Dumping Allegations as a (Less) Dumping Allegations as a (Less) Free Trade ToolFree Trade Tool

Michael R. CzinkotaMichael R. CzinkotaGeorgetown UniversityGeorgetown University

Masaaki KotabeMasaaki KotabeTemple UniversityTemple University

Preet S. AulakhPreet S. AulakhTemple UniversityTemple University

March 23, 2002March 23, 2002

U.S. Antidumping Orders in EffectU.S. Antidumping Orders in Effectas of Dec. 1, 2001as of Dec. 1, 2001

Category # Cases % of TotalSteel 114 47.7%Industrial Machinery and Equipment 48 20.1%Chemicals 37 15.5%Food/Agriculture 21 8.8%Consumer Goods 9 3.8%Textiles 8 3.3%Other 2 0.8%TOTAL 239 100.0%

Based on: http://ia.ita.doc.gov/stats/inefecta.html

U.S. Antidumping Orders in Effect as of Dec. 1, U.S. Antidumping Orders in Effect as of Dec. 1, 20012001

0

50

100

150

Asia Europe LatinAmerica

TransitionCountries

Regions

Num

ber

of C

ases

Based on: http://ia.ita.doc.gov/stats/inefecta.html

127

6127

18

Antidumping Cases Conducted Against the U.S. 1966 to 2000 Number of Cases

020406080

10019

6619

6919

7219

7519

7819

8119

8419

8719

9019

9319

9619

99Ba

sed

No. o

f Cas

es

Total Global Antidumping Actions Taken Annually

Based on: www.wto.org and http://ia.ita.doc.gov/statsYear

Total Cases

0

50

100

150

200

250

300

350

400

450

1996 1997 1998 1999 2000 2001

Total GlobalCases

CasesAgainst theU.S.CasesInitiated bythe U.S.

Total Global Antidumping Actions Taken Total Global Antidumping Actions Taken Annually by CategoryAnnually by Category

20012001 20002000 19991999 19981998 19971997 19961996

106106 114114 3535 5151 4141 4747

9090 9191 5252 6565 1717 2525

4646 3434 2121 2626 1616 1818

3030 3939 2121 1717 2222 2323

5555 8989 4747 5656 5151 5353

2626 2929 1818 3131 2929 3030

4747 3030 44 1111 99 1313

400400 426426 198198 257257 185185 209209

CHEMICALS

STEEL

FOOD/AGRICULTURE

TEXTILES

INDUSTRIAL EQUIPMENT/MACHINERY

CONSUMER GOODS

OTHER

TOTAL

Based on: www.wto.org

Research Questions Research Questions

A. ITC Filings and Decisions: Strategic Actions or Salvage Operations?

B. ITC Beneficiaries: Corporate Bullies or Competitive Underdogs?

C. Does the Type of Filing Influence the ITC Outcome?

D. Does the Country of Origin of Competition Matter?

E. Does the Pre-Petition Process Affect Trade Flows?

F. Does the ITC Decision in Favor of the Filing Companies Positively Affect their Post-Decision Stock Prices?

Research Questions Research Questions

A. ITC Filings and Decisions: Strategic A. ITC Filings and Decisions: Strategic Actions or Salvage Operations?Actions or Salvage Operations?

H1. Dumping cases will be filed with the ITC not only H1. Dumping cases will be filed with the ITC not only by industries with declining markets but also by by industries with declining markets but also by industries with stable or growing markets.industries with stable or growing markets.

H2. The ITC is more likely to issue positive findings of H2. The ITC is more likely to issue positive findings of injury, the higher the import penetration ratio is. injury, the higher the import penetration ratio is.

H3. The ITC is more likely to issue positive findings of H3. The ITC is more likely to issue positive findings of injury, the faster the import growth rate is.injury, the faster the import growth rate is.

B. ITC Beneficiaries: Corporate Bullies B. ITC Beneficiaries: Corporate Bullies or Competitive Underdogs?or Competitive Underdogs?

H4a. The ITC is more likely to issue positive H4a. The ITC is more likely to issue positive findings of injury for industries which are findings of injury for industries which are dominated by a few firms, irrespective of market dominated by a few firms, irrespective of market growth rate.growth rate.

H4b. The ITC is more likely to issue positive H4b. The ITC is more likely to issue positive findings of injury for atomistic industries if their findings of injury for atomistic industries if their markets are declining.markets are declining.

C. Does the Type of Filing Influence the C. Does the Type of Filing Influence the ITC Outcome?ITC Outcome?

H5. Fillings by large numbers of firms are more H5. Fillings by large numbers of firms are more likely to result in positive ITC decisions. likely to result in positive ITC decisions.

H6. The higher the current import tariff rates, the H6. The higher the current import tariff rates, the less likely the ITC is to make positive less likely the ITC is to make positive antidumping decisions.antidumping decisions.

H7. Consumer goods filings are more likely than H7. Consumer goods filings are more likely than industrial product filings to receive positive ITC industrial product filings to receive positive ITC decisions.decisions.

D. Does the Country of Origin of D. Does the Country of Origin of Competition Matter?Competition Matter?

H8. The ITC is more likely to issue positive H8. The ITC is more likely to issue positive findings of injury for industries where findings of injury for industries where Japan and/or Asian Tigers are accused of Japan and/or Asian Tigers are accused of dumping than otherwise.dumping than otherwise.

E. Does the Pre-Petition Process Affect E. Does the Pre-Petition Process Affect Trade Flows?Trade Flows?

H9. A longer pre-petition process is likely to H9. A longer pre-petition process is likely to result in negative ITC decisions.result in negative ITC decisions.

F. Does the ITC Decision in Favor of F. Does the ITC Decision in Favor of the Filing Companies Positively the Filing Companies Positively Affect their Post-Decision Stock Affect their Post-Decision Stock Prices?Prices?

Table 4Regression Model for

% Change in Stock Price on ITC Decision 

Variable 

 Estimate

 Standard

Error

 t-value

 p-value

 Intercept

-2.23

1.51

-1.47

  .14 

Decision File Date .002

.003

.66 .51

 % Stock Price Change on Filing Date - .27 .08

-3.26

.001 

ITC Decision (1 = in favor; 0 = against) 3.45 1.39 2.48 .02

  R 2 = 10.8% F (df = 3, 124) = 4.88 p-value = .003 

       

Conclusions and Implications

Political StrategiesPolitical Strategies Public action and private benefitsPublic action and private benefits

Collective action and free riding Collective action and free riding potential of firmspotential of firms

Market signalingMarket signaling Post-filing versus post-decision market Post-filing versus post-decision market

reactionreaction