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Policy externalities: how U.S. antidumping affects Japanese exports to the EU

  • Chad P. Bown
  • Meredith Crowley

This paper investigates the international externalities associated with US use of antidumping (AD) measures by examining the relationship between US AD duties (ADDs) and Japanese exports to the US and EU over the 1992-2001 period. We first examine the trade destruction and trade diversion associated with Japanese exports to the US market resulting from US AD duties. We then investigate whether US ADDs impose externalities on a non- targeted third country by examining the effect of these US policies on Japanese exports to the EU. We document sizable trade deflection and trade depression in the EU market resulting from US ADDs. Model estimates indicate that, on average, roughly one quarter to one third of the value of Japanese exports to the US thought to be destroyed by a US ADD is actually deflected to the EU in the form of a contemporaneous increase in exports. Finally, we present evidence that US ADDs impose terms-of-trade externalities on non-targeted markets. We find that US duties on Japanese exports are associated with substantially lower Japanese export prices in the EU market.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-04-12.

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Date of creation: 2004
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Handle: RePEc:fip:fedhwp:wp-04-12
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  1. Kyle Bagwell & Robert W. Staiger, 1988. "A Theory of Managed Trade," NBER Working Papers 2756, National Bureau of Economic Research, Inc.
  2. Joseph F. Francois & Gunnar Niels, 2004. "Political Influence in a New Antidumping Regime: Evidence from Mexico," Tinbergen Institute Discussion Papers 04-011/2, Tinbergen Institute.
  3. Nelson, Douglas, 2006. "The political economy of antidumping: A survey," European Journal of Political Economy, Elsevier, vol. 22(3), pages 554-590, September.
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  8. Davis, Steven J & Haltiwanger, John C, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, MIT Press, vol. 107(3), pages 819-63, August.
  9. Choi, E. Kwan & Harrigan, James, 2003. "Handbook of International Trade," Staff General Research Papers 11375, Iowa State University, Department of Economics.
  10. Robert W. Staiger & Kyle Bagwell, 1999. "An Economic Theory of GATT," American Economic Review, American Economic Association, vol. 89(1), pages 215-248, March.
  11. Hylke Vandenbussche & Jozef Konings & Linda Springael, 1999. "Import Diversion under European Antidumping Policy," NBER Working Papers 7340, National Bureau of Economic Research, Inc.
  12. Thomas J. Prusa, 2006. "East Asia's Anti-dumping Problem," The World Economy, Wiley Blackwell, vol. 29(6), pages 743-761, 06.
  13. Blonigen, Bruce A. & Bown, Chad P., 2003. "Antidumping and retaliation threats," Journal of International Economics, Elsevier, vol. 60(2), pages 249-273, August.
  14. Kyle Bagwell & Petros C. Mavroidis & Robert W. Staiger, 2003. "The Case for Auctioning Countermeasures in the WTO," NBER Working Papers 9920, National Bureau of Economic Research, Inc.
  15. Chad Bown & Meredith Crowley, 2003. "Trade deflection and trade depression," Working Paper Series WP-03-26, Federal Reserve Bank of Chicago.
  16. Chad P. Bown, 2004. "Developing Countries as Plaintiffs and Defendants in GATT/WTO Trade Disputes," The World Economy, Wiley Blackwell, vol. 27(1), pages 59-80, 01.
  17. Thomas J. Prusa, 1999. "On the spread and impact of antidumping," Departmental Working Papers 199916, Rutgers University, Department of Economics.
  18. 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, 06.
  19. Bruce A. Blonigen & Thomas J. Prusa, 2001. "Antidumping," NBER Working Papers 8398, National Bureau of Economic Research, Inc.
  20. Joseph F. Francois & Gunnar Niels, 2004. "Political Influence in a New Antidumping Regime: Evidence from Mexico," Tinbergen Institute Discussion Papers 04-011/2, Tinbergen Institute.
  21. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
  22. Thomas Prusa & Susan Skeath, 2002. "The economic and strategic motives for antidumping filings," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 138(3), pages 389-413, September.
  23. Thomas J. Prusa, 1996. "The Trade Effects of U.S. Antidumping Actions," Departmental Working Papers 199603, Rutgers University, Department of Economics.
  24. Giovanni Maggi & Pinelopi Koujianou Goldberg, 1999. "Protection for Sale: An Empirical Investigation," American Economic Review, American Economic Association, vol. 89(5), pages 1135-1155, December.
  25. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  26. Bown, Chad P. & Hoekman, Bernard & Ozden, Caglar, 2003. "The pattern of US antidumping: the path from initial filing to WTO dispute settlement," World Trade Review, Cambridge University Press, vol. 2(03), pages 349-371, November.
  27. Chad P. Bown, 2004. "On the Economic Success of GATT/WTO Dispute Settlement," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 811-823, August.
  28. Messerlin, Patrick A & Reed, Geoffrey, 1995. "Antidumping Policies in the United States and the European Community," Economic Journal, Royal Economic Society, vol. 105(433), pages 1565-75, November.
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