Journal of International Trade Law and Policy

Determinants of EU antidumping actions against East Asian countries

Weifeng Zhou Ludo Cuyvers

Article information:

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

To cite this document:

Weifeng Zhou Ludo Cuyvers, (2009),"Determinants of EU antidumping actions against East Asian
countries", Journal of International Trade Law and Policy, Vol. 8 Iss 3 pp. 291 - 305
Permanent link to this document:
http://dx.doi.org/10.1108/14770020910990669
Downloaded on: 06 December 2016, At: 19:34 (PT)
References: this document contains references to 27 other documents.
To copy this document: permissions@emeraldinsight.com
The fulltext of this document has been downloaded 442 times since 2009*

Users who downloaded this article also downloaded:

(2013),"Bureaucratic politics, policy learning, and changes of antidumping policy and rules
in Japan", Journal of International Trade Law and Policy, Vol. 12 Iss 1 pp. 4-22 http://
dx.doi.org/10.1108/14770021311312476
(2005),"Anti-dumping measures and China", Journal of Financial Crime, Vol. 12 Iss 3 pp. 272-289 http://
dx.doi.org/10.1108/13590790510624873

Access to this document was granted through an Emerald subscription provided by emerald-srm:313615 []

For Authors
If you would like to write for this, or any other Emerald publication, then please use our Emerald for
Authors service information about how to choose which publication to write for and submission guidelines
are available for all. Please visit www.emeraldinsight.com/authors for more information.

About Emerald www.emeraldinsight.com

Emerald is a global publisher linking research and practice to the benefit of society. The company
manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as
providing an extensive range of online products and additional customer resources and services.
Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee
on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive
preservation.
*Related content and download information correct at time of download.

The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1477-0024.htm

Determinants of EU antidumping
actions against East Asian
countries
Weifeng Zhou

Determinants of
EU antidumping
actions
291

Department of International Economics, University of Antwerp,

Antwerp, Belgium, and
Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

Ludo Cuyvers
Department of International Economics, University of Antwerp,
Antwerp, Belgium,
Centre for Asian Studies, Antwerp, Belgium and
European Institute for Asian Studies, Brussels, Belgium
Abstract
Purpose The purpose of this paper is to investigate the trends of antidumping actions targeting
East Asia and to examine the macroeconomic determinants of European Union (EU) antidumping
actions against East Asian countries including China, Japan, Korea, Hong Kong, and Taiwan.
Design/methodology/approach A Negative Binomial Regression approach is used to estimate
the macroeconomic determinants (exchange rates, gross domestic product (GDP) growth, and
unemployment rates) of EU antidumping actions against East Asian countries.
Findings The empirical estimation results suggest that the macroeconomic determinants (exchange
rates, GDP growth, and unemployment rates) significantly affect antidumping initiations against a
particular country in a particular year; in addition, the changing competitive structure and
environment in international trade play a role in prompting antidumping actions, and the countries
which are larger sources of EU imports are more likely to be hit with antidumping actions.
Originality/value This is the first paper to examine the macroeconomic determinants of EU
antidumping actions targeting East Asian countries and the empirical estimation results provide
strong evidence. It also finds that the changing competitive structure and environment in international
trade prompt antidumping actions.
Keywords European Union, Dumping, Macroeconomics, China, Japan, South East Asia
Paper type Research paper

1. Introduction
The creation of the World Trade Organization (WTO) led to a surge in antidumping
actions globally, as virtually the most countries created their own antidumping laws
and enforcement mechanism for initiating antidumping investigations. Antidumping
duties are allowed under WTO rules when there is material injury or threatened injury
to a competing domestic industry from sales by an exporter made at unfairly low prices
(usually prices alleged to be below those charged in the home market, but often below
costs). About 60 years of General Agreement on Tariffs and Trade (GATT) rounds
have resulted in low levels of tariff protection, especially for developed countries.
Constrained by these commitments, many countries have switched to other
instruments to wield protection. Among these, antidumping duties are some of the
most important.

Journal of International Trade Law

and Policy
Vol. 8 No. 3, 2009
pp. 291-305
q Emerald Group Publishing Limited
1477-0024
DOI 10.1108/14770020910990669

