Trade Effects Of China's Antidumping Actions

Antidumping, which WTO allows its members to employ as a means of contingent protection, is becoming more and more popular due to some of its unique natures. First of all, antidumping is typically more subtle and less transparent than tariffs, some of its practice often falling in the grey areas. This ambiguity explains why antidumping is so popular since it allows countries considerable discretion over when and how to implement antidumping policy. A second key characteristic-and the one that is the focus of this paper-is that antidumping is usually not comprehensive. Protection provided by antidumping is product- and country specific. Antidumping measures can only be imposed on products established being dumped from countries "named " by the importing domestic industry. Theoretical analyses suggest that antidumping policy has an effect on trade flows which can ,in return , affect the effectiveness of antidumping policy.This paper is motivated by the low number of empirical studies on trade effect of China's antidumping policy. The goal of this paper is to begin to address the issue of how the country-specific nature of AD protection affects its use and effectiveness. For this purpose, I use a unique data set at the 8-digit product level based on tariff codes named for each of the 12 AD petitions filed between 1997 and 2001. Based on statistical analysis, a econometric model was formulated and was used to estimate the trade effect of China's antidumping policy. Several important findings emerge. First, though AD dumping actions substantially restrict the volume of trade from named countries, they also induce significant trade diversion from named countries to non-named countries, which surely reduces the effectiveness of antidumping policy. Second, in spite of the substantial trade diversion, antidumping actions do provide important benefits to domestic industries due to increase in product price induced by antidumping policy in all cases. Third, the effectiveness of antidumping appears to vary with the nature of competition. It seems that antidumping policy is more effective for lowly concentrated sector than for highly concentrated sector. Fourth, there do exist investigation effect, harassment effect and reputation effect in China's antidumping activities, which makes antidumping become a comprehensive tool.