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An exploratory analysis of anti-dumping use in the most active user countries
By Aradhna Aggarwal
Head, Department of Business Economics, University of Delhi
This paper investigates the pattern of anti-dumping use, at the industry and firm level, across most active anti-dumping user countries, in the 1995-2004 period. The objective is to show that resourceful countries use anti-dumping mechanisms asymmetrically, and within these countries the presence of anti-dumping policy primarily benefits powerful and monopolistic firms particularly in large and concentrated industries.
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The study highlights the following propositions:
- Pecuniary and economic costs and the need for legal expertise/capacity associated with the use of anti-dumping deter use of the tool by a large number of countries, particularly less advanced developing countries.
- Large firms can support the litigation costs associated with the investigation process and can lobby to bias decisions in their favour. They are therefore more likely to pursue anti-dumping.
- Use of anti-dumping is likely to be concentrated in industries that are characterised by scale economies and a small number of powerful firms, particularly in the intermediate goods industries.
The study analyses trends and patterns in anti-dumping use globally and in each of 18 active user countries that have accounted for over 90% of total anti-dumping initiations during 1995-2004. Then, it examines anti-dumping use for each of the active user countries, notification-wise, target-country-wise and product-wise.
It investigates:
- Distribution of anti-dumping filings by the number of countries named.
- Distribution of anti-dumping cases by the number of products named in the petition.
- Sectoral patterns of anti-dumping use at two- and four-digit levels.
- Distribution of anti-dumping cases by the number of petitioning firms.
- Use of anti-dumping by dominating firms.
The study finds, first, that only 18 countries across the world account for 90% of total use of anti-dumping. These include five OECD countries, namely the US , EU, Canada , Australia and New Zealand , and 13 developing countries. These developing countries are large and relatively better-off; less advanced developing countries are excluded from use of the tool. They are restricted in use of the tool either due to the costs associated with it and/or the legal expertise required for its use.
Second, within user countries, anti-dumping investigations tend to be disproportionately concentrated in a few industries. Third, in terms of industry or sectoral concentration of anti-dumping initiations, the US and Canada top the list. Among new users, Venezuela, Colombia and Indonesia exhibit a high degree of single-product concentration, with over 67%, 57.6% and 66.7% of cases, respectively, filed in the steel sector alone.
Fourth, within active user industries, there are large and powerful firms that dominate the use of anti-dumping. In most countries, one or two firms account for a large number of petitions for initiating the process of investigation. Since the market share of petitioners should not be less than 25%, under anti-dumping rules, these firms hold a minimum share of 25%. In practice, however, they account for a major share in the industry.
Finally, there are not many firms that file anti-dumping cases. Those that do, do it over and over again to target different competitors at different times. It is therefore a rent-seeking instrument used by powerful monopolists in their pursuit of seeking protection.
The paper concludes that instead of countering monopolies, anti-dumping actually facilitates anti-competitive and unfair behaviour, and, instead of guaranteeing that world trade is fair and competitive, distorts it at the global, country and industry level.
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