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How Different Are Safeguards from Antidumping? Evidence from US Trade Policies Toward Steel

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  • Chad P. Bown

Abstract

How do the trade impacts of a safeguard measure - which is statutorily designed to follow the most-favored-nation (MFN) principle - compare to explicitly discriminatory measures such as antidumping? We address this question empirically by examining the trade effects of the 2002 US safeguard on steel imports and comparing this with the impact of other US trade remedies on steel imports in the 1990s. We first estimate a fixed-effects model on a dynamic panel of product-level US steel imports over 1991-2003 and examine the potential discriminatory impact on foreign-produced steel of the 2002 “MFN†safeguard that used relatively new tools in the policymakers’ arsenal: country and product exclusions. A unique data set on the excluded products allows us to document the sizable impact on trade of both forms of preferential treatment. We also exploit higher-frequency data to examine potential differences in the timing of the foreign export response to policies of differential treatment. Using quarterly data, we find that while developed country exporters respond more quickly when granted an exclusion, the developing-country exporters’ response is more persistent. Finally, while we find the full effect of the 2002 safeguard policy with country and product exclusions to be quite discriminatory, our results also highlight an important similarity between safeguards and preferential trade agreements (PTAs). Relative to antidumping measures, country and product exclusions from a safeguard allow the protection-imposing country to target preferential treatment more effectively toward specific foreign countries, much like a PTA, or even more narrowly toward a specific foreign firm. Thus costly trade diversion could be an even greater concern with a safeguard than with explicitly discriminatory protection such as antidumping.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 434.

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Date of creation: 11 Aug 2004
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Handle: RePEc:ecm:nasm04:434

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Keywords: MFN; discrimination; safeguards; antidumping; steel; country exclusions; product exclusions;

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References

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  1. Chad Bown & Meredith Crowley, 2003. "Trade deflection and trade depression," Working Paper Series, Federal Reserve Bank of Chicago WP-03-26, Federal Reserve Bank of Chicago.
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Citations

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Cited by:
  1. Bown, Chad P., 2009. "The global resort to antidumping, safeguards, and other trade remedies amidst the economic crisis," Policy Research Working Paper Series 5051, The World Bank.
  2. Blonigen, Bruce A. & Liebman, Benjamin H. & Pierce, Justin R. & Wilson, Wesley W., 2013. "Are all trade protection policies created equal? Empirical evidence for nonequivalent market power effects of tariffs and quotas," Journal of International Economics, Elsevier, Elsevier, vol. 89(2), pages 369-378.
  3. Bown, Chad P. & Crowley, Meredith A., 2012. "Import protection, business cycles, and exchange rates : evidence from the great recession," Policy Research Working Paper Series 6038, The World Bank.
  4. Chad P. Bown & Baybars Karacaovali & Patricia Tovar, 2014. "What Do We Know About Preferential Trade Agreements and Temporary Trade Barriers?," Working Papers, University of Hawaii at Manoa, Department of Economics 201418, University of Hawaii at Manoa, Department of Economics.
  5. Chad P. Bown & Meredith Crowley & Rachel McCulloch & Daisuke J. Nakima, 2005. "The U.S. trade deficit: made in China?," Economic Perspectives, Federal Reserve Bank of Chicago, Federal Reserve Bank of Chicago, issue Q IV, pages 2-18.
  6. Bown, Chad P., 2005. "Trade remedies and World Trade Organization dispute settlement : Why are so few challenged?," Policy Research Working Paper Series 3540, The World Bank.
  7. Chad P. Bown, 2010. "China's WTO Entry: Antidumping, Safeguards, and Dispute Settlement," NBER Chapters, in: China's Growing Role in World Trade, pages 281-337 National Bureau of Economic Research, Inc.
  8. Bruce A. Blonigen & Benjamin H. Liebman & Justin R. Pierce & Wesley W. Wilson, 2012. "Are all trade policies created equal? empirical evidence for nonequivalent market power effects of tariffs and quotas," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2012-17, Board of Governors of the Federal Reserve System (U.S.).
  9. Gary D. Libecap, 2013. "Addressing Global Environmental Externalities: Transaction Costs Considerations," NBER Working Papers 19501, National Bureau of Economic Research, Inc.
  10. Bruce A. Blonigen & Benjamin H. Liebman & Wesley W. Wilson, 2007. "Trade Policy and Market Power: The Case of the US Steel Industry," NBER Working Papers 13671, National Bureau of Economic Research, Inc.
  11. Gary D. Libecap, 2014. "Addressing Global Environmental Externalities: Transaction Costs Considerations," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 424-79, June.

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