The Enforcement and Revocation Dynamics of Five-Year Reviews in Agricultural Trade

The implementation of anti-dumping / countervailing duties as protectionism on international trade protects the U.S. domestic industry from material injury because of the dumped or subsidized imports. As a primary policy instrument, the Five-year Sunset Reviews assess the appropriateness of trade remedies imposed against foreign trading partners to mitigate the risk of prolonged and proliferative remedies. This paper examines the impact of the determinations of the Sunset Reviews on U.S. agricultural and food imports. We compile a comprehensive dataset including Sunset Reviews related data and U.S. monthly import data at the country-product level from 1998 to 2019. The empirical analysis concentrates on the contemporaneous trade effects of Sunset Reviews determinations by identifying the variation between trade remedy targeted countries and products. We also apply the event study method to examine the dynamic trade effects of the Sunset Reviews determinations. Based on our results, except the changes in duty margins bring about trade creation effects on the U.S. imports, no evidence shows that U.S. imports of agricultural and food goods alter by the change of Sunset Reviews determinations dummy. Our analysis indicates that even though the change of duty margins may attract exporters into the U.S. markets, the trade cost, the possible delayed access to the alternative trade supply market also affect the decision of trading economies not to choose to alter their trade.