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Import Diversion under European Antidumping Policy by Jozef Konnings, Hylke Vandenbussche and Linda Springael Lizbeth Rebeca Alvarez Villegas 720889 María.

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Presentation on theme: "Import Diversion under European Antidumping Policy by Jozef Konnings, Hylke Vandenbussche and Linda Springael Lizbeth Rebeca Alvarez Villegas 720889 María."— Presentation transcript:

1 Import Diversion under European Antidumping Policy by Jozef Konnings, Hylke Vandenbussche and Linda Springael Lizbeth Rebeca Alvarez Villegas María Alejandra Macias Ayala

2 Introduction Multilateral trade talks at the level of the WTO, have resulted in a general reduction of tariffs and VERs, in trade between member countries. However, non tariff barriers have remained an important policy instrument, used intensively by the EU and the US. In particular, the use of antidumping measures seems at least in part to have replaced the tariff and VERs.

3 Introduction Antidumping protection can only be imposed on products (8 digits) coming from countries “named” by the import competing home industry as alleged dumpers. The results of the authors suggest that the antidumping policy is much more effective in the European Union than in the United States, in protecting the domestic industry from foreign imports. This may be important for future negotiations on antidumping issues at the level of the WTO.

4 Data 246 cases in Europe, of which – –105 ended with the imposition of duties, – –61 in price undertakings, – –in 80 cases the investigation was terminated by the commission. Between 1985 and 1990, a total of 48 countries were subject to European AD- investigations.

5 Data For each investigated product, annual import trade data of the EU by source country were collected from the Eurostat trade stastistics. Up to 1988 Eurostat reports data using the nimexe 6-digit product codes, while after 1988 the 8 harmonized tariff codes are used to identify products. For each product, import values by country of origin were collected for nine consecutive years, starting two years before the initiation of an antidumping investigation by the EC.

6 This table shows the geographical spread of countries accused of dumping in the EU market over this period. About 70% of all antidumping cases are against less developed countries. Type of Country Industrialized countries Developing countries Non- market economies Percentaje of Cases

7 Industries most involved in AD, European Union chemical industry the production and the preliminary processing of metals mechanical engineering manufacture of office machinery and data processing machinery man-made fibers industry manufacture of non metallic mineral products textile industry timber and wooden furniture industries

8 Industries most involved in AD, European Union manufacture of paper and paper products,footwear and clothing industry other manufacturing industries extraction of minerals other than metalliferous and energy- producing minerals the extraction and preparation of metalliferous ores These products are the NACE 2 DIGIT CLASSIFICATION, most frequently filing dumping complaints to the European Union Commission.

9 Variable statistic overall named non named Import values at mean 53,941 38,487 67,259 t0 (x 1000 ECU s) median 12, 127 6,228 18,258 Import growth rates mean From t0-1 to t0 median This table shows the summary statistics on the import values and import growth that characterize the data set. Both the mean and the median values for the named, non-named countries. Indeed, the average share of named countries, imports in total import at t0 is 26% while 74% for the non-named countries. In addition, named countries import values often show very high import growth rates at the time of initiation. The average growth for the named countries is almost 2000%.

10 Econometric Model With this model we can test the import diversion in europe is sufficient to mitigate the effects of antidumping actions as it is in the case of the US. The basic econometric model that the authors used to seek to estimate is a reduced form with the following general specification, which allows to set a number of hypotheses.

11 Other explanatory variables include a dummy duty equal to one if there is a duty for case i at time t, a dummy undertaking equal to 1 if there is a price undertaking for price i at time t amd a dummy tremination equal to 1 if there is a termination for case i at time t. Dummy named is included for named countries. This dummy is used to interact with the policy barriers to capture the effects of antidumping actions on the named countries (D x N,U x N,T x N). The variable number proxies for the number of named countries. Number captures the effect that trade diversion will be lower when many countries are named as in prusa. The effects of import diversion can be read off by comparing the effects of D duty, undretalings U and terminations T with the same variables interacted with a dummy equal to one for the named countries.

12 Discussion of the results import diversion is lower in the EU than in the US. The first potential information that the authors give us can be the legal rules. One important difference between the US and the EU is the level of antidumping protection. dumping margin in the US/technical nature EU, Limited to the injury margin provided, smaller than the dumping margin./political nature Foreign Direct Investment in EU and in the US (Japanese Case) Different market structures

13 Conclusions The EU gains more from antidumping measures than does the US. There is less import diversion in Europe than in the US from antidumping measures. The EU uses lower duties than the US The European market is more segmented


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