesinthisliteratureexaminedataonU.S.cases,analysisofEUADcasesbystudiessuchasTharakan(1991),TharakanandWaelbroeck(1994a;1994b),andEymannandSchulknecht(1996)findverysimilarresults.

33

likelyinthedownstreamsector.FeinbergandKaplan(1993)findevidenceforthis

inU.S.ADactivity.

ii) Cross‐country incidence 

ThesubstantialincreaseincountriesadoptingADlawsinthe1980sand1990s,

alongwiththeestablishmentoftheWTO,whichbegancollectingdatamore

systematicallyfrommembercountries,ledtoaliteratureexaminingtheincidenceof

ADactivityacrosscountries.Miranda,Torres,Ruiz(1998),Prusa(2001,2005),and

Zanardi(2004)documentandassesstheproliferationofcountrieswithADlaws

andresultingADactivity.Bown(2010,2011)discussesmorerecentpatternsofAD

usageacrosscountries.

KnetterandPrusa(2002)examineaggregateADactivityovertimeandfocus

onmacroeconomicfactors.26KnetterandPrusademonstratesthatadepreciationof

theexportersexchangeratewillhaveconflictingeffectsonthedumpingmarginand

injurytest.Adepreciationwilllowertheexporters’pricewhichthereforeincreases

theprospectofinjury.Ontheotherhand,giventhatpassthroughisincomplete,the

changeinpricingwilldecreasetheprospectoflessthanfairvaluesales.Intheory,

eithereffectcoulddominate.Inpractice,theyfindthatperiodsofpoorGDPgrowth

andstrongcurrencyarepositivelycorrelatedwithincreasedcountry‐levelAD

activity.Inotherwords,macroeconomicforces(i.e.,businesscycles)andexchange

ratemovementsaffectfilingsofADpetitionsandthelikelihoodofsuccessfulAD

26Leidy(1997)examinestheimpactchangesinGDPonADfilingswhileFeinberg(1989)looksattheroletheexchangeratetrendsonADfilings.BothfocusjustonU.S.ADfilings.

34

decisions.27Wenotethattheallegedlydumpingexportingfirmshavenosayin

whereacountryisinthebusinesscycleorthevalueoftheexchangerate.

Consequently,onemightconsiderhowmuchADactivityisreallyabout

economicallymeaningfuldumpingversustheneedtoprovideprotectionto

politicallyimportantindustries.

OtherstudiesexaminestrategicinterdependenceofADactivityacross

countries.Maur(1998)documentsthecorrelationintheindustryusageofAD

acrosscountries,aphenomenonhecalls“echoing”.Thesteelcrisisduringthelate

1990s/early2000sisastarkexampleofechoingcases(DurlingandPrusa,2006).

PrusaandSkeath(2002,2005)andFeinbergandReynolds(2006)find

evidencethatcountriesmaybeengagingintit‐for‐tatADactionsagainsteachother.

Ineffect,countriesappeartobeusingtheflexibilityofantidumpingtoraisethecost

ofpartnersusingAD.WhiletheWTOdoesnotallowforcompensationforADduties,

countriesappeartobeabletousetheirownADasunofficialretaliation.

Incontrast,BlonigenandBown(2003)findthatU.S.petitionsforADduties

againstforeignfirmsinanothercountryarelesslikelywhentheU.S.industryhas

significantexportstothatsameforeigncountry.ThestudyalsofindsthattheU.S.

governmentislesslikelytorulefavorablyonapetitionforanADdutywhenthe

namedcountryisaWTOmemberwhocanretaliatebyfilingarequestfordispute

settlementwiththeWTODisputeSettlementBody.

27FrancoisandNiels(2006)findsimilarevidenceforMexico.Feinberg(2005)discusseshowthemacroeconomicinfluencesevolveovertime.

35

C. How effective are AD actions? 

ADdutiesaremeanttocounteractharmfuldumping.Asaresult,weshouldexpect

ittorestrictimportsandrestoreemploymentandprofitstodomesticindustriesthat

soughtADprotection.Substantialevidenceforthesedirecteffectshasbeenfound

throughanumberofmethodologies.Buttheliteraturehasalsoidentifiedmany

importanteffectsofADactionsthataremoreindirectandoftenunintended.

i) Direct effects 

AtraditionalwaytoestimatetheeffectsofADdutiesisthroughcomputable

partialorgeneralequilibriummodels,andexamplesoftheirapplicationtoAD

activityincludeMurrayandRouslang(1989),U.S.InternationalTradeCommission

(1995),DeVault(1996a),MorkreandKelly(1998),andGallaway,Blonigen,and

Flynn(1999).Alltheclassicalpredictionsaretypicallyfoundbythesemodels,with

significantlylowerimports;higherdomesticoutput,employment,andprofits;and

overallnetwelfarelosses.TheresultsfromthesemodelsindicatethatADimposes

aslarge(orlarger)welfarecoststhananyothercurrentcommercialpolicy.

Analysisoftradepoliciesincomputableequilibriummodelsisuseful,

particularlyforprovidingalargerangeofresultsandtheabilitytoestimate

aggregatestatistics(e.g.,netwelfareestimates),butalsohaswellknownissues.

First,thesemodelsmakefunctionalformassumptionsaboutthenatureofdemand,

marketcompetition,andcosts,whichcanlargelydictatethedirectionofimpacts

36

thatwillbefound.28Theyalsorelyonanumberofparameters,suchasdemand

elasticities,thathavetobeassumedordrawnfromexistingestimatesinthe

literature.

Analternativeapproachisstatisticalanalysis.Whilesuchanalysesare

typicallymoretargetedonaparticularoutcomevariable,theyhaveabetterability

toestimatethemagnitudeoftheresponsesoftheoutcomevariableandhowvarious

factorsaffecttheresponse.Onegroupofearlystatisticalstudiesofthedirecteffects

ofADactionsexaminesproduct‐leveltradedata,andincludesKrupp(1994),Krupp

andPollard(1996),andBrenton(2001).ThesepapersconfirmthatADactions

restricttrade,buttheyalsofindthattheeffectsonimportsvaryduringtheAD

investigationandwiththetypeofoutcomes(e.g.,ADdutiesversuswithdrawnor

suspendedcases).

Anumberofotherstatisticalstudies,includingHartigan,Kamma,andPerry

(1989),MahdaviandBhagwati(1994),Hughes,LenwayandRayburn(1997),and

Blonigen,Tomlin,andWilson(2004)useeventstudymethodologytoassessthe

effectofADactivityonfirms’stockmarketreturns–ameasureofafirm’scurrent

andexpectedprofitability.ThesestudiesfindthatADactionscan,butdonot

necessarily,leadtogreaterprofitabilityforthepetitioningdomesticfirms.For

example,Hartigan,Kamma,andPerry(1989)findthatADdecisionsdonothelp

domesticfirmswhentheagenciesrulethattherehasbeenactualinjurytothe

domesticfirmsfromthedumpedimports,asopposedtowhentheyonlyfindthat

28Aparticularconcernisthetypicalassumptionofperfectcompetition,sincetheoreticalworkbyDixit(1988)andReitzes(1993)pointoutthatwelfareeffectsofADdutiesarequitesensitivetotheformofmarketcompetition;forexample,quantityversuspricesettingbehaviorinanoligopolysetting.

37

thereisathreat.Blonigen,Tomlin,andWilson(2004)showthatpositivegainsonly

occurfordomesticfirmswhentheforeignfirmsarenotabletotariffjumptheAD

dutyandlocateproductioninthedomesticmarket.Thisisaclearexamplewhere

anindirect/unintendedeffectofADactions(here,tariff‐jumping)canimpactthe

effectivenessofADactions.Wediscusstheseindirecteffectsnext.

ii) Indirect and/or unintended consequences 

ThereisafairlylargesetofstudiesdocumentingboththedirecteffectofADduties

onsubjectcountriesandalsotheindirecteffectonnon‐subjectcountries.Perhaps

themostwidelydiscussedindirectconsequenceofADactionsistradediversion,

whereimportsfromcountrysourcesnotnamedinanADpetition(and,thus,not

subjecttotheADduty)goupsubstantiallywiththeimpositionofanADduty.While

StaigerandWolak(1994)discussnon‐subjectsuppliers,Prusa(1997)wasthefirst

toemphasizeanddocumentthephenomenon.UsingtradedataforU.S.ADcases

initiatedfrom1980through1988,Prusafindsthatinsomecasestradediversion

wassolargethateventhoughtheADdutyreducedimportsfromthenamed

countries(thedirecteffect),totalimportvolumescouldactuallyincreaseafteran

ADactivity.Asaresult,thedirecteffectoftheADdutyonimportsislargely,ifnot

completely,mitigatedbytheindirecteffect–tradediversion.

AsdocumentedinTable7thereisafairlyrobustsetoffindingsonthisissue.

StaigerandWolak(1994)focusprimarilyoninvestigationeffectsandestimatethat

halfthereductionoftradeoccursduringtheperiodofinvestigation.Theyalsofind

thatthemerefilingofanantidumpingpetitionleadstoadecreaseinimportsand

38

increaseindomesticproduction.Theyconcludethatthevalueofprotectionduring

theperiodofinvestigationcouldwellmakeitworthwhileforanindustrytoinitiate

aninvestigationevenifthecaseisultimatelyrejected.StaigerandWolakalsofind

thatdomesticproductionincreaseswhenauthoritiesrulethatdumpingistaking

place,butneverimposeadutyduetosometypeofsettlementagreement.

