Transcript Antidumping - Faculty and Staff | Faculty of Arts

Effectiveness of the
Canadian Antidumping
Regime: Is Trade
Restricted?
Nisha Malhotra and Horatiu Rus
WE would like to thank TARGET (UBC) for
funding the above project
Motivation


The large and growing use of antidumping
throughout the world: an interesting phenomenon,
theoretically and empirically.
Do antidumping duties amount to trade protection
for domestic producers?
• Unambiguously yes, when all foreign firms would be
restricted access to the domestic market, but Unclear
when only certain firms/countries singled out
• Antidumping - by its nature discriminatory among exporters

Also relevant from a policy point of view: AD duties
- higher prices: penalize industries that use these
protected goods and hurt final consumers.
Importance

A significant amount of work, theoretical and
empirical, to study effectiveness and
ramifications of AD investigations for an
importing country:
• There have been quite a few empirical studies carried
out analyzing the trade effect of ANTIDUMPING
investigations for various countries: US, EU, Mexico and
more recently for a few other developing countries.
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However, the results are not consistent across
these studies for the various countries; thus one
can not infer the effect of AD in Canada from
these studies
Research on the use or the effect of the Canadian
AD law is quite scarce.
Literature
There is no consensus

Prusa (1997) : trade effects of US antidumping
actions
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Vandenbussche et all (1999): case of European
Union.
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antidumping duties restrict trade named countries.
Trade diversion to the ‘non-named’ countries
antidumping duties restrict trade ‘named’ countries
No trade diversion to the ‘non-named’ countries
Niels (2003) shows that for Mexico there isn’t
significant trade diversion after AD duty is
imposed on the named countries.
Does not help infer - trade effects of AD policy in Canada
Importance of AD in Canada
Number of Properly documented cases
Proportion of AD cases initiated by the countries
0.3
0.25
0.2
0.15
0.1
0.05
0
1995
India
1996
1997
United States
1998
1999
Canada
2000
2001
China
2002
2003
2004
European Community
Percentage of AD cases initiated in each
sector
80
67
70
58
60
50
40
34
30
20
16
13
119
10
88
2
020
3
0
13
13
7
001
13
31
0
02
4 2
0
211
2
5
012
214
Sectors
Canada
United States
European Community
XX
ip
eq
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Tr
an
sp
.
nc
es
lia
ac
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Ap
p
M
Ba
se
M
et
al
XI
II
XI
I
Te
xt
il
e
X
d
wo
o
VI
II
b
Pl
as
t/r
u
m
Ch
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in
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0
Canada-Antidumping law

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Canada's anti-dumping and countervailing law is
contained in the Special Import Measures Act
(SIMA).
Canada Border Services Agency (CBSA) formerly
- Revenue Canada (CCRA) and the Canadian
International Trade Tribunal (Tribunal) are jointly
responsible for administering SIMA
If an industry in Canada believes that it is being
injured by unfair competition through dumping, it
may request the imposition of antidumping duties
by filing a petition with CBSA.
Canada-Antidumping law

Steps undertaken in an AD investigation
• Petition filed by the firm/firms on behalf of the
industry (petitioners must represent at least
25% of domestic production )
• CBSA starts an investigation and decides
whether to begin a formal investigation or drop
the case (Sends a copy to the Tribunal)
• Tribunal’s preliminary Injury finding
• CBSA preliminary dumping finding
• CBSA final dumping finding
• Tribunal’s final injury finding
Difference in ANTIDUMPING
legislation
WTO ADA: harmonization of ground principles (normal
values, need to prove injury etc.), still allows for
national/regional regulatory variation
1. ‘two-track’ AD determination, like the US, unlike the EU
prospective system, unlike the US (retrospective)
1. no lesser duty rule: “full duty rule” - unlike the EU regime,
but similar the US (more protectionist?)
1. the cumulation principle repeatedly maintained (pool
exporters to determine injury)
1. the 2% de minimis principle rarely used, at country level
(expect lower diversion if C.A. national)
1. Some results may be interpreted from the perspective of
these institutional and procedural differences in AD
legislation.
Question

Trade effects of AD policy in the
manufacturing Industry in Canada.
• Are antidumping duties effective in
restricting trade from Countries named
in the ANTIDUMPING petition?
• Is there any trade diversion to other
non-named countries thus making AD
ineffective as a protectionist tool.
Question-Why?

imports might be diverted away from the
alleged source country to the non-alleged
countries rendering AD law ineffective in
benefiting the domestic Industry.
• beneficiary of AD duties is not the domestic
industry, but exporters to whom trade is
diverted

These questions are also relevant from a
policy point of view; AD duties like any
other tariff translate into higher prices.
• These higher prices penalize industries that
use these protected goods and also hurt final
consumers
DATA
Data : 1990 - 2000
• Level of Imports: Detailed 10-digit HS-level
import data was obtained from Statistics
Canada.
• Antidumping Data: Canadian antidumping
measures was constructed using the report
from the Canadian Border Services Agency’s
Historical Listing of Antidumping Cases.
• confirmed from WTO Antidumping Gateway
and complemented from Statistics Canada’s
directory of HS codes
(The ANTIDUMPING data is available from the authors.
[email protected]/ [email protected])
Empirical Specification
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lnm: Log Imports
a: affirmative
n: negative
u: Undertaking
t(1-3): Years after AD
is filed; t1: one year
after petition is filed
Interaction terms
Include year
dummies
Models:
 Ordinary Least
Square
Regressions
 Fixed Effect Models
Results
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Sizeable trade restriction effects: strong evidence of
substantial (76%) trade restriction from named countries,
one period after the imposition of duties
a time-effective protectionist tool: initial drop not followed
by subsequent import decreases in later periods
no strong indication of an “investigation”/“harassment”
effect of Canadian AD: a negative dumping determination
has no significant trade effects for both named and nonnamed sources (transparency, prospective AD?)
Canadian Antidumping - timely and effective as a
protectionist instrument
Comparing the results
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
Prusa(2001):
substantial (50%) import drop from
the named sources in the first period
Vandenbussche et al.(2001):
comparable imports restrictions of
67% determination
Conclusion
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Canadian AD = timely and effective as
protectionist tool:
significant reduction in imports from
named sources, concentrated in the period
immediately after the imposition of duties
little to no evidence of imports being
diverted toward non-named countries or
firms
Possible refinements: does product
homogeneity/heterogeneity matter? Why
no effect for undertakings?