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Biases in calculating dumping Margins: The case of cyclical products

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  • Rude, James
  • Gervais, Jean-Philippe

Abstract

A dumping investigation involves comparing export prices with a “normal value” loosely defined as the price in the exporter’s domestic market observed in the course of normal trade. However, domestic sales with prices below production costs are excluded from the computation of a normal value; thus increasing the probability products with cyclical prices will get caught with positive dumping margins although there are no intentions to dump. The objective of the paper is to illustrate how price cycles impact the magnitude of estimated dumping margins. The empirical analysis focuses on Canadian hog exports to the U.S. and U.S. potato exports to Canada. The period and amplitude of each price cycles are estimated. The analysis starts with the assumption that export and domestic prices are equal so no true dumping occurs. Margins are then calculated based on rules that exclude below cost sales. The resulting average dumping margins for Canadian hogs and U.S. potato exports are respectively 11.5 and 5.9 percent. Biases in dumping margins depend on the nature of the cycle, the period of investigations, and the estimate of the cost of production.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 2745.

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Date of creation: 14 Mar 2007
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Handle: RePEc:pra:mprapa:2745

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Keywords: Anti-dumping; frequency estimation; price cycles; hog/pork trade disputes; potato antidumping case;

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  1. Wendy L. Hansen & Thomas J. Prusa, 1996. "The Economics and Politics of Trade Policy: An Empirical Analysis of ITC Decision Making," Departmental Working Papers, Rutgers University, Department of Economics 199621, Rutgers University, Department of Economics.
  2. Douglas A. Irwin, 2005. "The Rise of U.S. Antidumping Activity in Historical Perspective," IMF Working Papers 05/31, International Monetary Fund.
  3. Niels, Gunnar, 2000. " What Is Antidumping Policy Really About?," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 14(4), pages 467-92, September.
  4. Hartigan, James C, 2000. "Is the GATT/WTO Biased against Agricultural Products in Unfair International Trade Investigations?," Review of International Economics, Wiley Blackwell, vol. 8(4), pages 634-46, November.
  5. Bernhardt, Dan, 1984. "Dumping, adjustment costs and uncertainty," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 8(3), pages 349-370, December.
  6. Arye L. Hillman & Eliakim Katz, 1986. "Domestic Uncertainty and Foreign Dumping," Canadian Journal of Economics, Canadian Economics Association, vol. 19(3), pages 403-16, August.
  7. Matthew T. Holt & Lee A. Craig, 2006. "Nonlinear Dynamics and Structural Change in the U.S. Hog—Corn Cycle: A Time-Varying STAR Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 88(1), pages 215-233.
  8. Robert W. Staiger, 2005. "Some Remarks on Reforming WTO AD/CVD Rules," The World Economy, Wiley Blackwell, vol. 28(5), pages 739-743, 05.
  9. Douglas J. Miller & Marvin L. Hayenga, 2001. "Price Cycles and Asymmetric Price Transmission in the U.S. Pork Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 83(3), pages 551-562.
  10. Hansen, Wendy L & Prusa, Thomas J, 1996. "Cumulation and ITC Decision-Making: The Sum of the Parts Is Greater Than the Whole," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 34(4), pages 746-69, October.
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  12. Hartigan, James C & Kamma, Sreenivas & Perry, Philip R, 1989. "The Injury Determination Category and the Value of Relief from Dumping," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 183-86, February.
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Cited by:
  1. Lambert, Remy, 2012. "A Primer on the Economics of Supply Management and Food Supply Chains," Working Papers, Structure and Performance of Agriculture and Agri-products Industry (SPAA) 125246, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
  2. Rude, James, 2012. "Abstinence and the Single Desk: Canada – US Wheat Trade Relations in a post-CWB World," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, Estey Centre for Law and Economics in International Trade, vol. 13(2).

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