Prusa(2001)andCarterandGunning‐Trant(2010)usetheArellanoand

Bondtechniquetoestimateadynamicmodelforpaneldatatoestimatethetrade

effectsforU.S.ADactions.Prusa’sanalysisfocusesexclusivelyonmanufacturing

industrieswhileCarterandGunning‐Trantconcentrateonagriculturalproducts.

Theresultsarebroadlyconsistent–bothreportlargereductionsinsubjectsupply

andsignificanttradediversion.

TherearealsoaseriesofstudiesinvolvingEUADactions.While

Lasagni(2000)findstradeeffectsfortheEUontheorderofthosefoundfortheU.S.,

healsodocumentsthatthetradeeffectsassociatedwithpriceundertakingsare

considerablysmallerthanthoseassociatedwithduties.Thisperhapsexplainswhy

subjectcountriesoftenseektonegotiateundertakingswiththeEU.Konings,

Vandenbussche,andSpringael(2001)usetheArellanoandBondGMMestimation

approachandfindsubstantiallysmallertradeeffects–bothdirectandindirect–

thanthosefoundfortheU.S.Moreworkiscertainlywarrantedexaminingwhythe

tradeeffectsdiffersoconsiderablybetweentheEUandU.S.Ingeneral,subsequent

studieshavefoundthesetradediversionimpactstobeaquitegeneralphenomenon

acrossmanycountries/regionswithADpolicies,includingMexico(Niels,2003),

India(Ganguli,2008),andChina(Park,2009).

39

Asmentionedearlier,anotherindirecteffectthatcansubstantiallymitigate

directeffectsofADactionsistariff‐jumping.Thedomesticindustrymayexperience

littleprotectionifforeignfirmscaneasilyavoidtheADdutiesbylocating

productioninthedomesticmarket.HaalandandWooton(1998),Blonigenand

Ohno(1998),andBelderbos,Vandenbussche,andVeugelers(2004)aretheoretical

studiesthatexaminethevariousfactorsthatcantriggersuchAD‐jumpingbehavior

inanumberofgametheoreticsituations.Anumberofempiricalstudieshave

examinedtheextenttowhichtariff‐jumpingactuallyoccursafterADinvestigations

and/orduties,includingBelderbos(1997),Blonigen(2002),andGirma,Greenaway,

andWakelin(2002).Whiletheyfindthatsometariff‐jumpingoccursinresponseto

ADduties,itisfairlymodest,asonlylargefirmsfromdevelopedcountriesseemto

beabletoavailthemselvesofthisstrategy.Asmentionedearlier,Blonigen,Tomlin,

andWilson(2004)findthattariff‐jumpingFDIsignificantlyreducesprofitsof

domesticfirmsthatpetitionedforADprotection.

Farandawaythelargestsetofunintendedconsequencesdocumentedinthe

literaturestemfromtheuniquewayinwhichADinitiationsandmeasuresare

administered.Thishasbeenthesubjectofmanypapersintheliterature,whichwe

discussnext.

D. How do administrative, legal, and regulatory processes affect AD laws and their consequences? 

AsdescribedinsectionII.B,administrationofADlawsinvolvesafairlyinvolved

bureaucraticprocesstoimplementdecisionsbasedoncriteriathatcanbebroadly

40

interpreted(e.g.,whatconstitutes“injury”?)andarenotobvioushowtoapplyin

practice.Asaresult,theprocessgivessignificantdiscretiontotheadministrators

andcaninducestrategicbehaviorbyfirms.Additionally,legislationcanalterthe

processovertime.

Theliteraturehasshownarangeofwaysinwhichfirmsmaydistorttheir

behaviorinordertomanipulateapossibleADinvestigation.Forexample,papers

suchasEthierandFischer(1987),LeidyandHoekman(1990),Fischer(1992),

Reitzes(1993),Prusa(1994),andKohlerandMoore(2002)providetheoretical

modelswheredomesticfirmswillmanipulatedecisionstomorelikelysatisfythe

injuryanddumpingcriteriainanADinvestigation,whileforeignfirmswill

analogouslydistortpricesandproductiontolessenthechanceofgettinganAD

measureappliedtotheirexports.AsmentionedinsectionIV,thepresenceofAD

lawsmayalsocauseexportingfirmstodosuchthingsaskeeptheirproduction

capacitylower(StaigerandWolak,1992)toavoiddumpingofexcessproductsin

periodsoflowdomesticdemand,orpricehigherthantheyotherwisewouldtohelp

supportcollusion.

Ingeneral,thestructureofthepapersinthisliteraturecanbewrittenas

2 , , … , , , , … , ; ,

, , … , , , , … , ; , , , 1,2,3, … , ,

3 , , … , , , , … , ; , ,

4 , , … , , , , … , ; , , ,

41

where denotesfirmi’sprofitsinperiodtand isthediscountfactor.For

notationalconvenienceweusesuperscriptstodenotefirmsandsubscriptsto

denotetimeperiods.Firmsearnprofitsinperiodsoneandtwo( 1, 2).The

expectationistakenwithrespecttothestateoftheworld( .Somepapersinthe

literatureallowfirmstotakeactionsinperiodzerothatinfluencelaterdecisions

and/oroutcomesinlaterperiods.Forinstance,allfirmsmightmakequalityor

capacitychoicesinperiodzeroandtheninperiodsoneandtwocompeteinprices

orquantities.

Whilethisset‐upismoregeneralthanthatusedinanysinglepaper,its

generalstructureencompassesthemodelingstrategyoftheliteraturecitedabove.

Inthisset‐uptherearenfirms,asubsetofwhicharedomesticandtherestare

foreign.Inmostoftheliteraturen=2,whereonefirmisdomesticandotheris

foreign.

Profitsineachperiodareinfluencedbytheactionsofeachfirm, .

Dependingupontheapplication,thefirms’actionscanbeprices,quantities,thetotal

numberofworkers,lobbyingexpenditures,etc.Weallowforthepossibilitythat

isavector,implyingthatfirmscanmakemorethanoneactionchoiceineachperiod.

Forinstance,thefirmsmightchooseproductqualityandprice.Subsequentmarket

realizationswilldeterminewhetherdutieswillbelevied.

Itistypicalintheliteraturetoalsoallowtheprofitsineachperiodtobe

affectedbyarandomshockorstateoftheworld, ,whichcouldbeanexchange

42

rateshock,demandshock,orperhapstheunderlyingpoliticalsentimentfor

protection.

Inthesecondperiodthefirms’profitsmaybeaffectedbyanADduty

imposedbetweenperiodoneandperiodtwo.Finally,sinceADactionsand

voluntaryexportrestraintsareoftenrelated,wealsoincludethepossibilitythat

profitsinperiodtmightbeinfluencedbyaVERonasubsetofthefirms( ).

Thekeyinsightthattheliteratureexaminesistheinterplaybetweenactions,

statesoftheworld,VERs,andADduties.ADdutiesareendogenousinthesensethat

foratleastsomerealizationsof ,theactionstakenbyfirmicanincreaseor

decreasethechanceofanADdutyoraVERinperiod2.

ADdutiesareunusualbecausethereareprocedureswherebythedutycanbe

reviewedafterithasbeenappliedandadjustedbasedontheforeignfirms’pricing

decisions.ThisisaprominentfeatureoftheU.S.’simplementationwherethe

currentdutymarginisan“estimate”ofthefinalmargin.29Theactualmarginwillbe

determinedattheendoftheyear.30BlonigenandPark(2004)showthatperiodic

reviewofADdutiesaftertheirapplicationcreatesadynamicpricingproblemfor

anyfirmexportingtoamarketwithADlaws.Theyprovidetheoryandevidence

thatfirmsaltertheirpricestoanexportmarketwithADlawsbasedontheexpected

probabilityoftheapplicationofanADduty,aswellashowafirmwouldoptimally

adjustitspricesovertimeonceanADdutyisapplied.BlonigenandHaynes(2002)

29Whilenoothercountryusestheretrospectiveassessmentsystem,everycountyhasprovisionsthatallowittoreassessthedumpingmargin.30WenotethatwhileintheoryeveryU.S.ADmarginshouldberevaluedeachyear,inpracticethisdoesnothappen.Rather,inmanycasesneithertheforeignsuppliernorthedomesticindustryseeksareassessmentandconsequentlytheestimateddutybecomestheactualmarginforthatyear.

43

relatedlyshowhowfirms’pass‐throughofexchangeratesandADdutyitselfare

affectedbyadministrativereviewsaftertheADdutyisinplace.31

TheinvolvedprocesssurroundingADinvestigationsanddecisionsmeans

thattherearesubstantialcoststopetitionforanADdutythatdecreaseforthose

whoareexperiencedwiththeprocess.Basedonthis,afewstudieshave

hypothesizedandfoundevidencethatcertainfirmsandindustriescanbecome

morehabitualusersoftheADprocess.Morck,Yeung,andSepanski(2001)find

evidenceforthiswithsteelfirmsintheU.S.,whileBlonigen(2006a)findsevidence

acrossallU.S.ADcasesthatpriorexperiencewithfilingADcasesincreasesthe

probabilitythatafirmwillfileacaseinthefuture.Thesefindingsmaybepartofthe

explanationforwhyweseeADactivityconcentratedinonlycertainsectors.

Complicatedbureaucraticprocessesaresusceptibletoagencycaptureand

distortionofprocessesatthediscretionofthebureaucrats.Asdiscussedabove

thereisevidencethatpoliticalfactorsaffectADdecisions.WhileADdecisionsare

supposedtoemergefromanadministrativeprocessthatsimplyverifiesifthe

economic/accountingcriteria(dumpingandinjury)aresatisfied,studieshavefound

thatpoliticalinfluenceaffectsthedeterminations.Afewstudiesexaminecase‐

specificdataintheU.S.ofdumpingmargincalculations,whichareconductedbya

divisionoftheU.S.DepartmentofCommerce(Blonigen,2006b;Moore2006b).

