Antidumping Duties in the Agriculture Sector: Trade Restricting or Trade Deflecting?

Abstract

The key issues on the negotiation table in the agriculture sector are the elimination of export subsidies, a progressive reduction of tariffs and reduction in domestic support. However, it is observed that trade liberalization often involves moving from one set of distortions to another rather than a movement to free trade. More specifically, in the case of trade liberalization in manufacturing, countries have replaced lower tariffs with antidumping duties (ADD). Feinberg and Olson (2005) empirically show that countries that agreed to larger tariff reductions under the Uruguay Round are more likely to use AD statutes to protect their domestic industries. Thus if the use of ADD in agriculture are effective as a trade barrier (that is there is little trade diversion) then negotiators might need to include AD reform along-with lower tariffs in their future negotiations. In this paper we analyze whether imposition of an antidumping duty restrict imports of the named commodity or is the supply of imports deflected from countries named in the petition to countries not named in the antidumping petition? We find that AD duties have had a significant impact on the imports of agricultural commodities from countries named on the petition. However, our results also indicate that there was little trade diversion towards countries not named in the AD petition. It seems that AD is a plausible protectionist policy.

The Evolution of the Treatment of Agriculture in Preferential Trade Agreements

“…Anti-dumping measuresmeaning measures which, broadly defined, aim to counteract the sale of imports at prices below the cost of productionare similar in form and in terms of procedural requirements to countervailing measures, the main difference being that anti-dumping measures apply to "dumped", rather than subsidised, imports. There is evidence that efforts to liberalise trade in recent decades have resulted in greater reliance on anti-dumpingstudies have found, for example, that tariff reductions in the manufacturing sector have led to increases in anti-dumping duties, as countries seek alternative means to protect their industries (Malhotra and Kassam, 2006).…”

“…The fear of anti-dumping measures can even discourage prospective exporters with a comparative advantage in exports. Anti-dumping measures have been used less frequently in agriculture than in other sectorsnevertheless, previous studies have found that it can create an environment that discourages competition in the sector, reduces consumer welfare (Baylis and Malhotra, 2008) and restricts agricultural imports (Malhotra and Kassam, 2006).…”