Trade Policy Research

Antidumping duties in agriculture do what they are designed to do — but unlike in manufacturing, they do not simply push imports through alternative suppliers.

This study in the Global Economy Journal (De Gruyter, 2008) examines whether U.S. antidumping (AD) duties in the agricultural sector restrict imports from named countries or instead cause trade deflection — diverting import supply from named to non-named countries — using a panel dataset of U.S. antidumping petitions in agriculture filed between 1990 and 2002, with econometric models including affirmative and negative petition dummy variables.

AD duties had a significant impact on imports of agricultural commodities from countries named in petitions — confirming the trade-restricting effect. Critically, however, unlike in the U.S. manufacturing sector, there was little trade diversion toward non-named countries in agriculture. This absence of trade deflection makes antidumping in agriculture a more effective — and more blunt — protectionist instrument than in manufacturing, with implications for the WTO Antidumping Agreement and for Uruguay Round agriculture negotiations that treated tariff reduction and antidumping reform as separable issues.

Canada's antidumping regime does what it is designed to do — but its protection is gradually eroded by trade diversion, and it can suppress imports even when no dumping is ultimately found.

This study in Canadian Public Policy (University of Toronto Press, 2009) provides the first comprehensive empirical analysis of the trade effects of Canada's antidumping (AD) regime in the manufacturing sector, using a panel dataset of Canadian import data disaggregated to the ten-digit Harmonized System (HS) level and Canadian Border Services Agency (CBSA) AD case records for 1990–2000, estimated via OLS, fixed effects, and Arellano-Bond instrumental variable methods.

Affirmative AD determinations caused an average reduction of approximately 62% in the value of imports from named countries in the year following the decision, and approximately 70% in import quantities — effects consistent with the US and EU antidumping literatures. However, imports from non-named countries increased by approximately 19% in the same period following an affirmative AD determination, providing evidence of trade diversion that partially offsets the protection conferred to Canadian domestic industries. A further finding is the "harassment effect": imports from named countries declined significantly even following negative AD determinations — cases where no dumping was found — indicating that the Canadian AD process itself suppresses trade from targeted sources, regardless of outcome. These findings are directly relevant to Global Affairs Canada's administration of the Special Import Measures Act (SIMA) and to WTO Antidumping Agreement reviews of Canada's trade remedy regime.

Synthesis: Canada's antidumping system effectively restricts imports from targeted suppliers, but the protection it creates is gradually hollowed out as non-targeted suppliers fill the gap — and the mere act of filing a complaint deters imports even when no dumping is proven.

Malhotra and Rus (2009) find that affirmative Canadian antidumping determinations reduce imports from named countries by approximately 62% in value and 70% in quantity, while generating a 19% increase in imports from non-named countries, and further document a harassment effect whereby negative AD determinations also significantly suppress imports from investigated sources.

Cite: Malhotra, N., & Rus, H. A. (2009). The effectiveness of the Canadian antidumping regime. Canadian Public Policy, 35(2), 187–202. https://doi.org/10.1353/cpp.0.0015 

Trade agreements designed to protect domestic producers impose real costs on domestic industries that depend on the restricted imports — and those costs show up in stock prices.

This study in Contemporary Economic Policy (Wiley, 2010) examines whether the 1996 Softwood Lumber Agreement (SLA) between the United States and Canada imposed significant economic costs on U.S. industries that use softwood lumber as an input, using an event study of stock market abnormal returns for lumber-using firms listed on major U.S. exchanges.

The event study tracks stock price movements around three key SLA events: the U.S. producer threat to petition, the agreement in principle, and Canada's finalization of the SLA. News of events leading to the SLA had significant negative impacts on the stock prices of lumber-using firms, with an average reduction of approximately 5.42% across all events. The effect was concentrated in industries most directly dependent on softwood lumber inputs — including homebuilders, furniture manufacturers, and wood product firms — establishing that trade restrictions in upstream markets generate measurable downstream welfare losses. These findings are directly relevant to Global Affairs Canada's analysis of Canada-U.S. trade dispute costs and to ongoing CUSMA-era assessments of the softwood lumber dispute's broader economic incidence.

Synthesis: Restricting Canadian lumber exports to the United States hurt American homebuilders and manufacturers, not just Canadian producers — trade protection in one sector creates real costs across the supply chain.