Theyfindthatrulesforestimatingdumpinghasevolvedovertime(atthebehestof

domesticindustries),especiallytherulestodisallowinformationprovidedbythe

31Relatedtotheissueofdutyadjustmentandpayment,Gupta(1999)examinesthequestionofwhyfirmspaythedutyratherthanraisingtheirexportprices.

44

foreignfirms,leadingtosubstantialincreasesinU.S.dumpingmarginsandresulting

ADdutiesovertime.

Additionally,politicianscangetdirectlyinvolvedinaffectingtheAD

administrativeprocessthroughlegislation.HansenandPrusa(1996)andPrusa

(1998)documenthowalegalchangeallowingADagenciestocumulatetheeffectof

allinvestigatedimportsourceswhendetermininginjury(ratherthanexamineeach

investigatedsourceindividually)significantlyincreasedthenumberofimport

sourcesnamedininvestigationsand,moreimportantly,thelikelihoodofaninjury

finding.Tharakan,Greenaway,andTharakan(1998)findsimilarevidenceforan

analogouslegalchangeintheEuropeanUnion.

Morerecently,theU.S.sawalegalchangecalledtheByrdAmendment,which

allowedforamechanismtoprovidethecollectedADdutiesdirectlytothefirms

whopetitionfortheADduties.Ultimatelyrescindedafteritwasfoundinconsistent

withtheWTO,anumberofstudiesanalyzedthedistortingimpactsofthelaw,

includingCollieandVandenbussche(2006),Evenett(2006),andOgawaandOno

(2011).Empirically,LiebmanandReynolds(2006)findthatfirmssubsequently

usingADlawsandreceivingByrdpaymentsprovidedpoliticalcontributionstokey

legislators.Reynolds(2006)findsevidencethattheByrdAmendmentincreasedAD

petitions,aswellastheaveragenumberofdomesticfirmsparticipatinginthe

petitions.

Thelargeamountofdiscretioninthedeterminationofantidumping

remediesisthesourceofconsiderableinternationaltension.Oftencountries

subjecttoADdutiesfeelthemeasuresareunwarrantedandthattheADusing

45

countrydidnotfollowtheWTOrules.UndertheGATT/WTOmemberscanfile

disputeschallengingacountry’spractices.Whiletherewasadisputesystempre‐

UruguayRound,compliancewasakeyfailingoftheoldsystem;GATTcontracting

countrieseitherblockedorsimplyignoredthefindingsofGATTPanels.32Oneofthe

UruguayRound’smorenotableachievementswastheestablishmentoftheWTO

DisputeSettlementUnderstanding(DSU).

ADhasemergedasthemostfrequentlydisputedpolicybyfar.Bown(2009)

estimatesthatmorethan30%oftheentireWTOdisputeinitiationcaseload

involvedchallengestoeitherantidumpingorcountervailingduties.GiventhatAD

disputesarefarlesslikelytoberesolvedviaconsultations,AD’sshareofactual

PanelandAppellateBodytimeisconsiderablyhigher.ADdisputesofteninvolve

technicalandlegalaspectsofthelaw,butoftenimportantinsightsintoeconomic

consequencesofADcanbegleanedfromthedisputes.

Oneentrypointintothisliteraturearepapersconnectedtoaprojectbythe

AmericanLawInstitutewhichbringseconomicsandlegalscholarstodiscuss

disputesbroughttotheWTO,manyofwhichinvolveADissues(seeTable1).

TraditionallytradelawyershavefocusedontherelationshipbetweenADlawsand

antitrustandcompetitionlaws(e.g.,Victor,1982;ApplebaumandGrace,1986;

HoekmanandMavroidis,1994;SykesandCooper,1998).Bycontrast,theAmerican

LawInstituteprogramhasshownthereisafarbroadersetofADrelatedissuesthat

32TheneedtoproduceconsensusalsoaffectedhowPanelsconstructedtheirrulingsasthethreepanelistsknewthattheirreporthadalsotobeacceptedbythelosingpartyinordertobeadopted.Accordingly,therewasanincentivetorulenotsolelyonthebasisofthelegalmeritsofacomplaint,buttoaimfora“diplomatic”solutionbycraftingacompromisethatwouldbeacceptabletobothsides.

46

benefitfromtheperspectiveofeconomists,includingthecostsofdisputes(Tarullo,

2002),theincidenceofWTOdisputes(Bown,2005),therelevanceofpredatory

intent(HowseandStaiger,2005),andzeroingandthebiasednatureof“fair”

comparison(BownandSykes,2008;PrusaandVermulst,2009).

V. Recent Research Developments 

ResearchonADhascontinuedtoevolve,andtherecentliteraturehasboth

extendedthepriorliteratureandtakenitinnewdirections.Muchoftherecent

literatureismotivatedbytheascendantrolethatADplaysformanycountries.AD

hascontinuedtobethemostfrequentlyusedcontingenttradepolicyinstrument

(Bown,2010,2011).ButwhousesADhaschangedalot,astherehasbeena

decreaseinADactivitybytraditionalusersandamarkedincreaseinusebynew

users(primarilydevelopingcountries).Atthesametimetherehasbeenarisein

preferentialtradeagreements(PTAs)andthematurationofthedisputeresolution

processintheWTO,bothofwhichhavethepotentialtoaffectADuse.Finally,the

riseofnewfirm‐andplant‐leveldatahasprovidedresearcherstheopportunityto

examinetheeffectofADswithmuchmoreprecisionthanbefore.

A. Measuring the Myriad Effects of AD Duties on Trade 

i) Does AD Distort Trade in Third Markets? 

Inanimportantpaper,BownandCrowley(2007)documentthatthetrade

effectsofADprotectionspillovertoothermarkets.Theyconsideramodelwith

47

multiplecountries.BownandCrowleyarguethereareatleastfourdistincteffects

ofADduties.First,thereisthedirecteffectonsubjectexporters.AnADduty

imposedbycountrymonsupplierxwillresultinlesssupplyfromxtom.Second,

thedutyonxwilloftenleadothersuppliers(countyy)toincreasesupplytotheAD

usingcountry(m).BownandCrowleydubtheseeffectstradedestructionandtrade

diversion.Bothofthesetradeeffectshavebeenrobustlydocumentedinthe

previousliterature(seeTable7).33

BownandCrowleyalsoarguethatanADdutymightleadtotwoother

indirecteffects.AftertheADdutyisimposedbycountrymonx,countryxmay

increaseitsshipmentstothirdmarkets(say,countriesyandz).Theycallthiseffect

tradedeflection.Alongthesamevein,BownandCrowleyalsoarguethatifmwere

toimposeanADdutyonexportsfromathirdcountry(w),thiswillcausextoexport

lesstothatthirdmarket.Theycallthistradedepression.

UsingdetaileddataonJapaneseexportsBownandCrowleyfindstrong

statisticalevidenceforalleffects.Ofparticularnote,theydocumentthatU.S.AD

dutiesagainstJapanleadstoa5‐7%increaseinJapaneseexportsofthesame

producttotheaveragethirdcountrymarket(tradedeflection).34Theyalsofindthat

theimpositionofaU.S.antidumpingmeasureagainstathirdcountrydepresses

Japanesetrade,astheaverageU.S.dutyimposedonathirdcountryleadstoa5‐19%

33HillberryandMcCalman(2011)offeraninterestingstudyofwhathappenswithintheAD‐usingcountryinadvanceofthepetition.Theyfindverylittleevidenceofaggregateimportsurgesoroflargereductionsofimportprices.Instead,theyarguethemainissueismarketsharegrowthof(eventual)subjectcountriesattheexpenseofnon‐subjectsuppliers.Ifthisisindeedthecase,itprovidesconfirmationforsubstantialdiversiondocumentedinPrusa(1997,2001)–non‐subjectsuppliersarereadyandwillingtofillthevoid.34DurlingandPrusa(2006)findsimilarpatternsforaparticularproduct,hot‐rolledsteel.

48

decreaseinJapaneseexportsofthatsameproducttotheaveragethirdcountry's

market(tradedepression).35

Acoupleofrecentpapersalsodocumentunusualtrade‐distortingeffectsof

ADlawsbyexaminingspecificmarkets.Inaninterestingtwistontheusualtrade

diversionanalysis,BaylisandPerloff(2010)documenthowtheproduct‐specific

natureofanADordercancreateunexpectedincentivestoproductshift.They

analyzethesuspensionagreementthatemergedfromtheU.S.ADinvestigationon

freshtomatoesfromMexico.TheyfindthattheagreementcausedMexicotoship

moretomatoestoCanada(tradedeflection)andCanadatoshipmoretomatoesto

theU.S.(tradediversion).Overall,theyestimatethat80%ofthedirecteffectwas

offsetbytheindirecttradeeffects.Inaddition,becausetheagreementonlycovered

freshtomatoes,BaylisandPerloffdocumentasignificantincreaseinMexican

shipmentoftomatopastetotheU.S.;i.e.,tradediversioninvolvingarelatedproduct.