JITLP
8,3

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

292

Although originally devised to combat unfair trade in the form of export prices
below normal value (i.e. dumping), their wide and arbitrary applicability has led
economists to conclude that antidumping has nothing to do with keeping trade fair.
[. . .] It is simply another form of protection (Blonigen and Prusa, 2003). Still, because
of the stated objective of fairness, antidumping duties are legally provided under the
WTO antidumping agreement. Many studies have provided strong evidence that
antidumping measures warranted to obstruct unfair trade are increasingly used as a
non-tariff barrier.
While in the 1980s only the European Union (EU), Australia, Canada, and the USA
were active and heavy users of antidumping, many more countries especially
developing countries including India, Argentina, Brazil, and South Africa joined this
group during the 1990s. According to WTO statistics, the EU as traditional user
initiated 303 antidumping investigations (USA: 354, India: 400) against other countries
and imposed 193 definitive antidumping measures (USA: 219, India: 302) between 1995
and 2004 (http://people.brandeis.edu/ , cbown/papers/AD_developing.pdf), in which
over 30 percent of the total number of EU antidumping cases are initiated against East
Asian countries: China, Japan, Korea, Hong Kong, and Taiwan[1]. What makes East
Asian countries the most popular targets and what are the determinants of EU
antidumping actions against East Asian countries?
The purpose of this paper is to investigate the trends of antidumping actions
targeting East Asia and examine the macroeconomic determinants of EU antidumping
actions against East Asian countries including China, Japan, Korea, Hong Kong, and
Taiwan, which in the past decades top the list of most targeted countries by EU
antidumping measures to an extent that cannot simply be explained by its increasing
share in world exports. A Negative Binomial Regression approach is used to estimate
the determinants of EU antidumping actions against these countries; we assume in the
preliminary analysis that the macroeconomic determinants (exchange rates, gross
domestic product (GDP) growth, and unemployment rates) significantly affect
initiations against a particular country in a particular year; and the changing
competitive structure and environment in international trade also plays a role in
prompting antidumping actions.
The remainder of the paper is organized as follows: we provide a brief overview of
recent literature in the next section. Section 3 highlights the specific position of East
Asian countries as most popular targets of EU antidumping actions. In Section 4, we
examine the empirical estimation results and explain the determinants of EU
antidumping actions against East Asian countries. Section 5 presents our conclusion.
2. A review of recent literature
The recent studies suggest that antidumping law is no longer a developed country tool;
note that the leading user of antidumping since 1995 has been India, with Argentina
and South Africa joining the USA and EU among the top five. From another
perspective, the number of countries getting involved in bringing such cases has
roughly tripled between the late 1980s and today, with all of this growth brought about
by new enforcement agencies in developing economies. In addition, the lines between
administrative protection and other forms of trade restrictions have been blurred
at least in the views of many observers. Therefore, in studying motivations for
initiating antidumping investigations researchers have turned to considering not just

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

case-specific factors, but also more general determinants of the demand and supply for
protection against imports.
Economists have documented various economic factors, strategic effects, and trade
effects that derive from the use of antidumping laws. On most occasions, these effects
imply a net loss for the country using antidumping duties, although the protected
industries usually gain[2]. The wave of new adopters of antidumping laws has revived
economists interest in this defensive instrument for trade protection in order to
understand what the effects and factors of such widespread use of antidumping may
be on the international trading system.
Irwin (2005) also documents the long history of antidumping in the USA. The origin
of antidumping was the Antidumping Act of 1921, providing for extra import duties to
be placed on imported goods sold for prices below some measure of their fair value, if
these imports are likely a cause of injury to a domestic industry. Irwin notes that
extensive use of antidumping occurred as far back as the late 1930s, and there was a
steady flow of cases from the mid-1950s on. However, few of these cases produced
affirmative injury determinations resulting in antidumping duties[3]. A further major
change occurred in 1984 requiring the International Trade Commission (ITC)[4] to
cumulate the imports of all countries under investigation in judging injury, increasing
the incentive to initiate the cases against multiple exporting countries.
Miranda et al. (1998) and US Congressional Budget Office (CBO) (1998) document
the dramatic growth in the number of countries joining the antidumping club.
Miranda et al. suggest that if the emergence of increased antidumping enforcement by
developing countries was a quid pro quo for general trade liberalization, there may be
welfare gains from this proliferation of antidumping law, at least in a second-best
sense. The CBO paper acknowledges this possibility as well, though their focus is more
on whether US exporters have been harmed by and/or singled out for retaliation by
new users of antidumping; on these latter issues they suggest minimal impact to that
point, noting however that with continued growth in antidumping by developing
countries US exporters may begin to be more affected in future.
Vandenbussche and Zanardis (2008) study shows that the retaliatory motives are an
important determinant of the adoption and subsequent use of antidumping laws. It is
not by chance that some of the new users were heavily targeted by the EU and USA in
the 1980s. Also worrying is the finding that the adoption of these laws has been
prompted by past trade liberalization. It is therefore doubtful that antidumping actions
are only limited to unfair trade practices. Moreover, antidumping laws can be abused
by special interests once they are in place. For instance, the aggregate effect of
antidumping measures on trade flow can be substantial enough to reverse the gains
from past trade liberalization efforts (Vandenbussche and Zanardi, 2006).
Until recently, Prusa and Skeath (2002) address some of the issues considered in this
paper. Their stated focus is to explore whether the increase in global use of
antidumping was solely due to increased unfair trading and they reject this
hypothesis. This is consistent with the recent work of Feinberg and Hirsch (1989),
Feinberg (1989, 2005), Leidy (1977), Knetter and Prusa (2003), Irwin (2005), Francois
and Neils (2004) and Sanguinetti and Bianchi (2005). Using somewhat different
samples and econometric specifications, these have all found macroeconomic
and industry-specific not purely case-specific factors to be important in
explaining antidumping actions.