Malhotra and Gulati (2010) find that news events leading to the 1996 U.S.-Canada Softwood Lumber Agreement (SLA) generated average abnormal stock price reductions of approximately 5.42% for U.S. lumber-using industries, establishing that bilateral trade restrictions in primary commodities impose significant and measurable costs on downstream industrial users.

Cite: Malhotra, N., & Gulati, S. (2010). The effects of the 1996 U.S.-Canada Softwood Lumber Agreement on the industrial users of lumber: An event study. Contemporary Economic Policy, 28(2), 275–287. https://doi.org/10.1111/j.1465-7287.2009.00177.x

Filing for antidumping protection can raise profits in the short run — yet most eligible firms never petition. The reason may be that petitioning reveals something firms would rather keep hidden.

This paper examines why, despite the well-documented short-run profit gains from filing antidumping petitions, the number of firms petitioning for import relief remains low. If petitioning itself restrains imports and raises domestic prices, rational profit-maximizing firms should file more frequently — yet they do not. The paper proposes and tests a signalling hypothesis: that filing for antidumping protection reveals cost inefficiency on the part of the petitioning firm, and that the reputational and competitive cost of disclosing this inefficiency acts as a deterrent. In declining industries where exit is being contemplated, however, petitioning may serve as a credible signal that the firm intends to remain in the market, changing the strategic calculus.

The signalling hypothesis is tested by comparing the stock market response to antidumping petition announcements for petitioning firms versus non-petitioning firms producing the same product. This approach allows the information content of the petition signal to be isolated from the trade-restricting effect, contributing to WTO and trade law debates about the strategic use of antidumping procedures and the extent to which petitioning reflects genuine injury versus strategic firm behaviour.

In this article we highlight the anticompetitive nature of antidumping (AD) legislation. Antidumping legislation was set up to protect domestic firms from predatory pricing by foreign firms. We argue that protecting highly concentrated industries drastically reduces competition at home. In cases where the industry consists only of one or two firms, import restriction may breed monopolies at the expense of domestic consumers. This article looks at cases filed by the agriculture sector, and at the market concentration of industries in this sector, to illustrate the above possibility. We study the case of fresh tomatoes in detail to further demonstrate the anticompetitive nature of AD legislation. We show the effect of AD legislation on imports, as well as the change in the Lerner index in the fresh tomato industry. [go to paper]

Antidumping law was intended to level the playing field against foreign predatory pricing — but in industries where domestic firms already hold significant market power, it may do precisely the opposite.

This study in Competitiveness Review (2006) examines the competitive effects of antidumping (AD) legislation in the U.S. chemical industry, using it as a case study to assess whether antidumping measures function as pro-competitive trade remedies or as instruments that entrench domestic market power at the expense of competition and consumer welfare.

The U.S. chemical industry is among the most active filers of antidumping petitions, and its market structure — characterized by significant concentration in several subsectors — provides a testing ground for the hypothesis that AD protection raises barriers to entry and reduces competitive pressure. By examining antidumping cases filed in the chemical sector and their relationship to industry concentration metrics, the paper documents the conditions under which AD legislation poses a threat to domestic competition rather than protecting it, with direct implications for WTO competition policy and for the broader debate about whether antidumping reform should be incorporated into multilateral trade negotiations.

Synthesis: In concentrated industries like chemicals, antidumping protection does not restore fair competition — it fortifies the market position of dominant domestic firms against any foreign rivalry.

Malhotra (2006) finds that antidumping duties in the U.S. chemical industry — a sector characterized by significant market concentration — function as a threat to domestic competition rather than a remedy for predatory foreign pricing, contributing to the WTO and trade law literature on the anticompetitive effects of trade remedy measures.

Cite: Malhotra, N. (2006). Is antidumping legislation a threat to competition? A case study of the U.S. chemical industry. Competitiveness Review, 16(2).

This study in the Journal of World Trade (Kluwer Law International, 2005) examines the extent of protection conferred by antidumping (AD) duties in the Indian Vitamin C industry, using it as a case study to analyze how effectively antidumping measures protect a domestic industry in a developing country context where global production is concentrated among a small number of major suppliers, primarily in China.