Cohen‐Meidan(2013)examinestheimpactoftheU.S.impositionofAD

dutiesonJapaneseandMexicanimportsofPortlandcementintheearly1990s,and

findsheterogeneoustradeandmarketimpactswithintheU.S.market.Thelarge

transportationcostscreatearegionallysegmentedmarketthatsignificantlyaffects

boththepatternoftradeandalsotheimpactoftradepolicy.Shefindspronounced

regionalvariationintheimpactondomesticprices,salesandimports.Specifically,

shefindsADdutiescausesignificantpriceandproductioneffects,buttheseeffects

35BownandCrowley(2006)extendsthesefindingsbyfocusingspecificallyonthetradediversionanddeflectionassociatedwiththeU.S.useofADontheEUmarket.TheyfindthatU.S.ADdutiesimposeterms‐of‐tradeexternalitiesontheEUasU.S.dutiesonJapaneseexportsareassociatedwithsubstantiallylowerJapaneseexportpricesintheEUmarket.

49

arehighlylocalized(i.e.,WestCoast,GulfCoast)andhadlittleimpactonmore

distantU.S.markets.

ii) What are the Firm‐ and Plant‐level Impacts of AD Duties? 

Theincreasedavailabilityoffirm‐andplant‐leveldatahastouchedvirtually

allareasofresearchininternationaleconomics,andtheliteratureonADisno

different.SeveralimportantpapersstudyADeffectsusingfirm‐andplant‐leveldata

fromanumberofcountries,includingtheU.S.,theEU,andChina.Thestudies

demonstratethatADisanexcellentcommercialpolicyfortestingthepredictionsof

themodelsoftradewithheterogeneousfirms.

Pierce(2011)studiestheeffectofADontheperformanceandbehaviorof

U.S.manufacturers.HefindsthatwhileADprotectionraisestherevenueforimport‐

competingfirms,theincreaseinrevenueassociatedwithADdutiesisprimarilydue

toincreasesinpricesandmark‐ups,asphysicalproductivityfallsamongprotected

plants.Moreover,hefindsADdutiesslowthereallocationofresourcesfromless

productivetomoreproductiveplants.

SimilarstudieshavebeenconductedontheeffectofADonEUfirms.Konings

andVandenbussche(2005)usealargepaneldatasetofEUfirmsandestimate

markupsbeforeandafterthefilingofanADcase.TheirfindingsindicatethatAD

protectionhaspositiveandsignificanteffectsondomesticmark‐upsexceptincases

wherethereisalargevolumeofimportdiversion.KoningsandVandenbussche

(2008)usethesamedatasettostudytheeffectofADprotectionontheproductivity

ofEUfirmsinimport‐competingindustries.TheirresultsreinforcethoseinPierce

50

(2011).Namely,theyfindthattheproductivityoftheaveragedomesticfirm

improvesduringADprotection.Yet,theaveragehidesimportantdifferencesacross

firms.Theyfindfirmswithrelativelylowinitialproductivityhaveproductivity

gainsduringADprotection,whilefirmswithhighinitialproductivityexperience

productivitylosses.Thisfindingisconsistentwithmodelsheterogeneousfirms

responsetotradeliberalization.Putbluntly,ADprotectionappearstobegoodfor

badfirms,butbadforgoodfirms.

TherearealsoimportantstudiesoftheeffectofADonexporters.Chandra

andLong(2013)usedetailedChinesefirmleveldataandfindU.S.ADduties

decreaselaborproductivityandTFPoftargetedChinesefirms.Theyfindthat

Chinesefirmswiththehighestinitialexportintensityexperiencethebiggestdropin

productivityduetotheU.S.ADduties.Fromawelfareperspective,thissuggestsAD

isacostlypolicy.

Lu,Tao,andZhang(2013)usemonthlytransactionlevelChinesecustoms

datatostudyhowChineseexportersrespondtoU.S.ADprotection.Theyfindthat

ADprotectioncausesasignificantdecreaseinthetotalexportvolume.Interestingly,

theyfindthatthefallinexportsisduetoasignificantdecreaseinthenumberof

exporters(i.e.,extensivemargineffects).Moreover,theyfindthatthefirmswho

exittheexportmarketarelargelyamongthelessproductivefirms.

Brambilla,Porto,andTarozzi(2012)goonestepbeyondstandardplant‐and

firm‐levelanalysesandofferanimportantstudyofADdutiesonindividual

householdsintheexportingcountry.In2003,theU.S.imposedlargeADdutieson

importsofcatfishfromVietnam.Thesedutiesresultedinasharpdeclinein

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VietnameseexportsofcatfishtotheU.S.Whatmakesthisaparticularlyinteresting

studyisthatVietnamesecatfishproductionisdominatedbyhousehold‐level

production.UsingauniquepaneldatasetofVietnamesehouseholds,theydocument

theresponsesofcatfishproducers(i.e.,households)intheMekongdeltabetween

2002and2004.TheyfindtheADordersignificantlyloweredtheincomegrowthfor

catfishfarmers.

iii) Does Antidumping Have a Chilling Effect on Trade Beyond the Targeted Products? 

EconomistshavelongdebatedthebreadthorextentofADprotection.Aswe

discussedabove,thebestestimatesofthedirecttradeeffectofADprotectionareon

theorderof3‐8%ofacountry’stotalimports,withmostusershavingafarlower

percentoftheirimportscovered(Bown,2011).Onecouldargue,then,thatevenif

ADisthelargestandmostfrequentlyusedcontingenttraderemedy(andthemostly

costlysinglecommercialpolicy),ADmaynonethelessbeadesirablepolicyasit

servesanimportantroleinpromotingoveralltradeliberalizationbyactingasa

pressurereleasevalve(FeinbergandReynolds,2007;MartinandVergote,2008;

MooreandZanardi,2009,2011).Ineffect,theabilitytoprovidetargetedtrade

reliefmakesbroadtariffconcessionseasiertonegotiate.Thedeadweightlossesina

smallnumberofindustriescouldbesmallcomparedtotheoverallgainscontained

inatradeagreement.Consequently,onecouldarguethevalueofADexceedsthe

costsitimposesonaneconomy.Atthesametime,however,itmaybethecasethat

thedirecteffectsunderstatethetruedistortioncausedbyAD.ThespecterofAD

dutiescouldreducetradeinproductsthatareatriskofbeingsubjecttoanADorder.

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Thatis,theuseofADononesetofproductsfromacountrymaydiscouragethe

exportofotherproductsfromthesamecountry.Thisspillovereffectissometimes

referredtoasthe“chillingeffect”ofADonoveralltrade.

Tworelatedpapersexaminethisissueandcometostrikinglydifferent

conclusions.EggerandNelson(2011)estimateagravitymodelusingapanel

datasetofbilateraltradefornearlyallADusersandtargetsovertheperiod1960‐

2001.TheyuseastructuralapproachinthestyleofAndersonandvanWincoop

(2003)toevaluatethespilloverissue.Theyfindthatthespillovervolumeand

welfareeffectsareindeednegative,butthattheestimatesarequitemodest.They

concludethatADmaybemuchadoaboutnothing.

VandenbusscheandZanardi(2010)alsoestimateagravitymodelusinga

largepaneldatasetofbilateraltradeflows.IncontrastwithEggerandNelson

(2011),theyfocusonnewusersofantidumping.Theyfind“tough”newusers(India,

Mexico,Brazil,Taiwan,etc.)experiencealargereductioninaggregateimports.

TheyconcludethatthedampeningeffectsofADlawsontradeflowssubstantially

offsettheincreaseintradevolumesderivedfromtradeliberalization.Farfrom

beingunimportant,theyconcludethatADerodesthevalueofhard‐wontrade

concessions.

Inanattempttoresolvethisdiscrepancybetweenthetwopapers,

VandenbusscheandZanardialsoestimatetheirmodelusingalargersetofcountries

(similartothecountriesusedbyEggerandNelson).Theyfindtheestimatedeffect

fallssignificantlywiththiswidersample.Thissuggeststhespillovereffectis

predominatelyaconcernfornewandtoughusers.

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iv) Does Antidumping Result in Exit? 

GiventhesizeoftheaverageADduty,thequestionariseswhetherADprotection

resultsinfirms/countriestoexitamarket.IfsunkcostsareimportantandAD

resultsinafirmtoceasesupplyingamarket,thecostsofADprotectionmaywellbe

largerthanwhatisimpliedbythereductionintrade.BesedesandPrusa(2013)

examinethisissueandfindthatADinvestigationsoftendriveexportsuppliers

entirelyoutofthemarket.UsingmonthlydisaggregatedtradedataalongwithU.S.

ADcaseinformation,theyestimateahazardmodelandfindthatADincreasesthe

likelihoodofexitbymorethan50percent.ReminiscentofStaigerandWolak

(1994),theyfindlargeeffectsduringtheinvestigationperiod–inmanycases

subjectfirmsexitfromtheU.S.marketwhiletheinvestigationisinprocess.In

contrastwiththeearlierfinding,theyfindlargetradeeffects(exit)evenbeforethe

preliminarydutiesareinplace.Moreover,theyfindthatre‐entrytotheADusing

marketislesslikelythelongertheADdutyisineffect.

B. Does Antidumping Matter for Developing Countries? 

UntilquiterecentlynearlyallempiricalstudieshavefocusedontheuseofADby

traditionalusers.Asmentioned,thenewusershavebecomeboththemajorusers

andalsothemajortargetsofADprotectioninthepastcoupledecades.Cheong

(2007)examinestheEU’suseofADandfindsthattheEUhasincreasinglybegunto

useADagainstcountrieswithlowerper‐capitaincomeandhasimposedmore

restrictivemeasuresonthem(thanoncomparablecasesagainstdeveloped

countries).HedoesnotfindanysupportfortheBlonigenandBown(2003)

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retaliationcapacityhypothesis–theEUisjustaslikelytotargetdeveloping

countrieswithorwithouttheirownADstatute.However,hedoesfindsupportfor

thePrusaandTeh(2010)PTAeffect–thatis,developingcountriesinPTAswiththe

EUarelesslikelytobesubjecttoEUADactions.

