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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.

Suggested Citation

  • Chad P. Bown, 2004. "How Different Are Safeguards from Antidumping? Evidence from US Trade Policies Toward Steel," Econometric Society 2004 North American Summer Meetings 434, Econometric Society.
  • Handle: RePEc:ecm:nasm04:434
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    Citations

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    Cited by:

    1. 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.
    2. Chad P. Bown & Baybars Karacaovali & Patricia Tovar, 2014. "What Do We Know About Preferential Trade Agreements and Temporary Trade Barriers?," Working Papers 201418, University of Hawaii at Manoa, Department of Economics.
    3. Bown, Chad P. & Crowley, Meredith A, 2016. "The Empirical Landscape of Trade Policy," CEPR Discussion Papers 11216, C.E.P.R. Discussion Papers.
    4. Gary D. Libecap, 2014. "Addressing Global Environmental Externalities: Transaction Costs Considerations," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 424-479, June.
    5. Matilde Bombardini & Bingjing Li, 2016. "Trade, Pollution and Mortality in China," NBER Working Papers 22804, National Bureau of Economic Research, Inc.
    6. Gary D. Libecap, 2013. "Addressing Global Environmental Externalities: Transaction Costs Considerations," NBER Working Papers 19501, National Bureau of Economic Research, Inc.
    7. Bown, Chad P. & Crowley, Meredith A., 2013. "Import protection, business cycles, and exchange rates: Evidence from the Great Recession," Journal of International Economics, Elsevier, vol. 90(1), pages 50-64.
    8. 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, pages 369-378.
    9. 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 2012-17, Board of Governors of the Federal Reserve System (U.S.).
    10. 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.
    11. Chad P. Bown, 2005. "Trade Remedies and World Trade Organization Dispute Settlement: Why Are So Few Challenged?," The Journal of Legal Studies, University of Chicago Press, vol. 34(2), pages 515-555, June.
    12. Bown, Chad & Porto, Guido, 2010. "Exporters in Developing Countries: Adjustment to Foreign Market Access after a Trade Policy Shock," Papers 88, World Trade Institute.
    13. repec:spr:minecn:v:30:y:2017:i:3:d:10.1007_s13563-017-0110-2 is not listed on IDEAS
    14. 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.
    15. Chad P. Bown & Meredith A. Crowley & Rachel McCulloch & Daisuke J. Nakajima, 2005. "The U.S. trade deficit: made in China?," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q IV, pages 2-18.
    16. Aquilante, Tommaso, 2015. "Bureaucrats or Politicians? Political Parties and Antidumping in the US," MPRA Paper 70359, University Library of Munich, Germany.

    More about this item

    Keywords

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

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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