Determinants of
EU antidumping
actions
293

JITLP
8,3

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

294

Feinberg (1989) found evidence of a negative relationship between US antidumping

and countervailing duty petitions (lumped together) against the four leading target
countries and country-specific real exchange rates. While this tends to support what
has been called a technical view of antidumping initiation (i.e. occurring more
frequently when the rules indicate more likelihood of dumping actually occurring), it
should be noted that the time period chosen (1982-1987) was in the period shortly after
major changes in the US trade laws (among other things giving, the US Department of
Commerce, instead of the Department of Treasury, the responsibility for determining
dumping)[5].
It is quite likely that in those early years petitioner attorneys did not realize the
extent to which general macroeconomic trends might be relevant to the outcome of a
case or that getting over the commerce hurdle (i.e. a finding of dumping) would be no
problem Knetter and Prusa (2003) note that over a 20 year period only 3 percent of
petitions have been rejected by Commerce on these grounds. If petitioners anticipate
that a finding of dumping is a virtual certainty, and the focus turns to persuading the
ITC of injury to the domestic industry, the expected role of exchange rates on the filing
decision is more likely to turn to a positive effect of a dollar appreciation.
Knetter and Prusa do find convincing evidence after examining a broader and
longer data set that the effect of exchange rate movements on antidumping is in fact
now positive[6]. They look at annual target-specific filings in four areas (Australia,
Canada, the EU, and the USA) and find both a strong positive impact of currency
appreciation and a strong negative impact of growth in GDP. They experiment with
limiting their analysis to the sample of target countries and time period used in
Feinberg (1989) and find there a negative (but not significant) impact, concluding that
those earlier results were specific to the sample and time period chosen.
Feinberg (2005) then replicates the Knetter and Prusa results only for the USA
using quarterly data, and explains that learning by petitioners about the enforcement
process has changed the patterns of response to macroeconomic phenomena over time.
Sanguinetti and Bianchi (2005) apply a similar methodology to explain the
intertemporal pattern of antidumping initiations in Argentina, Brazil, and Mexico;
while the determinants vary a bit among the three countries, generally macroeconomic
indicators are found to play similar roles for these major Latin American users of
antidumping as in the USA.
3. Trends of antidumping actions targeting East Asia
Until now, the most countries have established their own antidumping law (Figure 1)
and antidumping measures has become the most popular instrument of protectionist
trade policies. According to Prusa (2006), WTO members reported 1.441 antidumping
investigations, compared to only 115 countervailing duty investigations and
61 safeguard investigations between 1995 and 2000. The dramatic rise in antidumping
actions could reflect an increase in dumping activities or an increasing awareness
(e.g. among developing countries) of imposing antidumping measures for a strategic
motive in international trade, perfectly in line with GATT rules.
In Table I, we can observe the list of 40 countries most targeted by antidumping
investigations during the period 1981-2001. Until the beginning of the 1990s,
traditional users of antidumping actions were the USA, the EU, Canada, Australia, and
New Zealand, but more recently, the developing countries including Argentina, Brazil,

Determinants of
EU antidumping
actions

100

80

60

295

40

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

20

0
1900
1910
1920
1930
1940
Source: Vandenbussche and Zanardi (2008)

1950

1960

1970

1980

1990

2000

China, India, Mexico, and South Africa joined the antidumping club. In the period
1985-2001, developing countries initiated 810 antidumping investigations, 266 of which
targeted developed countries, 287 other developing countries and 257 countries in
transition, whereas developed countries initiated 925 investigations, 411 targeting
developing countries, 282 other developed countries and 232 countries in transition
(Zanardi, 2004, p. 423).
The global share of East Asian countries in antidumping cases increased from
28 percent in the period 1980-1984 up to 48 percent in the period 2000-2002. In contrast
with their popularity as targets, the East Asian countries themselves initiate less than
5 percent of global antidumping actions (Prusa, 2006, p. 744). Looking at the intensity of
antidumping investigations after 2000 only and normalising antidumping
investigations by the value of exports to create an intensity measure, compared to
Japan (set to 100 as a benchmark), China showed an antidumping target intensity of
653, Korea of 405, and Taiwan of 311. The intensity measure reveals that the increasing
trend of antidumping actions against East Asian countries is not as outspoken as the
increasing trend in the absolute number of antidumping investigations.
Although there is still a debate going on with the determinants of East Asian
Miracle emerged in last two decades, there is a consensus among economists that a
sharp increase in exports significantly contribute to the GDP growth in East Asian
countries. Nowadays, China has become motor of East Asian Miracle. As shown in
Figure 2, China increased its export share to EU market from 7 up to 12 percent over
the period from 1999 to 2004. Figure 2 shows that this increase did not only coincide
with a fall in the import share of the USA, but also with a decrease in the import shares
of Japan and Taiwan.
Figure 3 shows the EU trade balance with its main trade partners, it is observed that
all the East Asian countries are experiencing a trade surplus with the EU. The strong
increase in the export share from China prompted protectionist reactions taken
by its two biggest trade partners: the EU and the USA. Therefore, it is no surprise that
China tops the list of most targeted countries by antidumping investigations.

