ian wooton university of strathclyde and cepr trade and competition policy anti-dumping and...

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Ian Wooton Ian Wooton University of Strathclyde University of Strathclyde and CEPR and CEPR Trade and Trade and competition competition policy policy anti-dumping and anti-trust anti-dumping and anti-trust policies in RTAs policies in RTAs

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Page 1: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Ian WootonIan WootonUniversity of StrathclydeUniversity of Strathclyde

and CEPRand CEPR

Trade and Trade and competition competition

policypolicyanti-dumping and anti-trust anti-dumping and anti-trust

policies in RTAspolicies in RTAs

Page 2: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Competition policyCompetition policyDisciplines behaviour of imperfectly competitive firms in the international marketplace examine the different

opportunities offered by RTAs relative to those under the multilateral trading regime

Page 3: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Competition in autarkyCompetition in autarkyIn a world of self-sufficient countries firms produce entirely for domestic

consumptionIf firms competitive and no distortions free market is efficient

If a firm (or firms) exercise an inappropriate degree of market power government should use

competition policies to address this behaviour “anti-trust” (AT) policies

Page 4: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Competition and tradeCompetition and tradeWhen trade barriers are lowered penetration of domestic markets by

foreign firms bringing aggregate benefits

If firms behave competitively global efficiency with free trade

and free marketsIf foreign firms exercise market power government intervention justified

but limited instruments available

Page 5: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Policy responsesPolicy responsesExporting country options use AT policies to discipline firm

often not in national interestImporting country options

1. does not have ability to use AT rules2. resurrect trade barriers

losing all the gains from trade3. implement “anti-dumping” (AD)

policies only affects goods in import market prevents price discrimination

Page 6: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

AT AT versusversus AD 1 AD 1AT focused on encouraging competition AT rules designed to ensure firms do

not undercut the benefits of market integration by collusive behaviour whereas AD often works to

reinstate some of this lost powerIf governments had single goal of promoting efficiency and competition AT the superior instrument

increasingly seems that AD being used to pursue other goals

Page 7: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

AT AT versusversus AD 2 AD 2Advantage of AD over AT does not need supranational

powersDisadvantage of AD over AT does not directly address misuse of

market power, except for predation only works indirectly

often the disadvantages of AD overwhelm the advantages

Could be complementary policies AT for domestic markets AD to deal with foreign firms

Page 8: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Anti-dumping legislationAnti-dumping legislationAD a twentieth century phenomenon particularly rapid growth in 1990s

when developing countries increasingly adopted AD legislation

by 2000, more than 90% of world trade potentially subject to AD actions may have pervasive effects even

when duties not imposedStrong correlation with trade liberalization a pressure safety valve for system? an instrument of retaliation?

Page 9: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

AD and RTAsAD and RTAsPreferential trading is flourishing what is relationship between

competition policy and RTAs? does RTA creation result in the

elimination of AD on intra-regional trade?

is AD replaced by AT? No clear pattern has emerged seems to depend on goals of the

RTA

Page 10: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

RTA examples: polar RTA examples: polar extremesextremes

EU has substituted AD with AT for

intra-union trade applies common AD procedures

for third-country trade driven by goal of single market

NAFTA on AD, only concession by US was

establishment of bi-national panels

no harmonization of AT no acceptance of supranational

authority

Page 11: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Multi-dimensional Multi-dimensional integration 1integration 1

Both trade liberalization and competition policy can be pursued multilaterally or bilaterally range of available policy options

depends on the desired degree of integration

Most basic level of regional integration is FTA only obligation is zero tariffs on bilateral

trade with other member nations could parallel this with elimination of AD

on intra-regional trade no reduction in national sovereignty

Page 12: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Multi-dimensional Multi-dimensional integration 2integration 2

Could match deeper trade integration with coordination on competition e.g. common AD together with

common external tariffs regional AD more consistent for

external firms AD more effective as protection

ambiguous welfare implications

common AT policies part of achieving a common market

Page 13: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

ConclusionsConclusionsRTAs can facilitate the multilateral process in moving towards free trade by removal of intra-regional AD

policies in addition to tariff elimination

This is especially true given the increasing complexity of the

multilateral negotiations, and the expected expansion in RTAs

Page 14: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

ReferenceReferenceIan Wooton and Maurizio Zanardi“Trade and Competition Policy: Anti-Dumping versus Anti-Trust”Forthcoming in James Hartigan, ed., Handbook of Trade and Law, London: Basil Blackwell

Page 15: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

As of 31 December 1989As of 31 December 1989

Growth of anti-dumping Growth of anti-dumping lawslaws

Countries with AD law (49) Countries without AD law No information

Page 16: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Countries with AD law (94) Countries without AD law No information

As of 31 December 2001As of 31 December 2001

Growth of anti-dumping Growth of anti-dumping lawslaws

Page 17: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

0

20

40

60

80

100

120

140

1900 1920 1940 1960 1980 2000Year

Countries

AD law, by year GATT/WTO member, by year

0

20

40

60

80

100

120

140

1900 1920 1940 1960 1980 2000Year

Countries

AD law, by year GATT/WTO member, by year

Growth of WTO and AD Growth of WTO and AD lawslaws

Page 18: Ian Wooton University of Strathclyde and CEPR Trade and competition policy anti-dumping and anti-trust policies in RTAs

Stages of bilateral Stages of bilateral integrationintegration

TradeTrade Competition Competition policypolicy

Self sufficiency(autarky)

Autonomous competition (AT)

policyUnilateral tariffs Unilateral AD actions

RTA(free bilateral trade)

Bilateral removal of AD

Customs union(common external

tariff)

Common external AD policy

Common market Common AT policy