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

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  • Chad P. Bown
  • Meredith A. Crowley

Abstract

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.

Suggested Citation

  • Chad P. Bown & Meredith A. Crowley, 2004. "Policy externalities: how U.S. antidumping affects Japanese exports to the EU," Working Paper Series WP-04-12, Federal Reserve Bank of Chicago.
  • Handle: RePEc:fip:fedhwp:wp-04-12
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    References listed on IDEAS

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    Cited by:

    1. Veysel Avsar, 2013. "Antidumping, Retaliation Threats, and Export Prices," World Bank Economic Review, World Bank Group, vol. 27(1), pages 133-148.
    2. Lu, Yi & Tao, Zhigang & Zhang, Yan, 2012. "How exporters respond to antidumping investigations?," MPRA Paper 38790, University Library of Munich, Germany.
    3. Peter Egger & Douglas Nelson, 2011. "How Bad Is Antidumping? Evidence from Panel Data," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1374-1390, November.
    4. Laura Rovegno, 2013. "Trade protection and market power: evidence from US antidumping and countervailing duties," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(3), pages 443-476, September.
    5. Kokko, Ari & Gustavsson Tingvall, Patrik & Videnord, Josefin, 2017. "Which Antidumping Cases Reach the WTO?," Ratio Working Papers 286, The Ratio Institute.
    6. Giovanni Ganelli & Juha Tervala, 2015. "Tariff-tax Reforms in Large Economies," The World Economy, Wiley Blackwell, vol. 38(12), pages 1990-2012, December.
    7. Yang, Wen & Liu, Yi-Cheng & Mai, Chao-Cheng, 2017. "How did Japanese exports evolve from 1995 to 2014? A spatial econometric perspective," Japan and the World Economy, Elsevier, vol. 41(C), pages 50-58.
    8. Giordani, Paolo E. & Ruta, Michele & Weisfeld, Hans & Zhu, Ling, 2017. "Capital flow deflection," Journal of International Economics, Elsevier, vol. 105(C), pages 102-118.
    9. Lu, Yi & Tao, Zhigang & Zhang, Yan, 2013. "How do exporters respond to antidumping investigations?," Journal of International Economics, Elsevier, vol. 91(2), pages 290-300.
    10. Marta dos Reis Castilho, 2009. "Documentos IPEA/CEPAL - Antidumping nas Américas: Uma Investigação dos Efeitos do Uso desse Instrumento sobre as Exportações e sobre a Conduta das Empresas Brasileiras," Discussion Papers 1382, Instituto de Pesquisa Econômica Aplicada - IPEA.
    11. Conconi, Paola & García-Santana, Manuel & Puccio, Laura & Venturini, Roberto, 2016. "From Final Goods to Inputs: the Protectionist Effect of Rules of Origin," CEPR Discussion Papers 11084, C.E.P.R. Discussion Papers.
    12. Giancarlo Corsetti & Meredith Crowley & Lu Han & Huasheng Song, 2018. "Markets and Markups: A New Empirical Framework and Evidence on Exporters from China," Discussion Papers 1803, Centre for Macroeconomics (CFM).
    13. Ning Meng & Chris Milner & Huasheng Song, 2016. "Differences in the determinants and targeting of antidumping: China and India compared," Applied Economics, Taylor & Francis Journals, vol. 48(43), pages 4083-4097, September.
    14. Kyle Bagwell & Chad P. Bown & Robert W. Staiger, 2016. "Is the WTO Passé?," Journal of Economic Literature, American Economic Association, vol. 54(4), pages 1125-1231, December.
    15. Zissimos, Ben, 2009. "Optimum tariffs and retaliation: How country numbers matter," Journal of International Economics, Elsevier, vol. 78(2), pages 276-286, July.
    16. Bagwell, Kyle & Mavroidis, Petros C. & Staiger, Robert W., 2007. "Auctioning countermeasures in the WTO," Journal of International Economics, Elsevier, vol. 73(2), pages 309-332, November.
    17. Chandra, Piyush, 2016. "Impact of temporary trade barriers: Evidence from China," China Economic Review, Elsevier, vol. 38(C), pages 24-48.
    18. Vandenbussche, Hylke & Zarnic, Ziga, 2007. "Did US Safeguards Affect Mark-ups of EU Steel Producers?," CEPR Discussion Papers 6486, C.E.P.R. Discussion Papers.
    19. Hylke Vandenbussche & Ziga Zarnic, 2008. "US Safeguards on Steel and the Markups of European Producers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 144(3), pages 458-490, October.
    20. Chandra, Piyush & Long, Cheryl, 2013. "Anti-dumping Duties and their Impact on Exporters: Firm Level Evidence from China," World Development, Elsevier, vol. 51(C), pages 169-186.
    21. Maggi, Giovanni, 2014. "International Trade Agreements," Handbook of International Economics, Elsevier.
    22. Chrysostomos Tabakis & Maurizio Zanardi, 2017. "Antidumping Echoing," Economic Inquiry, Western Economic Association International, vol. 55(2), pages 655-681, April.
    23. Meredith A. Crowley & Huasheng Song, 2015. "Policy Shocks and Stock Market Returns: Evidence from Chinese Solar Panels," Cambridge Working Papers in Economics 1529, Faculty of Economics, University of Cambridge.
    24. 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.
    25. Yan Zhang, 2017. "Impact of Latin-American and Caribbean Antidumping Measures on Chinese Exports," IDB Publications (Working Papers) 97857, Inter-American Development Bank.

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    Keywords

    Antidumping duties ; Exports ; Trade;

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