Trade deflection and trade depression

Abstract

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

Preferential Trade Agreements and Antidumping Protection

“…13 As expected, the effects become less precisely estimated when using lower thresholds. 14 We exclude any pair of countries that are members of the same PTA in force as recorded by de Sousa (2012).…”

“…In the benchmark regressions, we assume this import-share threshold to be 10%, but we discuss the sensitivity of our results to the chosen threshold in the robustness section. 13 In terms of the sample, we do not include country pairs that are partners to a PTA in force or are involved in the negotiation of one. In fact, our focus is on verifying whether PTAs have an effect on the use of AD measures by their members against non-member countries while being negotiated and after entering into force.…”

Impact of Latin-American and Caribbean Antidumping Measures on Chinese Exports

“…This subsection examines whether Chinese exporters respond to LAC's antidumping measures by diverting their exports to countries other than LAC, namely,h the trade deflection response (e.g., Bown and Crowley, 2007). Figure 6 presents time trends of total export volume to other countries of affected HS 6-digit products and their control groups over the pre-and post-antidumping years.…”

“…Governments around the world have used antidumping measures, which are permissible under the WTO rules and regulations, to protect their firms and industries, especially in developing countries. More than 40 members of the WTO have become active antidumping users, led by developing countries, which have been the most frequent users since 1995 (Bown, 2007). For example, Argentina opened only 44 antidumping investigations before 1995; between 1995 and 2014, that number was 302.…”

Adjusting To Trade-Policy Changes In Export Markets: Evidence From U.S. Antidumping Duties On Vietnamese Catfish

“…The empirical literature on anti-dumping has traditionally focused on aggregate issues like changes in international equilibrium prices (Debaere, 2005;Prusa, 1997), pass-through to domestic prices (Blonigen and Haynes, 2002;Blonigen and Park, 2004), changes in trade volumes, trade deflection and trade depression (Bown and Crowley, 2007a;Staiger and Wolak, 1994;Prusa, 1997), impacts on aggregate welfare costs (Gallaway, Blonigen and Flynn, 1999), and retaliation and further trade liberalization (Blonigen and Bown, 2003).…”