The Indian Vitamin C case involves an antidumping petition against Chinese imports — the dominant global supplier — and provides a setting where the named country's market share and the domestic industry's production capacity can be used to assess the actual protection achieved versus the nominal duty imposed. The study examines import volumes, market structure, and the trade-restricting versus trade-deflecting effects of the duty, contributing to the literature on antidumping in developing countries and to WTO debates about the differential impact of antidumping measures in economies with limited domestic production capacity. These findings are relevant to WTO reform discussions and to Global Affairs Canada's analysis of antidumping as a tool for developing country industrial policy.

Malhotra, Gulati, and Malhotra (2005) examine the extent of protection achieved through antidumping action in the Indian Vitamin C industry against Chinese imports, finding that the effectiveness of antidumping measures in developing country contexts depends critically on the global market structure of the named commodity and the domestic industry's capacity to absorb displaced demand.

Cite: Malhotra, N., Gulati, S., & Malhotra, S. (2005). Extent of protection via antidumping action: A case study of the Vitamin C industry in India. Journal of World Trade, 39(5).

When a developing country liberalizes its tariffs, it may simultaneously reach for antidumping duties as a substitute, and in India's pharmaceutical industry, that substitution came at the direct expense of consumers who could least afford it.

This study in the Journal of Economic Policy Reform (Taylor & Francis, 2008) examines whether antidumping (AD) actions in the Indian pharmaceutical industry effectively restricted trade from named countries and whether trade was diverted to non-named countries, using AD petition data filed between 1992 and 2002 and import data disaggregated at the product level, analyzed with panel regression methods for both named and non-named country samples.

The Indian pharmaceutical industry filed AD petitions against 17 products across 12 named countries during the period, representing a disproportionately high 19% of all Indian AD cases despite accounting for only approximately 4% of total imports and 3% of GDP. China faced the most complaints, followed by EU member states. AD measures significantly restricted imports from named countries, and critically, no evidence of trade diversion to non-named countries was found — making AD an effective but blunt protectionist substitute for the tariff liberalization that had reduced the effective rate of protection from 97% to 40% between 1986–1990 and 1996–2000. In a country where only 30% of the population can afford modern drugs, import restrictions via AD duties translate directly into higher prices for essential medicines — a consumer welfare cost with no offsetting supply-side adjustment. These findings are directly relevant to WTO debates on antidumping reform in developing countries and to India's Directorate General of Anti-Dumping and Allied Duties.

Synthesis: India's pharmaceutical industry used antidumping duties to rebuild the trade barriers that tariff liberalization had dismantled — at real costs to patients, the least able to pay.

Malhotra and Malhotra (2008) find that antidumping duties in the Indian pharmaceutical industry significantly restricted imports from named countries — with no trade diversion to non-named sources — establishing that AD measures functioned as an effective protectionist substitute for declining tariff barriers, with direct consumer welfare costs in a sector where access to affordable medicines is already severely limited.

Cite: Malhotra, N., & Malhotra, S. (2008). Liberalization and protection: Antidumping duties in the Indian pharmaceutical industry. Journal of Economic Policy Reform, 11(2), 115–122. https://doi.org/10.1080/17487870802213860

We estimate the degree of trade diversion from provinces named under the Softwood Lumber Agreement(SLA) to provinces not named. Our regression results indicate that the SLA had a significant impact on the exports of non-named SLA provinces. Controlling for other factors, the SLA would have increased exports from these provinces four times. The corresponding effect for the provinces named in the SLA is estimated at minus 5 percent. This decrease is not, however, statistically significant.[go to paper]

In this paper, we compare the use of antidumping (AD) measures in the agriculture sector by Canada and the United States, the two major users of antidumping procedures.1 We consider both the direct and indirect effects of the AD measure and consider what factors make an AD measure more or less successful at impeding trade and when it is more likely to cause trade diversion. Specifically, we ask when the imposition of an antidumping duty restricts imports of the targeted commodity and when is there a deflection in the supply of imports from countries named in the petition to countries not named in the antidumping petition? We compare these results for that of the US and draw conclusions about the determinants of such differences, like the exchange rate, GDP and distance to partner countries. We use a modified version of the gravity model, as used in the earlier literature (Prusa (2001)) for our analysis. We find that affirmative AD cases caused trade diversion from non-named countries for agricultural products in general, but that trade diversion was particularly strong for perishable products. We also find that the more concentrated the imports, the more restrictive the AD duties.[go to paper]