Figure 1.
Evolution of the number
of countries with
antidumping laws

JITLP
8,3

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

296

Table I.
Top 40 countries targeted
by antidumping
investigations
(1981-2001)

Country
China
USA
Korea
Japan
Taiwan
Germany
Brazil
UK
Thailand
France
Italy
India
Spain
Indonesia
Russia
Poland
Canada
Romania
Belgium
Malaysia
South Africa
Ukraine
Mexico
Czechoslovakia
Hong Kong
Netherlands
Turkey
Singapore
Yugoslavia
Hungary
Argentina
Sweden
Venezuela
East Germany
Austria
USSR
EU
Australia
New Zealand
Chile

Number of investigations

Percentage of total

422
338
305
292
201
190
188
118
116
115
113
108
100
92
92
75
74
71
69
65
62
62
60
59
59
59
55
48
47
43
39
39
39
38
36
35
28
26
26
25

9.43
7.55
6.82
6.53
4.49
4.25
4.20
2.64
2.59
2.57
2.53
2.41
2.24
2.06
2.06
1.68
1.65
1.59
1.54
1.45
1.39
1.39
1.34
1.32
1.32
1.32
1.23
1.07
1.05
0.96
0.87
0.87
0.87
0.85
0.80
0.78
0.63
0.58
0.58
0.56

Source: Zanardi (2004)

East Asian countries (Table I) accounted for 36 percent of all investigations and the
East Asian countries alone for 29 percent. Although, China alone accounts for almost
10 percent of the global antidumping cases, Korea, Japan, and Taiwan are also in the
top five. As illustrated in Table I, East Asian countries have been most popular targets
of antidumping actions.
In the period 1991-2003, East Asian countries accounted for 32 percent of the total
number of 394 antidumping investigations initiated by the EU. The East Asian

0.25
1999
2004
0.20

Determinants of
EU antidumping
actions
297

0.15

0.05

Ca
na
da

Ta
iw
an

a
Ko
re

Tu
rk
ey

N
or
w
ay

nd
la
er

Sw

Ru

itz

Ja
pa
n
Ca
na
da

ia
ss
Tu
rk
ey

Ch
in
a

U
SA

0.00

Figure 2.
Evolution of import shares
in EU (1999-2004)

Source: Eurostat (2004)

100
80
60
40
20

Ch
in
a

ia
Ru

ss

n
pa
Ja

N
or
w
ay

ea
or
K

Ta
iw
an

nd
la
er

20

U
SA

Sw
itz

Euros (billions)

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

0.10

40
60
80
100
Source: Eurostat (2004)

Figure 3.
EU trade balance with
main partners 2004

JITLP
8,3

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

298

countries, the ASEAN countries and the SAARC countries totally accounted for
58 percent of EU antidumping investigations. As shown in Figure 4, the share of EU
antidumping investigations against East Asian countries decreased substantially from
60 percent in 1991 to only 11 percent in 2001. In meanwhile, the European Commission
initiated 64 investigations against China, 28 against Korea, 18 against Taiwan,
15 against Japan, and two against Hong Kong. After a peak in 1999, the number of EU
antidumping investigations dramatically decreased to seven cases in 2003, three of
which targeting East Asia. There is no a reliable explanation for the recent drop in the
EU antidumping actions although Evenett and Vermulst (2005) argue that it may be an
outcome of the politicization of the EU antidumping procedure[7].
Figure 5 shows the EU antidumping investigations targeted by product category
and 170 out of 394 antidumping investigations in the period 1991-2003 were targeting
different products[8]. By comparing the shares of each product group in the number of
investigations against East Asia to the shares of these products in the total number of
EU investigations, surprisingly, the share of antidumping investigations against East
Asian countries targeting textile products is substantially smaller than the overall
share of EU investigations targeting textiles, and the most antidumping investigations
are concentrating on the electronics and mechanical products that is relatively more
often than overall EU investigations.
Moreover, over 41 percent of all the antidumping investigations (394 in total) did not
result in any definitive antidumping duties. A success rate of 59 percent for the EU
antidumping investigations is closely in line with Zanardis (2004) study for the USA,
i.e. 59.35 percent, but smaller than the success rate of 65 percent for EU investigation in
70
East Asia
Total
60

50

40

30

20

10

Figure 4.
The share of EU
antidumping
investigations targeting
East Asian countries
(1991-2003)

0
1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Source: The official journal of the European Communities and the annual reports from the Commission to
the European Parliament (2004)