BownandCrowley(2014)extendtheanalysisofKnetterandPrusa(2002)to

emergingeconomies.Theyfindevidenceofacounter‐cyclicalrelationshipbetween

macroeconomicshocksandnewADrestrictions,aswellasanimportantrolefor

fluctuationsinbilateralrealexchangerateswiththeestimatesgrowingovertime.36

BownandTovar(2011)useIndianproduct‐leveldatatoexaminewhether

countriesuseADtoreversecommitmentstolowertariffs.Theypresentcompelling

evidencethatinthefaceofpolitical‐economicpressureIndiaoffsettheimpactof

lowertariffsthroughuseofADandsafeguardprotection.

Bown(2013)focusesontheuseofADbydevelopingcountries.Incontrast

withthemodestincreaseinadministeredprotectionbytraditionalADusersduring

the2007‐09economiccrisis,Bownfindsamarkedincreaseinprotectionby

developingcountries.Heprovidesseveralalternativemeasuresoftheincrease,but,

onaverage,itappearsthatADusebydevelopingcountriesincreasedaboutfive

timesmorethanbydevelopedcountries.Oneexplanationissimplythatdeveloping

countries’“demandforprotection”ismoresensitivetoeconomicconditions.There

areseveraladditionalfactorsthatexplainthesharpincreaseinADprotection.First,

Bownnotesthedevelopingcountrieshaveloweredtariffsoverthepastdecade.By

contrast,therehavebeenfewtariffreductionsbydevelopedcountries.This36BownandCrowley(2013a)applyasimilarmodeltotraditionalusersandfocusonthemodel’spredictionsforthepost‐financialcrisisperiod.

55

liberalizationhasbeenanadditionalmotivationfordevelopingcountriestouseAD

protection.Second,muchoftheincreasedtradeandmostoftheincreasedAD

activityhasinvolvedemergingcountry‐emergingcountrypairs.Thetargets’

relativeinexperienceindefendingthemselvesinADproceedingshasmadethem

easyprey.Overall,BownfindsthatmostofthenewADactivityisinitiatedby

developingcountriestargetingotherdevelopingcountries.Furtherexplorationsof

South‐Southprotectionareanimportantareaforfutureresearch.

Anotherimportantissueistherelationship,ifany,betweentariffoverhang

andtheuseofADactions.Asiswellknown,appliedtariffsareoftenlessthanthe

WTOboundtariffs,referredtoastariffoverhang.Formostindustriesindeveloped

countries,thegapissmall(oftenzero).However,formanyindustriesindeveloping

countries,theoverhangcanbequitelarge–oftenontheorderof20‐30percentage

points.AstillunresolvedquestioniswhetherADdutiesarelesslikelyinindustries

wheresubstantialtariffoverhangispresent.Ifacountryhasconsiderablelatitude

toraiseappliedtariffsitmaynotneedtoresorttoAD.BownandCrowley(2014)

presentevidencethattheuseoftemporarytradebarriers(includingAD)by

developingcountrieshasbecomeincreasinglysensitivetomacroeconomic

fluctuationsafter1995,evenaftercontrollingforoverhang.Webelievethereareat

leasttwoadvantagestoacountryusingADratherthanraisingappliedtariffrates.

First,ADdutiescanbeappliedonadiscriminatorybasis.Second,requiring

protection‐seekingindustriesto“jumpthroughthehoops”requiredtofileand

prosecuteanADactionmightraisethecosttoseekingprotectionandtherefore

lowertheamountofpoliticalpressureforprotection.

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C. Is AD Used Strategically at the Country Level? 

ThereisanongoingdebateabouttheextenttowhichcountriesuseADstrategically.

BaoandQiu(2011)explorewhetherChina'sADismoreretaliatorythanthatofthe

U.S.Theyfindsupportthatbothcountries’usageisconsistentwithatit‐for‐tat

incentive,butfindnoevidencethatChinaismoreretaliatory.

FeinbergandReynolds(2008)examinewhetherU.S.exportersaresubjectto

moreADactionsasaresultoftheU.S.import‐competingindustriesuseofAD.After

controllingformacroeconomicandexchangerates,theyfindretaliationplayinga

largerroleinacountry’sdecisiontofileADactionsagainsttheUnitedStates

comparedtoothertargetcountries.

Miyagiwa,Song,andVandenbussche(2010)arguethatacountry’srelative

sizeplaysaroleinthestrategicdecisiontoretaliate.Ifallcountriesarethesame

size,thenaretaliation‐driven“tradewar”makesallpartiesworseoff.Thus,for

comparably‐sizedcountriesADwarsmaybeaverted.However,whentheforeign

marketisrelativelysmall,thenADretaliationhasamodesteffectonthelarger

country.Theyarguethattheirmodelisconsistentwiththegrowingproportionof

ADdisputesbetweencountriesofvastlydifferenteconomicsize.

Thequestionofwhycountriesretaliatehasbeenlongdebated.Whywoulda

countrydeviatefromthecooperativelowtariffequilibrium?MartinandVergote

(2008)analyzetheroleofretaliationintradeagreementsandarguethatADisnota

deviationfromacooperativeequilibrium,butratheracrucialpartofthe

equilibrium.Theyshowthat,inthepresenceofprivateinformation,retaliationcan

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beusedtoincreasethewelfarederivedfromtradeagreements.Specifically,

becausegovernmentscannotresorttointernationaltransfersorexportsubsidiesto

compensateforterms‐of‐tradeexternalities,retaliationisanecessaryfeatureofany

efficientequilibrium.Fromthisperspective,thebenefitfromADishardtodirectly

measure,butessentialunderexistingWTOrules.

D. Trade Agreements, the WTO, and AD   

i) Do PTAs Affect the Patterns of AD Use? 

Itiswellknownthatpreferentialtariffsdiscriminateagainstnon‐membersitisnot

clearwhetherotherPTApoliciesaccentuateorattenuatethisdiscrimination.Prusa

andTeh(2010)focusontheextenttowhichPTAsalterthepatternofAD.ADisa

particularlyaptpolicytostudybecausethereisconsiderablevariationinADrules

acrossPTAs.SomePTAscontainnoADprovisions,someprohibitit,andothers

containspecialrulesforitsuse.TheyfindPTAshavehadlargeeffectonthepattern

ofADuse:decreasingtheincidenceagainstPTAmembersandincreasingthe

numberofADactionsagainstnon‐PTAmembers.Theresultsareparticularly

strongforPTAsthathaveadditionalADrules.Takingthetwoeffectstogether,they

findneteffectofPTArulesontotalADfilingsissmall.Bown(2014b)findsasimilar

effectlookingjustatPTAsinvolvingTurkey.

ii) Has Mandatory Sunset Worked? 

OneofthemajorchangestoADrulesduringtheUruguayRoundoftheGATTwas

theinclusionofamandatorysunsetprovision.Previously,therewasnoautomatic

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reviewofADordersand,intheory,anADdutycouldbeinplaceforever.Thiswas

notmerelyatheoreticalpossibilityastherewereaADdutiesthathadbeeninplace

sincethe1960s.

Severalauthorshavestudiedhowsunsetreviewshaveworkedinpractice.

Moore(1999)andGourlayandReynolds(2012)examinesunsetdecisionmakingat

theU.S.DepartmentofCommerce.TheybothfindthatthevaguenessoftheWTO

rulesregardingsunsetreviewshaveallowedDepartmentofCommercetorulethat

dumpingwouldresumeatthelevelsdeterminedattheoriginalinvestigation

regardlessofhowmanyyearshavepassedandregardlessofhowmany

administrativeviewshavetakenplace(DeVault,1996b).Liebman(2004)and

Moore(2006a)examinetheinjurytestduringsunsetreviewsandfind,similarto

theearlierliteratureonoriginalinvestigations,botheconomicandpoliticalfactors

playarole.Overall,thereislittleevidencethatthemandatorysunsetprovision

actuallyshortensthedurationofduties.Infact,Prusa(2011)findsthatfortheU.S.,

ADdutiesarelongerlivedafterthesunsetprovisionwasenactedthenunderthe

earlierrules.

iii) Is the WTO Constraining the Use of AD? 

AsmentionedabovetheWTODSUisoneofthemajorachievementsoftheUruguay

RoundandADhasemergedasbyfarthemostfrequentlydisputedpolicies.Manyof

theADdisputesinvolvethemethodsforcalculatingADmargins.Thesinglemost

commonissuechallengedtotheWTOistheU.S.practiceof“zeroing”inthe

calculationofdumping.Zeroingisasomewhatobscuretechnicalissuerelatedto

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thecalculationofADmarginswhereallnegativedumpingamountsarereplaced

withazeropriortothecalculationofthefinaldumpingmargin.Asaresult,this

discretionarypracticewillleadtheU.S.tofindlargerdumpingmarginsbyvirtually

anyforeignfirmitinvestigates.37BownandPrusa(2011)estimatethat

approximately25%ofcurrentU.S.antidumpingcaseswouldhaveresultedina

findingof“nodumping”ifzeroingwerenotused.

AccordingtoBownandPrusa(2011)throughthefirst15yearsofthe

UruguayRoundzeroinghadbeenthesubjectofmorethan13%ofWTOPanel

investigationsandalmost20%ofWTOAppellateBodyreports.Theyconcludethat

theWTOABhadlikelydevotedmoretimetozeroingthananyothersingleissuein

theWTO.38Ifnothingelse,thenumerousdisputesinvolvingzeroinghighlighta

weaknessesoftheWTODSU.Sinceeachdisputewillrequireatleast18monthsto

adjudicateandsinceWTO“relief”isonlyprospective,WTOmembershavefairly

weakincentivestochangetheirrules.Forinstance,theU.S.isstillzeroingsome15

yearsaftertheWTOfirstruledthatzeroingwasWTOinconsistent.

