Kara M. Reynolds

The Spread of Antidumping Regimes and the Role of Retaliation in Filings

Over the past decade, the world-wide use of antidumping has become very widespread – 41 WTO-member countries initiated antidumping cases over the 1995-2003 period. From another perspective, US exporters were subjected to 139 antidumping cases during this period, by enforcement agencies representing 20 countries. In this context, it is natural to consider whether antidumping filings may be motivated as retaliation against similar measures imposed on a country’s exporters. This is the focus of our study, though we also control for the bilateral export flows involved and non-retaliatory impacts of past cases, with other motivations – macroeconomic, industry-specific and political considerations – dealt with through industry, country and year fixed effects. Applying probit analysis to a WTO database on reported filings, we find strong evidence that retaliation was a significant motive in explaining the rise of antidumping filings over the past decade, though interesting differences emerge in the reactions to traditional and new users of antidumping.

Tariff Liberalisation and Increased Administrative Protection: Is There a Quid Pro Quo?

Theoretical models and intuition suggest that the amount of non- traditional protection against imports obtained through administrative procedures such as antidumping enforcement will increase as more traditional forms such as tariffs and quotas are lowered under multilateral trade agreements. This paper is the first empirical study of the role of tariff liberalization in the spread of antidumping. Through both correlations and regression approaches we analyze the relationship between tariff concessions made during the Uruguay Round trade negotiations and the filing of antidumping petitions, with particular interest in whether multilateral trade reductions have spurred the recent growth in new users of antidumping policies. We find that tariff reductions agreed to under the Uruguay Round not only increased the likelihood of a country using antidumping protection but also the total number of antidumping petitions filed by countries.

The returns from rent-seeking: campaign contributions, firm subsidies and the Byrd Amendment

This paper examines Congressional support of the Byrd Amendment, a new antidumping law that directs the U.S. Customs Service to distribute collected duties to protected firms. A critical feature of the Byrd Amendment is that it produces a highly transparent measure of how much each firm is rewarded for its rent-seeking efforts to secure the bill’s passage, specifically the dollar value its Byrd disbursement. Therefore, this policy provides researchers with a unique setting in which to study the link between campaign contributions, Congressional behavior, and the subsequent financial returns to firms. Our empirical results show that campaign contributions from potential beneficiaries increased the likelihood that lawmakers would sponsor the Byrd Amendment. We also show that political contributions from the law’s beneficiaries increased with the rewards that they expected to receive, although not by as much as predicted by some political economy models of trade policy.

Subsidizing Rent-Seeking: Antidumping Protection and the Byrd Amendment

Theoretical comparisons of the welfare consequences of tariffs, subsidies and import licenses have relied on the assumption that firms reap no private benefits from the imposition of a tariff. This paper conducts an empirical analysis of whether a recent change in U.S. antidumping law known as the Byrd Amendment bestows private benefits to firms lobbying for tariff protection and, thus, increases the level of rent-seeking in the United States. The results provide strong evidence that industries have chosen to lobby for more tariff protection, or filed more antidumping petitions, since passage of the Byrd Amendment. However, there is less evidence that the number of firms filing these petitions increased under the law. This suggests that the Byrd Amendment only partially alleviates the incentive to free-ride.

Does Trade Adjustment Assistance Make a Difference

Background: The U.S. Trade Adjustment Assistance (TAA) program provides workers who have lost their jobs due to increased trade with income support and training, job search, and relocation benefits. This paper uses the most recent data collected by the Department of Labor on TAA beneficiaries to provide one of the first evaluations of the effectiveness of the Trade Adjustment Assistance program. Using propensity score matching techniques, we find that the TAA program is of dubious value in terms of helping displaced workers find new, well-paying employment opportunities.

From Agreement to Application: An Analysis of Determinations Under the WTO Antidumping Agreement

Although the World Trade Organizations (WTO) Antidumping Agreement includes rules that govern the application of antidumping duties, countries still have a great deal of latitude in how they decide whether to impose this form of protection. This research is one of the first papers to explore country-specific differences in the determinants of antidumping injury decisions. Using a series of probit regressions, I compare the leading determinants of injury determinations in nine of the largest users of antidumping protection at the WTO. The results prove that investigating authorities in one country may be swayed by a very different set of economic and political factors than their counterparts in other countries.

Innovation through Protection: Does Safeguard Protection Increase Investment in Research and Development?

We perform the first empirical study of the impact of temporary trade protection on firm investment in R&D. Using a firm-level panel of the beneficiaries of safeguard protection between 1975 and 2005, we find support for predictions from the theoretical literature that temporary tariffs stimulate investment in R&D, but we find no evidence that this effect disappears as the termination of protection approaches, as predicted by some models. We also find little evidence that quotas impact firm investment in R&D, which we believe is because of the great deal in variation in how restrictive safeguard-related quota protection has been over the last 35 years.

How Do Countries Respond to Antidumping Filings? Dispute Settlement and Retaliatory Antidumping

Empirical studies have found that countries may respond strategically to the antidumping petitions filed against their exporters through their own retaliatory actions. Although most previous studies have focused on retaliatory antidumping filings, in this paper we explore another potential avenue for strategic response—filing a complaint under the World Trade Organization’s (WTO) Dispute Settlement Understanding. Using a panel of global antidumping filings between 1995 and 2011, we analyze under what conditions countries will choose to retaliate through either an antidumping petition or a WTO dispute, and to what degree these two strategies are complementary or act as substitutes. We find statistical evidence that countries are more likely to file a WTO dispute when they have also filed retaliatory antidumping petition, suggesting that these two strategies may be complementary. JEL classification: F13

Trade Policy and Antitrust: Do Consumers Matter to Legislators?

We provide one of the first efforts to measure the importance of consumer preferences in legislators’ trade policy decisions by estimating the degree to which the level of antitrust enforcement in the legislator’s state impacts his or her vote on free trade agreements. To the extent that antitrust and trade liberalization are both viewed as proconsumer in nature, we would expect to see a positive relationship between antitrust enforcement in their legislative district and Congressional votes in support of trade liberalization. We find evidence suggesting that consumer preferences do play a role in legislative decisions on trade policy.

The Erosion of Tariff Preferences

The Generalized System of Preferences (GSP), the program instituted in 1976 that allows developing countries to export thousands of products to the United States duty-free, is an important element of U.S. efforts to promote economic growth in the developing world. However, since the programs inception U.S. tariff rates have fallen significantly, thus potentially reducing the ability of the GSP program to encourage U.S. imports from beneficiary countries. This paper estimates the impact of U.S. tariff reductions on imports from the developing world using a panel of import data from 76 countries and 2,389 GSP-eligible products between 1998 and 2001. It finds that reductions in U.S. tariff rates have diminished imports from developing countries significantly, although some countries have been impacted more than others.