Antidumping Duties in the Agriculture Sector: Trade Restricting or Trade Deflecting

The key issues on the negotiation table in the agriculture sector are the elimination of export subsidies, a progressive reduction of tariffs and reduction in domestic support. However, it is observed that trade liberalization often involves moving from one set of distortions to another rather than a movement to free trade. More specifically, in the case of trade liberalization in manufacturing, countries have replaced lower tariffs with antidumping duties (ADD). Feinberg and Olson (2005) empirically show that countries that agreed to larger tariff reductions under the Uruguay Round are more likely to use AD statutes to protect their domestic industries. Thus if the use of ADD in agriculture are effective as a trade barrier (that is there is little trade diversion) then negotiators might need to include AD reform along-with lower tariffs in their future negotiations. In this paper we analyze whether imposition of an antidumping duty restrict imports of the named commodity or is the supply of imports deflected from countries named in the petition to countries not named in the antidumping petition? We find that AD duties have had a significant impact on the imports of agricultural commodities from countries named on the petition. However, our results also indicate that there was little trade diversion towards countries not named in the AD petition. It seems that AD is a plausible protectionist policy.