ForU.S.tradingpartners,theU.S.’snon‐responsivenesstothezeroing

decisionssendsasignalthatcomplianceisvoluntary,andthiseffectivelyerodesthe

legitimacyoftheWTO.Asevidence,inthelastseveralyearstherehavebeenfive

separatedisputesinvolvingasetofsimilarantidumpingpracticesbyChinaandin

eachcasetheWTOhasruledagainstChina’sprocedures.Asofthetimeofthis

37Relatedly,Blonigen(2006b)findsthatdiscretionarypracticesbyU.S.agenciesisthemainreasonwhydumpingmarginsinU.S.caseshaverisenfrom15%to60%overthe1980to2000period.38Therehavebeennumerouspapersstudyingzeroinganditseffects,includingJanowandStaiger(2003),BownandSykes(2008),andPrusaandVermulst,(2009,2011).

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writing,ChinahasnotrevisedanyofitsproceduresinresponsetotheWTO’s

disputebodydeterminations.

E. AD’s Role in Maintaining Trade Cooperation 

BagwellandStaiger(1990)offeraninterestinginterpretationoftheroleAD

playsinmaintainoveralltradepolicystability.Theydevelopadynamic,repeated

tradepolicy‐settinggameofacooperativetradeagreementbetweenlargecountries

andshowthatacooperativetradepolicyequilibriumcharacterizedbyrelativelylow

tariffscanbesustainedbythethreatofinfinitereversiontoaNashequilibriumof

hightariffs.Whiletheydonotmakespecificreferencetoantidumping,the

relevanceisapparent.Becauseofrelativelylowtariffbindingsformanydeveloped

countries,thereislittleleewayformanycountriestodiscretionarilyraisetheir

appliedtariffs.Hence,ADcanplaythekeyroleinthepunishmentphaseofthetrade

policygame.Moreover,intheBagwellandStaigermodelthecooperative

equilibriumischaracterizedbyapositivecorrelationbetweenunexpectedincreases

inimportvolumesandimporttariffs.Thiscorrelationbetweenincreasedimport

volumeandADdutiesisoftenakeypartofthe“materialinjury”analysisinAD

investigations.

Wesketchtheirresultbecauseithasbeenthetheoreticaljustificationfor

recentempiricalworkandalsobecauseitoffersanovelinterpretationofwhythe

ADpolicy“exception”isimportantundertheWTO.Intheirmodel,stochasticoutput

leadstofluctuationsinthevolumeoftradeovertimethatprovideanincentivefor

countriestoadjusttheleveloftradepolicyrestrictiveness.Theimportdemandand

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exportsupplyfunctionsarewrittenas ∗, ∗ and , wherePisthe

(domestic)exporter’sprice,P*isthe(foreign)importer’sprice,and and ∗are

generalshiftparameterssuchthat ∗, ∗ / ∗ 0and , / 0.Let

denotethefreetradevolumeofimportsandexports;BagwellandStaiger

assumeanincreaseineithershiftparametercausesanincreaseinthevolumeof

trade,i.e., / ∗ 0and / 0.Theyanalyzethechoiceofaspecific

importtariff,τ*,andaspecificexporttax,τ,whereP*−P=τ*+τinequilibrium.

Thenationalwelfareforeachcountryisdefinedasthesumofconsumer’s

surplus,producer’ssurplus,andtariffortaxrevenueandisdenotedW(k,k*,τ,τ*)

forthedomestic(exporting)countryandW*(k,k*,τ,τ*)fortheforeign(importing)

country.TheNashequilibriumintheone‐shottradepolicysettinggameis

characterizedbyanimporttariff,τ∗ , ∗ ,andanexporttax,τ , ∗ ,thatare

eachinefficientlyhigh.BagwellandStaigerusetheirstochasticoutputmodelto

provethat,providedthediscountfactorisnottoohigh,acooperativeequilibrium

characterizedbyanimporttariff,τ∗,thatislowerthantheNashequilibriumtariff

andanexporttax,τ ,thatislowerthantheNashequilibriumexporttaxcanbe

supportedbythethreatofinfinitereversiontotheNashequilibriuminadynamic

infinitelyrepeatedgame.

Forthemostcooperativeequilibriumtoexist,bothcountriesmustbenefit

fromcooperation.The“nodefection”conditionrequiresthat,foreverypossible

volumeoftrade,thediscountedpresentvalueofgainsfromcooperationtothe

foreignimportingcountry,definedasω*(⋅),exceedsthewithin‐periodgainof

defectingfromthecooperativeagreement,definedasΩ*(⋅),

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(5)Ω*(k,k*, (k,k*), ∗ (k,k*, (⋅))≤ω*( (k,k*), ∗(k,k*),

whereτ∗ denotesthedefectionlevelofprotection.Iftheincentivetodefect,Ω*(⋅),

increases,BagwellandStaigershowthatthecooperativetradepolicies,τ∗andτ ,

mustriseinordertomaintaintheinequality.

Considerthespecialcaseoftwocountriesthatstartfromamostcooperative

tradepolicyequilibriumoffreetrade,τ∗ 0, τ 0, ∗ .Thegainstothe

importingcountryofdefectingtoapolicyτ∗ fromacooperativeequilibriumoffree

tradecanbewritten:

6 ∗ , ∗, 0, ∗ , ∗, 0, ∗ ∗, ∗ , ∗, 0, ∗

∗, ∗ ∗, ∗ , ∗, 0, ∗ ∗∗ , ∗, , ∗

Equation(6)statesthatiftheimportingcountrydefectstoitsbestresponse

tariff,τ∗ ,andtheexportingcountrymaintainsacooperativepolicyoffreetrade,

τ 0thenthechangeintheimportingcountry’swelfareintheperiodinwhichit

defectsisequaltoitsterms‐of‐tradegain(thefirstterm)lesstheefficiencyloss

associatedwithdistortingtheconsumptionpriceinitseconomyawayfromthefree

tradepriceandreducingtheimportvolumetoaninefficientlylowlevel(thesecond

term).Further,BagwellandStaigershowthattheincentivetodefectfroma

cooperativefreetradeequilibriumisincreasinginpositiveshockstotradevolumeif

andonlyiftheefficiencylossofthetariffpolicyissufficientlysmall:

(7)∗ ⋅∗ 0ifandonlyif

∗, ∗

∗, ∗

∗∗

∗ , ∗, , ∗,

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whereη istheexportsupplyelasticityevaluatedatfreetradeandη isthe

importdemandelasticityevaluated(positively)atfreetrade.Thisequation

providesthebasisfortheresultthatthemostcooperativetariffincreasesin

responsetoapositiveimportvolumeshock.Ifthemostcooperativetarifffailsto

rise,theimportingcountrywilldefectbecausethewithin‐periodgainfrom

defectingexceedsthediscountedpresentvalueofinfinitereversiontotheNash

equilibrium.

Equation(7)isthebasisfortestableempiricalpredictionsregardingtheuse

ofAD;namely,thatanincreaseinimportvolumeraisestheincentivetodefect

providedthatimportdemandandexportsupplyaresufficientlyinelastic.Thus,the

likelihoodofatariffincreaseriseswithanincreaseinimportvolume.

BownandCrowley(2013b)testthetheorybyexploitingthetheoretical

predictionthatimpliesthat,inthecrosssection,agivenincreaseinimportsabove

theexpectedvaluewillresultinahighercooperativetariffforthesectorthathas

thesmallervarianceofimports.Inotherwords,anincreaseinthetariffismore

likelywhenanimportsurgeinasectorappearstobeunusual.Theytesttheir

hypothesisusingU.S.dataonADduties.39TheyfindnewUSADtariffsaremore

likelytobeimposedwhentherehasbeenasurgeinpastimportgrowth,import

demandandexportsupplyarerelativelyinelastic,andimportgrowthislessvolatile.

Consequently,thereiscompellingevidencethatU.S.ADdutiesareconsistentwith

anincreaseintheincentivetoraise“cooperative”tariffsasintheBagwelland

39Theyalsotesttheirmodelusingsafeguardactions,buttheoverwhelmingmajorityofobservationsareADduties.Theresultsarequalitativelyunchanged.

64

Staiger(1990)modelofself‐enforcingtradeagreements.Animportantareaof

futureresearchwillbeextendingtheBownandCrowleyestimationapproachto

otherADusingcountries.

VI. Concluding Comments ThelandscapeofADusehasbeensignificantlyevolvingoverthepastdecade,

openingupanumberofimportantnewphenomenaforanalyses.Theconstruction

andmaintenanceoftheGlobalAntidumpingDatabaseprovidesarich,detailed

datasetforresearchers.WenowhaveinformationonADactionsthatgoesback

decadesandnowcoversvirtuallyallcountriesusingADlaws.Webelievethereare

manyfruitfulavenuestousethisrichdataasastartingpointtonotonlyre‐visitand

testexistingtheoriesandhypothesesaboutAD,butalsothegeneraleffectsoftrade

policy.Wealsothinkthereareopportunitiestonotonlyextendtheoryinthe

literature,butalsotestexistingtheorieswehave,especiallythoserelatedtothe

motivationfordumpingandtheroleofADinthestructureofmultilateraltrade

liberalization.40

ThemaindevelopmentsinADuseoverthepastdecadeshavebeenthemajor

targetingofChinaandthesubstantialriseofnon‐traditionalusers,particularlythe

BRICcountries(Brazil,Russia,India,andChina).TherapidintegrationofChinainto

theworldtradingeconomy,includingtheaccessionintotheWTOin2001withthe

concomitantliberalizationofmanystandardformsoftradeprotectionvis‐à‐vis

40Pleaseseechapters9and10ofthisHandbookformoreonthetheoryofthepotentialroleplayedbyvariousformsofcontingentprotectionwithinmultilateraltradingagreements.

