How do countries respond to anti‐dumping filings? Dispute settlement and retaliatory anti‐dumping

Date01 May 2018
AuthorKara M. Reynolds,Robert M. Feinberg
DOIhttp://doi.org/10.1111/twec.12601
Published date01 May 2018
ORIGINAL ARTICLE
How do countries respond to anti-dumping filings?
Dispute settlement and retaliatory anti-dumping*
Robert M. Feinberg
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Kara M. Reynolds
Department of Economics, American University, Washington, DC, USA
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INTRODUCTION
A growing literature has explored motivations for anti-dumping (AD) usage (and its spread to a
much wider group of user countries) since the mid-1990s (e.g., Miranda, Torres, and Ruiz, 1998;
Zanardi, 2004). One factor noted has been the strategic use of anti-dumping in retaliation for ear-
lier cases (especially for new/developing-country users). However, most of this work has ignored
the other mechanisms that targets of anti-dumping petitions have for response or retaliation.
For example, both economic and legal scholars have examined the role of the WTOs dispute
settlement understanding (DSU) procedures, providing evidence on trends in this usage by both
developed and developing countries and attempting to econometrically explain determinants of
these patterns. Papers such as Bown (2005b) have explicitly studied why trade remedies such as
AD are not challenged more under the DSU. However, little of this work has discussed the inter-
relationships between AD and DSU mechanisms.
Theoretically, both forms of retaliatory actions may be geared towards pressuring the forei gn
country to remove the anti-dumping measures and/or to retard future anti-dumping actions by the
foreign country. If the DSU can substitute for AD as a retaliatory action, the existence of a strong
DSU system could theoretically reduce global anti-dumping protection. However, the two forms
differ in terms of cost, length of time and effectiveness. Between 1995 and 2011, countries
launched more than 4,000 anti-dumping investigations, over two-thirds of which resulted in anti-
dumping duties. As illustrated in Figure 1, only 3% of inves tigations were later challenged under
the DSU, while countries targeted by these petition filed counter-anti-dumping petitions in
response to as many as 27% of the investigations. This suggests that countries find it easier or
more effective to retaliate via the AD process. Nevertheless, slightly more than 1% of petitions
resulted in both a WTO dispute and an AD retaliatory action, suggesting that at least some coun-
tries may pursue these two actions as complementary strategies.
In this paper, we examine the large number of post-1995 AD filings and ask several questions:
What determines a response by target (exporting) countries? If a response, is this via the DSU or
by filing a (retaliatory) AD case? What other determinants of DSU filings are important? We find
some evidence that countries pursue WTO disputes and AD actions as complementary retaliatory
actions, suggesting more use of the DSU will not necessarily limit global AD use.
*Earlier versions of this paper were presented at the 2016 Southern Economic Association meetings, the 2017 Eastern Econ-
omic Association meetings and at a WTO seminar.
DOI: 10.1111/twec.12601
World Econ. 2018;41:12511268. wileyonlinelibrary.com/journal/twec ©2017 John Wiley & Sons Ltd
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LITERATURE REVIEW
As noted in the introduction, a number of papers have explored to what extent AD cases may be
filed in part as retaliation for other such actions. Prusa (2001) briefly discusses the strategic issues
involved in a governments decision to adopt an AD policy, while Prusa and Skeath (2002) present
some evidence consistent with strategic motivations in AD petitions.
Blonigen and Bown (2003) develop a formal trigger-price model allowing for threats of AD
actions against a country to limit that countrys own AD activity, and produce supportive evidence
for the United States. Empirical papers such as Francois and Niels (2004) suggest that new users may
be initiating AD actions to retaliate against countries taking AD action against their exports (focusing
on data for Mexico). Similarly, Feinberg and Reynolds (2006) apply probit analysis to a large data-
base on reported filings and find strong evidence that retaliation was a significant motive in explain-
ing the rise of AD filings over the first decade of the WTO, particularly for new user countries.
More recently, Moore and Zanardi (2011) found robust evidence that retaliation is a significant
motivation for AD actions in their study of whether AD actions replace tariffs as countries undergo
trade liberalisation. Miyagiwa, Song, and Vandenbussche (2016b) develop a theoretical model that
suggests that market expansions and/or improvement in R&D capability can help less-developed
countries avoid AD wars with their more developed trading partners.
Another growing literature has examined the role of the WTOs DSU mechanism, and what
role this mechanism plays in the anti-dumping process.
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For example, Bown (2002) considers
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sectoral AD Retaliation Other AD Retaliation DSU and AD Retaliation Just DSU No Retaliation
FIGURE 1 Anti-dumping petitions, 19952011 [Colour figure can be viewed at wileyonlinelibrary.com]
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Other work on determination of who files DSU cases, but not relating to AD retaliation, includes that of Davis and Bermeo
(2009), Guzman and Simmons (2005), Horn, Mavroidis, and Nordstrom (2005) and Johns and Pelc (2014).
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FEINBERG AND REYNOLDS

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