Macroeconomic Conditions and Pressures for Protection under Antidumping and Countervailing Duty Laws: Empirical Evidence from the United States

Abstract

This is aWorking Paper and the author(s) would welcome any comments on the present text Citations should refer to a Working Paper of the International Monetary Fund, mentioning the author(s), and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

Macroeconomic Determinants of Contingent Protection: The Case of the European Union

“…The sign of the lagged number of newly initialized antidumping investigations, NUMBERNEW(t-1), suggests, when significant, existence of the ‚depletion effect ' Leidy (1997) finds for the US. However, the significance is not robust to changes in the explanatory variables.…”

“…Because of such investigation or withdrawal effects, the number of investigations initiated each year is usually regarded to be a better proxy for the protective effect than the number of cases that end with affirmative decisions on injurious dumping (see e.g. Leidy, 1997). In the EU, the case activity per year is subject to considerable variation: The number of newly initiated cases frequently jumps after an external shock before protectionist pressure gradually declines in the subsequent periods.…”

“…A significantly negative sign would suggest a ‚depletion effect' à la Leidy (1997): the higher the number of petitions is in a year t, the more the stock of potential petitions in the following year t+1 is depleted. According to Leidy, the depletion effect indicates the "safety value" nature of AD petitions.…”

“…12 12 Leidy (1997) suggests that this is due to the stock of petitioners being finite and the petitions remaining under consideration during the following year.…”

“…When the exporting country's currency is appreciating, WTO rules induce the AD-authority to interpret pricing-to-market by foreign firms as dumping, since foreign export prices expressed in foreign currency are then lower than in their domestic markets. Takacs (1981) and Coughlin, Terza and Khalifah (1987), while evidence indicating their unimportance follows from the work of Feigenbaum and Willet (1985), Salvatore (1987) and Leidy (1997). Regarding the estimation tools employed in the different studies, they in most part relied on conventional OLS regression techniques.…”