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China,hasclearlyledtotradefrictionsonmanyfrontsandisalikelyreasonwhy

ChinahasbeenanoverwhelmingtargetofADactivity.Beyondthisgeneral

observation,however,littlehasbeendonetoformallyexaminetheADresponseto

thisnaturalexperiment–theopeningoftheworldtotradewithChina.Whathas

beenthecross‐industryandcross‐countryincidenceofADuseagainstChinaand

doesitaccordwiththeory?WhathasChinesetradelookedlikeforcountrieswith

ADlawsversusthosewithout?Andtowhatextenthastheriseofothernon‐

traditionalusersbeenaresponse?

ADactivitybynon‐traditionalusersclearlyrequiresfurtheranalysisaswell,

especiallygiventheirrapidriseinuse,whichhasnowsurpassedthatoftraditional

usersandappearstobeincreasinginintensity.Whatweknowempiricallyabout

ADfromthepriorliteraturecomesalmostexclusivelyfromanalysisofEU,and

especially,U.S.data.Butthenon‐traditionalusershavedifferenteconomic

structures,differentpoliticaleconomyforces,andarepositioneddifferentlyinthe

globaleconomythantheEUorU.S.Asaresult,themotivationsforandthe

economicoutcomesofADactivityarelikelyquitedifferentaswell.Whilean

interestingrecentdevelopmentinEUandU.S.ADactivityistheirdisputesover

technicalissuesofADimplementationintheWTOdisputesettlementprocess,non‐

traditionalusersarenotveryinvolvedintheseprocessesandseemtofollow

simpler(thoughoftenlesswell‐documented)methodstoapplyADremedies.This

mightsuggestthatthereisalifecycleofADuseascountriesmatureintheiruseand

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sophisticationofthelawovertime,orcouldalternativelyindicatethatuseofAD

lawsdependsonthelevelofeconomicdevelopmentofthecountry.41

ThereareanumberofareaswherewefeelthattheADliteraturewould

benefitbyrevisitingexistingtheoryandtestingthemfurther,oftenwithmuch

richerdataavailablethanwhenthetheorieswerefirstdeveloped.Perhapsthemost

fundamentalwouldbefurtherempiricalevaluationofthevarioustheoriesforwhy

dumpingmayoccur.Understandingtheunderlyingmotivationfordumpingis

criticalindeterminingtheimpactofADremediesandtheirultimatewelfareeffects.

Yet,withtheexceptionofafewstudies,therehasbeenlittledonetodetermine

whichexplanationsfordumpingaremostsalientinpractice.42

AnotherexampleofADtheorythatshouldberevisitedisthefewearly

papersonverticalproductionrelationshipsandAD.HoekmanandLeidy(1992)

introducedtheconceptthatADactionsinanupstreamindustrycanaffectAD

activityindownstreamindustriesandFeinbergandKaplan(1993)followedupwith

someinitialempiricalevidenceforsucheffectsinU.S.data.Thesepaperswere

publishedovertwodecadesagoandtherehasbeenlittletonoworkontheissueof

verticalproductionrelationshipsandADsincethen.43Thedramaticincreasein

verticalspecializationandglobalvaluechainsintheworldeconomyoverthepast

41WethankChadBownformakingtheobservationthatthetraditionalandnon‐traditionalusersofADhavetheseimportantdifferencesinhowtheyuseADlaws.42ThesestudiesincludeTaylor(2004)thatexamineswhetherU.S.withdrawncasesindicatetacitcollusionbyfirms,andBlonigenandWilson(2010)examiningtheexcesscapacitymodel.BownandTovar(2011)isalsorelatedinthattheyexaminewhetherADuseinthewakeoftradeliberalizationfollowstheGrossmanandHelpman(1994)protectionforsalemodel,butalsoinformsthetheoreticalliteraturethatseestheroleofADactivityasareleasevalveforothertradeconcessions.43ArecentexceptionisCohen‐Meiden(2015)thatexaminesdifferencesincalculationofU.S.dumpingmarginsdependingonwhethertheforeignproducerisintegratedwiththedomesticimporterornot.

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coupledecadesmakesfurtherinvestigationintothisissuealmostanimperativefor

theADliterature.

Theinternationaltradeliteraturehasalsodevelopedtheoryandempirics

aroundanumberofnewissuesthattheADliteraturehasoftennotexamined,but

should.Onesuchissueisproductquality.Anumberofrecentpapersdevelop

methodstoexploreheterogeneityinthequalityofproductsexportedbyfirms,

includingHallak(2006),Verhoogen(2008),Khandelwal(2010),Baldwinand

Harrigan(2011),TopalovaandKhandelwal(2011),andKuglerandVerhoogen

(2012).Onepatternthatemergesinthisliteratureisthatexportingfirmsare

associatedwithhigherqualityproductsthantheirdomestic‐orientedcompetitors

andthattradeliberalizationcanleadtoaccesstohigherqualityproducts.Whatis

theincidenceofADacrossvariouslevelsofproductquality,andtowhatextentdoes

itimpactthequalityofavailableproductsorfirms’productqualitydecisions?

AnotherissuethathasrarelybeenexploredintheADliterature,butrecently

hasreceivedsignificantattentionintheliterature,istheideathatfirms’exportsto

variousdestinationsarefarfromstable,withlotsofchurning,necessary

experimentationfornewmarkets,andnon‐linearentrycostsacrossandwithin

destinations.44TherecentstudybyBesedesandPrusa(2013)findsthatADduties

oftencompletelyeliminatethetargetedexportflow,andpapersbyBownand

Crowley(2007)andLu,TaoandZhang(2013)showthatADdutiescancausefirms

toalterexportdestinations.Buttherearestillmanyopentopicsinthisarea.For

example,doesADactivitylimitfirms’decisionsonwhichexportdestinationstotry44KeypapershereincludeArkolakis(2010),ArkolakisandMuendler(2010),BesedesandPrusa(2006;2011),Albornozetal.(2012),andEatonetal.(2012).

68

orlimithowaggressivelytheygrowinnewmarkets?Ifentrycostsarelowestfor

nearbymarkets,arecountrieslocatednearactiveADexportdestinationsultimately

limitedintheirabilitytogrowexportsacrossalldestinations?

Theinternationaleconomicsliteraturehasalsoseentheresurgenceof

quantitativeanalyseswhereresearchersbuildstructural,oftengeneralequilibrium,

modelsandsimulateeconomicexperimentsandcounterfactualswiththesemodels.

TherehasbeenlittletonotypeofanalysislikethisintheADliteraturesince

Gallawayetal.(1999)untilarecentworkingpaperbyRuhl(2015).Bothefforts

focusonthewelfareimpactsfortheimport‐protectingcountryusingU.S.dataand

assumethattheprimarymotivefordumpingissimplepricediscrimination.There

iscertainlyplentyofroomfortheliteraturetofurtherexplorevariousmarketand

welfareeffectsonexportingcountriesandforalternativedumpingmotives(e.g.,

short‐runexcesscapacity)usingthesequantitativeapproaches.

WereiteratethattherearetradepolicyissuesthattheavailableADdatawill

bebetterabletoexplorethanothertradepolicysettingsanddata.Theobvious

comparisonistotheextensiveliteratureexamininglargeunilateraltrade

liberalizationsreviewedinchapter3ofthisHandbook.Thosesettingsaretypically

one‐timepoliticaleconomyevents.Incontrast,eachADcaseisitsownpolitical

economyeventthatisofteninterconnectedwithotherADcases,affordingamuch

richersetofobservationstoevaluatepoliticaleconomyforcesandhowtheyevolve

overtimeandinresponsetootherevents(e.g.,tradeagreementsorotherADcases).

Relatedly,onecanstudyinteractionsofindustryevolutionandthedemandfortrade

protection.AsshownbytheliteraturelookingatworldwideADpatterns,AD

69

activityinagivencountrymaybeinterdependentwithADactivityinother

countries,andisnotjustaone‐timeunilateralaction.Thus,onecanbetterstudy

thesemultilateralinterdependenciesintradepolicyactions.Finally,themore

targetednatureofADallowsonetostudytraderesponsesthatonecannotwith

unilateraltradeactions.Anobviousexampleistheanalysisofhowtradedivertsto

otherimportsourcesthatarenotnamedinanADaction.Focusingontheseissues

whereADdataistheonlywell‐suitedcontextforstudyingageneraltradepolicy

questionisanobviousstrategytomakingsubstantialcontributionstotheliterature.

ButwehavealsoindicatedlargeimportantquestionsaboutADactivityitself

thatmeritsignificantattention.Onearea,asnotedabove,isbetteranalysisofwhat

actuallymotivatesthedumpinginactualADcases.Weendwithapuzzlethatwe

pointedoutinourlastliteraturereview(BlonigenandPrusa,2003)thatstill

remains.WhilewehaveshownthatADactivityissubstantialinourglobaleconomy,

westillgrapplewiththequestion,whyisn’tthereevenmoreADactivity?And

relatedly,whyisitsoconcentratedinonlycertainproducts?Thesetypesof

remainingquestionsshowthatthereissignificantinterestingandimportantwork

lefttobedone.

70

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Figure1:CountrieswithADLaws,1900‐2014

Source:VandenbusscheandZanardi(2008).UpdatedbytheauthorstoincludemostrecentyearsusingonlineWTOresourcesandchangesinmembershipofcustomsandmonetaryunionswithexistingADlaws.Detailedcountrylistavailableuponrequest.