0.3
East Asia
All EU
0.25

Determinants of
EU antidumping
actions
299

0.2

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

0.15

0.1

0.05

0
Chemical

Textiles

Wood and Electronics Mechanical Iron and steel Other metals

paper
products
Source: The official journal of the European Communities and the annual reports from the Commission
to the European Parliament (2004)

the period 1980-2002 (Cuyvers and Dumont, 2005). The success rate for EU
antidumping investigations targeting East Asian countries are, respectively, 50 percent
for Hong Kong, 54 percent for Korea, 56 percent for Taiwan, 63 percent for China, and
73 percent for Japan. In this case, China and Japan are the most popular targets by EU
antidumping investigations. From 2002 onwards, all EU antidumping investigations
against East Asian countries almost resulted in affirmative antidumping duties[9] that
provide evidence for unfair trade practice of EU antidumping law against East Asian
countries.
4. Explaining EU antidumping case against East Asian countries
In seeking to explain the determinants of antidumping actions, empirical studies have
gone beyond the case-specific requirements for finding dumping (determined by the
European Commission) and material injury (determined by the European
Commission) to consider macroeconomic and in some studies industry-specific
factors. Consider first how macroeconomic factors can influence the dumping
determination[10].
Let the home market price (in foreign currency) be PF and the exporters price (after
adjustments for Transportation & Distribution) in the EU (in euro) be PEU. In the
absence of dumping, PEU PF/e, where e is the foreign currency (or external) value of
the euro. Dumping would require PEU , PF/e. If the EU experiences an expansion, one
would expect an increased demand for most products. An exporter would likely raise
PEU, cet. par., therefore reducing the likelihood of dumping. In a recession, in contrast,
exporters would likely reduce price in the EU market to retain market share, increasing
the likelihood of dumping.

Figure 5.
EU antidumping
investigations by product
category (1991-2003)

JITLP
8,3

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

300

Similarly, the euros appreciation (e increasing) would reduce the likelihood of

dumping if foreign exporters refrain from passing on the full reduction in price dictated
by the exchange rate change, taking higher profit margins on sales in the EU market
instead[11]. A depreciation would increase the likelihood of dumping as exporters will
likely reduce profit margins on EU sales to avoid having to raise EU-euro prices to
uncompetitive levels.
But potential domestic complainants (EU firms) know they also must show injury
caused by dumping. It is reasonable for domestic complainants to anticipate that their
chances of convincing the EC that they have been harmed by dumping are greater the
weaker is the industrys general condition. The probability of any given industry
experiencing a decline will clearly be larger the weaker is the overall European
economy. This implies that an economic expansion would reduce the likelihood of
generating a finding of injury by reason of dumping, and the euro appreciation (which
inevitably will lead to lower import prices and increased import competition) will
increase the likelihood of receiving a positive injury determination.
Considering both required elements the need to convince the European
Commission that dumping has occurred, and the need to convincing the European
Commission that material injury has been experienced we see that the business
cycle effects on the antidumping initiation decision are unambiguous. An expansion,
cet. par., should lead to reduced petitions. But, the exchange rate effect is somewhat
unclear; an appreciation of the euro may make a showing that dumping exists less
likely, but make injury easier to show.
In what follows, we employ a simple econometric specification, assuming that the
number of antidumping cases initiated by EU firms against individual East Asian
countries during 1995-2005 measured by growth in real GDP, the unemployment
rate, and import share and by the one-year-lagged bilateral real exchange rate, Real
Exchange Rate (REXCH), (weighted by relative Consumer Price Index movements) vs
that country[12]. As clearly the motivation for initiating antidumping case is to protect
an industry from import competition, also included is the euro value of the individual
countrys exports to the EU (one-year lagged and expressed in natural logs)[13]. In
addition to explaining the occurrence of all the antidumping cases for a sample of five
countries over ten years 107 observations, also explained are all mechanical products
cases, and cases involving electronic products.
In addition, there were several events which occurred during the sample period that
also may have had implications for petitioner filing practices. Chinas entry into WTO
in 2001 will significantly reduce its trade barriers to outside world. By estimation, trade
barrier reduced trade by an average of 47 percent before a non-WTO member country
like China entering into WTO and entry into WTO will increase trade by about
90 percent that not only strongly explained a surge in export from China to outside
world but also may have explained a sharp increase in antidumping case against China
after entry into WTO; a dummy variable is included to investigate this potential effect.
Moreover, the Asian financial crisis started in Thailand in 1997 had devastated the
most Southeast Asian economies; in the same period, the East Asian countries caught
by the financial crisis experienced a sharp drop in export growth that also may have
affected the number of cases against these countries (www.treasury.gov.au/documents/
103/HTML/docshell.asp?URL sect4.asp) although no evidence of a significant
impact on target-specific antidumping investigation was found in preliminary analysis;

a dummy variable is included to examine this potential effect for the year 1997 and
after.
Following Knetter and Prusa (2003), Irwin (2005) and Sanguinetti and Bianchi (2005),
and given the count nature of the data, a Negative Binomial Regression approach is
employed. Knetter and Prusa explain that count data (i.e. only non-negative integer
values) often exhibit overdispersion (high variance of the individual observations
relative to their mean) and are more appropriately assumed to be generated by a
negative binomial random variable than by a poisson distribution (and that either is
preferable to ordinary least squares regression estimation). The equation estimated,
explaining antidumping cases against country i in year t, has the following form:

Determinants of
EU antidumping
actions
301

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

ADi; t a b EUGROWTHt c EUUNEMt d ln EXPORTSTOUSi;t21

e REXCHt21
Estimation results are presented in Table II, explaining all cases initiated, mechanical
products cases, and electronic products cases, respectively, in columns (1)-(3). Rather
than presenting estimated coefficients, incidence rate ratios (IRRs) associated with
these coefficients are presented. The IRR is the ratio of the predicted number of case
with the variable of interest one unit above its mean value, holding other variables at
their means, to the predicted number with all variables are at their means. An IRR
above 1.0 indicates a positive impact, one below 1.0 a negative impact of an explanatory
variable.
Looking first at column (1), explaining all the antidumping cases, the estimated IRR
of 1.0016 on the one-year lagged real exchange rate implies a 10 percent point
appreciation of the euro (with 2002 normalized to 100) would increase cases by
1.6 percent with all other variables at their mean; similarly the estimated IRR of
0.91 implies a 9 percent reduction in cases associated with a 1 percent point increase in
the one-year rate of real GDP growth. About 1 percent point increase in the EU
unemployment rate is estimated to lead to more than a 50 percent increase in cases. Not
surprisingly, countries which are larger sources of EU imports are more likely to be hit

(1) All cases

REXCH (2 1 year)
Real gross domestic product (1-year
growth (%))
EU unemployment rate
In EU imports from target (21 year)
WTO-entry dummy
Post-crisis dummy
Likelihood-ratio x 2
Significance of x 2
Pseudo-R 2

1.0016 *
0.9102 *
1.5703 * * *
1.9902 * * *
2.2516 *
0.3608 * *
57.26
0.0000
0.116

(1.85)
(1.78)
(3.89)
(6.65)
(1.92)
(1.98)

(2) Mechanical
products cases
1.0027 * * * (2.73)
0.9355
1.4973 * * *
2.5038 * * *
1.9198
0.2362 * *
47.55
0.0000
0.119

(1.23)
(2.83)
(5.84)
(0.95)
(2.41)

(3) Electronic
products cases
1.0019 *
0.9828
1.3824 *
2.3089 * * *
0.9807
0.3105 *
37.07
0.0000
0.114

(1.69)
(0.58)
(1.93)
(4.96)
(0.28)
(1.83)

Notes: Significance at *10, * *5, * * *1 percent, respectively; z-statistics reported, in parentheses, for
test of no effect on filings (no effect corresponds to an IRR value of 1.0)

Table II.
Negative binomial
estimation of
determinants of EU
antidumping case against
East Asia, 1995-2005

JITLP
8,3

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

302

with antidumping actions a tripling of imports implies roughly a doubling of cases.

The binary variables are of interest as well, with a large positive effect of the Chinas
WTO-entry and a similarly large negative impact on post-crisis cases.
The impacts of these binary variables indicate that EU market participants reacted
as expected to the changing competitive structure and environment in international
trade. The estimated impact of after Chinas WTO-entry, roughly doubling the
expected number of cases initiated, ceteris paribus, may be larger than expected; the
above results provide a support to the explanation that Chinas entry into WTO
strongly prompted the use of antidumping actions as defensive instrument by EU
firms while facing fierce import competition from China; and it is therefore not
surprising that China after WTO-entry toped the list of most popular targets by its two
biggest trade partners: the EU and the USA. The rationale for a negative impact on
post-crisis cases, is not completely clear, but may relate to the third country impact of
antidumping measures (Cuyvers and Zhou, 2008, p. 55), lessening the motivation by
the EU firms against these countries.
The effects for mechanicals products cases and for electronic products cases are
quite similar, though exchange rate impacts seem more important and economic
growth/unemployment rate impacts somewhat less so. Larger exporters to the EU are
even more likely to be caught with cases in these product areas than in all cases more
generally. While the post-crisis variable continues to predict a lessening of antidumping
actions, the WTO-entry variable seems not to have played a significant role in
determining these product-specific cases.
5. Conclusion
This paper has investigated the trends of antidumping investigations targeting East
Asia and examined the determinants of EU antidumping actions against East Asian
countries during the past decades. The global share of East Asian countries in
antidumping cases increased from 28 percent in the period 1980-1984 up to 48 percent
in the period 2000-2002. In the period 1991-2003, East Asian countries accounted for
32 percent of the total number of 394 antidumping investigations initiated by the EU
while all the East Asian countries were experiencing a trade surplus with the EU. The
success rate for EU antidumping investigations targeting East Asian countries are
50 percent for Hong Kong, 54 percent for Korea, 56 percent for Taiwan, 63 percent for
China and 73 percent for Japan, respectively, and East Asian countries are most
popular targets of EU antidumping actions.
A Negative Binomial Regression approach is used to examine the macroeconomic
determinants of EU antidumping actions against East Asian countries including
China, Japan, Korea, Hong Kong, and Taiwan and the empirical estimation results
suggest that the macroeconomic determinants (exchange rates, GDP growth, and
unemployment rates) significantly affect antidumping initiations against a particular
country in a particular year. We also found that the changing competitive structure
and environment in international trade prompt antidumping actions, and the countries,
which are larger sources of EU imports, are more likely to be hit with antidumping
actions. The binary variables are of interest as well, with a large positive effect of the
Chinas WTO-entry and a similarly large negative impact on post-crisis cases.
The effects for mechanicals cases and for electronic products cases are quite similar,

though exchange rate impacts seem more important and economic growth/
unemployment rate impacts somewhat less so.
However, our investigation also raises the following questions for further research
on EU antidumping policy, first:

Determinants of
EU antidumping
actions

RQ1. Antidumping is only one part of any countrys defensive instruments for
protecting domestic industry, so does the substitutability effect between these
instruments exist?

303

RQ2. To what extent will it affect the trade flow?

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

Second, in the context of East Asian exporters, an important retrospective study would
be to examine how exporters targeted by EU antidumping actions responded:
RQ3. Did the EU antidumping actions lead to trade diversion and trade reflection?
Did East Asian antidumping cases vs the EU come about in retaliation?
Notes
1. Hong Kong Special Administration Region and Taiwan Province are two administrative
provinces of the Peoples Republic China.
2. See Blonigen and Prusa (2003) for a survey of the literature.
3. For example, between 1947 and 1969 there were 429 antidumping filings in the USA, but
only 24 affirmative injury determinations a 5.5 percent success rate.
4. It is the International Trade Commission of the USA.
5. It should be noted that as the first surge of US dumping cases in 1982, petitioner attorneys
had little previous experience at that point in how the two administering agencies would deal
with these cases. While there have been subsequent changes in the antidumping procedures
since the 1979 Trade Act, it seems clear that the trend of making an affirmative decision
easier to obtain began at that point.
6. Earlier (1997) had found that declines in real GDP led to increases in combined antidumping
and countervailing duty petitions in the USA over the 1980-1995 periods. However, the
analysis was based on just 16 annual observations on aggregate filing data.
7. There are disagreements between member states over the merits of imposing antidumping
duties, which results in the Council of Ministers rejecting the proposal of the European
Commission to impose antidumping measures or the Council of Ministers failing to enact a
regulation within time.
8. An investigation targeting three countries is counted as three antidumping investigations in
the total number.
9. Ad valorem tariffs are the antidumping measure most imposed against the East Asian
countries in the period considered, i.e. in 64 of the 81 investigations that resulted in any
measure being imposed. The average ad valorem tariff was 29.84 percent for China,
38.48 percent for Japan, 31.47 percent for Taiwan, 27.40 percent for Hong Kong, and
24.99 percent for Korea.
10. While the following discussion is based on the price comparison analysis of dumping,
similar results would obtain from an analysis of the cost comparison approach.
11. Such incomplete passthrough is certainly thought to be the norm see Goldberg and
Knetter (1997) for an excellent survey of the passthrough literature. See Kim (2000)

JITLP
8,3

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

304

for a discussion of the treatment of exchange rate movements in dumping margin

calculations, both in the USA and more generally under WTO rules.
12. The growth in real GDP, unemployment rate, import share, and bilateral real exchange
rate data were obtained from Eurostat (http://epp.eurostat.ec.europa.eu/portal/page?_page
id1090,30070682,1090_30298591&_dadportal&_schemaPORTAL).
13. This was retrieved from the EUROSTAT and UN COMTRADE database, respectively. To
some extent this can be viewed as a target country fixed effect.

