Revista de Economía y Negocios

Protection Begets Protection? Role of Retaliation in Anti-Dumping Case Filing

Abstract

Neha B Upadhayay

In this paper we uncover the determinants of anti-dumping-a trade policy that has emerged as a serious impediment to free trade. Anti-dumping actions have flourished, starting with active use by developed nations or traditional users, transcending into escalating use by developing countries or new users. The motives of anti-dumping use have also evolved, including influence of political factors, growing importance of strategic concerns, macroeconomic conditions like exchange rates and GDP. Researchers have questioned whether anti-dumping filings may be motivated as retaliation against similar measures imposed on a country’s exporters. This is the focus of this paper, though we also control for other anti-dumping related indicators like past filing behaviour, cases filed globally and cases faced by the exporter. Using a large sample of anti-dumping users and their trade partners for a two decade period (1996-2015), we show that there exists marked heterogeneity in nations’ use of anti-dumping as a contingent protection mechanism. The focus of this paper is on retaliatory motives and we find evidence that this effect is masked at the aggregate level with insufficient statistical significance (except for select regions and income groups of countries), however, a sectoral analysis reveals that retaliation is a positive and significant determinant of current anti-dumping case filing activity for a select group of large importers. Another key result of this study is that a substitution effect exists between trade liberalisation (reduction of applied tariffs) and anti-dumping petitioning activity.