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Figure2:AnnualADInitiationsandMeasuresbyWTOMembers,1995‐2013

Source:OfficialWTOstatisticsavailableonlineathttps://www.wto.org/english/tratop_e/adp_e/adp_e.htm.

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Initiations Measures

Table1:ResourcesforAntidumpingResearch

GlobalAntidumpingDatabase,availableathttp://econ.worldbank.org/ttbd/gad/

DefinitivesourceforADinformation;keydates,product,subjectcountries,duties,outcomes,HSlines,etc.;linkstomostADusingcountriesadministrativeagencies

PublicWTOdataonADactivity,availableathttps://www.wto.org/english/tratop_e/adp_e/adp_e.htm

SummaryandexplanationofWTOantidumpingagreement;year‐by‐yearsummaryofactivity;informationonWTODisputesinvolvingantidumping

WTOCaseLawProject,availableathttp://globalgovernanceprogramme.eui.eu/wto‐case‐law‐project/

AmericanLawInstituteproject,summariesofWTOADdisputes;discussionandanalysisofcasesbroughttotheWTO,manyofwhichinvolveADissues

GlobalTradeAlert,availableathttp://www.globaltradealert.org/

Regularlyupdatedinformationontradepolicyactionsaroundtheworld,includingantidumping

U.S.AntidumpingInformation U.S.InternationalTradeCommission(availableathttp://www.usitc.gov/ ),

U.S.DepartmentofCommerce(availableathttp://trade.gov/enforcement/operations/),and U.S.FederalRegister(availableathttp://www.federalregister.gov/http://www.gpoaccess.gov/fr/);comprehensivereportingonU.S.actions,dates,administrativedecisions,etc.

EUAntidumpingInformation EuropeanCommissionAnti‐dumping

(availableathttp://tinyurl.com/eceu‐antidumping)

Table2:CountriesThatApplyandThatAreTargetedbyADMeasures

TopUsers TopTargets

CaseHSTariffLine(%covered) Case

Count* Count** TradeWtd*** Count*India 519 6.9 5.8 China 719U.S.A 323 5.8 3.9 SouthKorea 201E.U. 297 3.1 1.7 Taiwan 162Argentina 219 3.3 2.5 U.S. 150Brazil 165 1.9 1.7 Japan 126China 164 1.4 3.2 Thailand 121Turkey 154 6.9 2.6 Indonesia 110SouthAfrica 131 0.6 0.3 Russia 105Canada 113 1.1 0.7 India 103Australia 108 0.7 0.4 Brazil 86*1995‐2013**TTBcoverage(2011)***ADcoverage(2011)Source:CaseCountfromofficialWTOstatisticsavailableonlineatwww.wto.org/english/tratop_e/adp_e/adp_e.htm;ADandTTBcoverageattarifflinelevelfromBown(2013)

1

Table3:BilateralADUse

Importer ExporterNo.ofADCases*

ShareofTarget’sBilateralExportsSubjecttoTTB(%)**

India China 132 23.2U.S. China 97 9.1E.U. China 85 7.3Argentina China 68 10.9Turkey China 60 15.7Brazil China 50 18.8India E.U. 41 ‐‐India Taiwan 41 ‐‐India Korea 39 7.2Argentina Brazil 37 ‐‐China U.S. 33 6.7China Japan 29 ‐‐India Thailand 28 7.7China Korea 27 4.3India U.S. 26 ‐‐Canada China 25 3.6India Japan 25 ‐‐U.S. Japan 22 ‐‐India Indonesia 22 ‐‐Mexico U.S. 21 0.9Colombia China 21 3China E.U. 20 ‐‐E.U. India 20 1.3SouthAfrica China 20 1.4*1995‐2013**2013Source:CaseCountfromofficialWTOstatisticsavailableonlineat

www.wto.org/english/tratop_e/adp_e/adp_e.htm.;2013TTBcoverageattarifflinelevelfromBown(2014a)

2

Table4:BilateralTTBCoverage(2013)

Importer ExporterShareofTarget'sBilateralExportsSubjecttoTTB(%)

Jordan Belarus 100.0Jordan Libya 95.5Turkey Kuwait 65.6Chile Paraguay 54.5U.S.A. Ukraine 53.6Argentina Kazakhstan 47.9U.S.A. Latvia 40.7Turkey Oman 37.2Peru Pakistan 35.6Thailand Kazakhstan 34.3India Slovenia 33.7Mexico Ukraine 31.3Colombia TrinidadandTobago 31.0U.S.A. Moldova 31.0India Kenya 30.7Indonesia Macao 30.2Ukraine Japan 29.1Ukraine Kuwait 28.1Brazil NewZealand 27.0India Belarus 26.1Colombia Turkey 25.9Brazil Bangladesh 23.3India China 23.2Brazil China 18.8U.S.A. Russia 18.6Ukraine Mexico 18.1Canada Bulgaria 17.0Turkey China 15.7Chile CzechRepublic 15.5Ukraine SouthKorea 15.4Ukraine Uzbekistan 15.4Turkey India 15.3Morocco Portugal 15.1Source:Bown(2014a).

3

Table5:AverageADDutiesforSelectedUsers(percent)

UsersAverageADduties(1980‐2005)

AverageAppliedMFNTariffRates

(Allproducts,1996‐2007)Developed Canada 12.1 4.2 EC 17.6 6.4 U.S. 41.4 5.2Developing China 21.4 13.8 Mexico 89.5 15.8 Indonesia 21.5 8.5 SouthKorea 27.4 12.6 Peru 30.9 10.9 SouthAfrica 29.1 7.0 Turkey 29.1 12.9Source:WTO(2009),p130.

Table6:ADMeasuresbyProducts,1995‐2014

WorldMainDevelopedCountryUsers

MainLessDevelopedCountryUsers

HarmonizedSystemSectionName Total Percent Total Percent Total PercentLiveanimalsandproducts 28 0.9 15 1.8 7 0.5Vegetableproducts 37 1.2 20 2.3 4 0.3Animalandvegetablefats,oilsandwaxes 2 0.1 0 0.0 0 0.0Preparedfoodstuff;beverages,spirits,vinegar;tobacco

35 1.2 22 2.6 1 0.1

Mineralproducts 50 1.7 11 1.3 15 1.1Productsofthechemicalandalliedindustries 624 21.0 119 13.9 407 29.3Resins,plasticsandarticles;rubberandarticles 379 12.8 59 6.9 251 18.1

Hides,skinsandarticles;saddleryandtravelgoods

2 0.1 2 0.2 0 0.0

Wood,corkandarticles;basketware 51 1.7 17 2.0 17 1.2Paper,paperboardandarticles 125 4.2 31 3.6 53 3.8Textilesandarticles 250 8.4 40 4.7 155 11.2Footwear,headgear;feathers,artif.flowers,fans 23 0.8 9 1.1 3 0.2

Articlesofstone,plaster;ceramicprod.;glass 108 3.6 19 2.2 50 3.6Basemetalsandarticles 881 29.7 410 48.0 230 16.6Machineryandelectricalequipment 244 8.2 58 6.8 128 9.2Vehicles,aircraftandvessels 29 1.0 11 1.3 13 0.9Instruments,clocks,recordersandreproducers

34 1.1 2 0.2 24 1.7

Miscellaneousmanufacturedarticles 64 2.2 9 1.1 30 2.2Total 2966 100 854 100 1388 100Source:WorldTradeOrganization‐https://www.wto.org/english/tratop_e/adp_e/adp_e.htmNotes:MainDevelopedCountriesareAustralia(111),Canada(119),EuropeanUnion(298),andtheUnitedStates(326).MainLessDevelopedCountriesareArgentina(221),Brazil(174),China(174),India(529),SouthAfrica(132)andTurkey(158).

1

Table7:EstimatesofTradeEffectsofADOrders,SubjectandNon‐SubjectSuppliers

StudyInvestigatingCountry SubjectCountries Non‐SubjectCountries Comments

StaigerandWolak(1994)

U.S. 25%decreaseintradevalue;abouthalfofwhichoccursduringtheinvestigation

Increaseinsupplyfromnon‐subjectoffsetsabouttwo‐thirdsthedecreasefromsubject

Emphasizesinvestigationeffects;industryleveldata

Prusa(1997) U.S. 20%‐50%decreaseintradevalue(and40%‐50%intradevolume)forhighdutycases

30%‐40%increaseintradevalueforhighdutycases

Manufacturingcasesonly;TSdata;tradediversionquitelargeincaseswithhighduties

Prusa(2001) U.S. 40%‐50%decreaseintradevalueforhighdutycases

60%‐80%increaseintradevalueforhighdutycases

Manufacturingcasesonly;TSdata;moresophisticatedestimationtechniquethanPrusa(1997)

CarterandGunning‐Trant(2010)

U.S. 40%decreaseintradevalue;60%decreaseintradevolume

60%increaseintradevalue;70%decreaseintradevolume(fromsmallbaselevel)

Agriculturecases;HSdata;diversionlargeinpercentagetermsbutduetosmallbaseleveltheneteffectissmall

Lasagni(2000) EU 60%decreaseintradevalue 20%‐40%increaseintradevaluefromnon‐EUsources

Tradeeffectassociatedwithpriceundertakingsconsiderablysmallerthanthoseassociatedwithduties

Konings,Vandenbussche,andSpringael(2001)

EU 30%decreaseintradevalue 13%increaseintradevaluefromnon‐EUsources

Relativelysmallamountofdiversiontonon‐EUsources