References
Blonigen, B. and Prusa, T.J. (2003), Antidumping, in Choi, E.K. and Harrigan, J. (Eds),
Handbook of International Trade, Blackwell, Cambridge, MA.
Cuyvers, L. and Dumont, M. (2005), EU antidumping measures against ASEAN countries:
impact on trade flows, Asian Economic Journal, Vol. 19, pp. 249-71.
Cuyvers, L. and Zhou, W. (2008), Third country impact of EU antidumping measures, Journal
of European Economy, Vol. 7, pp. 55-71.
Eurostat (2004), Statistical Yearbook: External and Intra-European Union Trade, Eurostat,
Luxembourg.
Evenett, S.J. and Vermulst, E. (2005), The politicisation of EC antidumping policy: member
states, their votes and the European Commission, World Economy, Vol. 28, pp. 701-17.
Feinberg, R.M. (1989), Exchange rates and unfair trade, Review of Economics and Statistics,
Vol. 71, pp. 704-7.
Feinberg, R.M. (2005), US antidumping enforcement and macroeconomic indicators revisited:
do petitioners learn?, Weltwirtschafliches Archiv (Review of World Economics), Vol. 141
No. 4, pp. 612-22.
Feinberg, R.M. and Hirsch, B.T. (1989), Industry rent seeking and the filing of unfair trade
complaints, International Journal of Industrial Organization, Vol. 7 No. 3, pp. 325-40.
Francois, J.F. and Niels, G. (2004), Political influence in a new antidumping regime, Discussion
Paper TI 2004-011/2, Timbergen Institute Erasmus University, Rotterdam.
Goldberg, P. and Knetter, M.M. (1997), Goods prices and exchange rates: what have we
learned?, Journal of Economic Literature, Vol. 35, pp. 1243-72.
Irwin, D. (2005), The rise of US antidumping activity in historical perspective, The World
Economy, Vol. 28 No. 5, pp. 651-68.
Kim, J.B. (2000), Currency conversion in the antidumping agreement, Journal of World Trade,
Vol. 34 No. 4, pp. 125-36.
Knetter, M.M. and Prusa, T.J. (2003), Macroeconomic factors and antidumping filings: evidence
from four countries, Journal of International Economics, Vol. 61, pp. 1-17.
Leidy, M.P. (1977), Macroeconomic conditions and pressures for protection under antidumping
and countervailing duty laws: empirical evidence from the United States, IMF Staff
Papers, Vol. 44 No. 1, pp. 132-44.
Miranda, J., Torres, R-A. and Ruiz, M. (1998), The international use of antidumping: 1987-1997,
Journal of World Trade, Vol. 32 No. 5.
Prusa, T.J. (2006), East Asias antidumping problem, The World Economy, Vol. 29, pp. 743-61.
Prusa, T.J. and Skeath, S. (2002), The economic and strategic motives for antidumping filings,
Weltwirtshaftliches Archiv, Vol. 138, pp. 389-415.

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

Sanguinetti, P. and Bianchi, E. (2005), Trade liberalization, macroeconomic fluctuations and

contingent protection in Latin America, Economia, Vol. 6 No. 2, pp. 147-83.
US Congressional Budget Office (1998), Antidumping action in the United States and around the
world: an analysis of international data, CBO paper, Washinton, DC, June.
Vandenbussche, H. and Zanardi, M. (2006), The global chilling effects of antidumping
proliferation, CEPR Discussion Paper No. 5597, London.
Vandenbussche, H. and Zanardi, M. (2008), What explains the proliferation of antidumping
laws?, Economic Policy, Vol. 23 No. 53, pp. 93-138.
Zanardi, M. (2004), Antidumping: what are the numbers to discuss at Doha?, The World
Economy, Vol. 27, pp. 403-33.
Further reading
Feinberg, R.M. and Reynolds, K.M. (2006), The spread of antidumping regimes and the role of
retaliation in filings, Southern Economic Journal, Vol. 72 No. 4, pp. 877-90.
Lindsay, B. and Ikenson, D. (2001), Coming Home to Roost: Proliferating Antidumping Laws and
the Growing Threat to US Exports, Cato Institute, Center for Trade Policy Studies,
Washington, DC, July.
Prusa, T.J. (1997), The trade effects of US antidumping actions, in Feenstra, R. (Ed.), The Effects
of US Trade Protection and Trade Promotion Policies, University of Chicago Press,
Chicago, IL, pp. 191-213.
Prusa, T.J. (2001), On the spread and impact of antidumping, Canadian Journal of Economics,
Vol. 34, pp. 591-611.
Staiger, R.W. and Wolak, F.A. (1994), Measuring industry specific protection: antidumping in
the United States, Brookings Papers on Economic Activity (Microeconomics), Vol. 1,
pp. 51-103.
Corresponding author
Weifeng Zhou can be contacted at: weifeng.zhou@ua.ac.be

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints

Determinants of
EU antidumping
actions
305

Downloaded by Universiti Malaysia Sabah At 19:34 06 December 2016 (PT)

This article has been cited by:

1. Yi Liu, Jun Deng. 2016. Antidumping under International Fragmentation: Evidence from China. Review
of Development Economics 20:1, 306-316. [CrossRef]
2. Faqin Lin School of International Trade and Economics, Central University of Finance and Economics
(CUFE), Beijing, China Hsiao Chink Tang Office of Regional Economic Integration, Asian Development
Bank, Metro Manila, Philippines Lin Wang Institute of Economics, Chinese Academy of Social Sciences,
Beijing, China . 2015. Anti-dumping petitions and exports. Journal of Chinese Economic and Foreign Trade
Studies 8:3, 194-212. [Abstract] [Full Text] [PDF]
3. Yi Liu, Ning Zhang. 2015. Sustainability of Trade Liberalization and Antidumping: Evidence from
Mexicos Trade Liberalization toward China. Sustainability 7:9, 11484-11503. [CrossRef]
4. Weifeng ZhouFaculty of Applied Economics, University of Antwerp, Antwerp, Belgium Ludo
CuyversFaculty of Applied Economics, University of Antwerp, Antwerp, Belgium, Centre for ASEAN
studies, Antwerp, Belgium, European Insitute for Asian studies, Brussels, Belgium and NorthWest
University, Potchefstroom, South Africa. 2012. The effectiveness of EU's Generalised System of
Preferences. Journal of International Trade Law and Policy 11:1, 65-81. [Abstract] [Full Text] [PDF]