Self-enforcing trade agreements: evidence from antidumping policy
This paper empirically examines how governments make trade policy adjustments under a self-enforcing trade agreement in the presence of economic shocks. Using data on US antidumping (AD) policy formation between 1997-2006, we find that US antidumping policy is often consistent with the time-varying “cooperative” tariff increases modeled in the self-enforcing trade agreement of Bagwell and Staiger (1990). Estimates of an empirical model of US antidumping indicate that the likelihood of a US antidumping duty is increasing in the size of the unexpected import surge, decreasing in the volatility of imports and decreasing in the elasticities of import demand and export supply. This suggests that time-varying increases in US tariff rates under antidumping policy could be interpreted as “cooperative” tariff increases that support a self-enforcing trade agreement facing an unexpected import surge.
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