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Free video lecture for mca
- 1. Video Lectures for MBAVideo Lectures for MBA By:By: Video.edhole.comVideo.edhole.com
- 2. Effectiveness of theEffectiveness of the Canadian AntidumpingCanadian Antidumping Regime: Is TradeRegime: Is Trade Restricted?Restricted? Nisha Malhotra and Horatiu RusNisha Malhotra and Horatiu Rus WE would like to thank TARGET (UBC) forWE would like to thank TARGET (UBC) for funding the above projectfunding the above project Video.edhole.com
- 3. MotivationMotivation The large and growing use of antidumping throughout the world: an interesting phenomenon, theoretically and empirically. Do antidumping duties amount to trade protection for domestic producers? • Unambiguously yes, when all foreign firms would be restricted access to the domestic market, but Unclear when only certain firms/countries singled out • Antidumping - by its nature discriminatory among exporters Also relevant from a policy point of view: AD duties - higher prices: penalize industries that use these protected goods and hurt final consumers. Video.edhole.com
- 4. ImportanceImportance A significant amount of work, theoretical and empirical, to study effectiveness and ramifications of AD investigations for an importing country: • There have been quite a few empirical studies carried out analyzing the trade effect of ANTIDUMPING investigations for various countries: US, EU, Mexico and more recently for a few other developing countries. However, the results are not consistent across these studies for the various countries; thus one can not infer the effect of AD in Canada from these studies Research on the use or the effect of the Canadian AD law is quite scarce. Video.edhole.com
- 5. LiteratureLiterature There is no consensusThere is no consensus Prusa (1997) : trade effects of US antidumpingPrusa (1997) : trade effects of US antidumping actionsactions antidumping duties restrict trade named countries.antidumping duties restrict trade named countries. Trade diversionTrade diversion to the ‘non-named’ countriesto the ‘non-named’ countries Vandenbussche et all (1999): case of EuropeanVandenbussche et all (1999): case of European Union.Union. antidumping duties restrict trade ‘named’ countriesantidumping duties restrict trade ‘named’ countries No trade diversionNo trade diversion to the ‘non-named’ countriesto the ‘non-named’ countries Niels (2003) shows that for Mexico there isn’tNiels (2003) shows that for Mexico there isn’t significant trade diversion after AD duty issignificant trade diversion after AD duty is imposed on the named countriesimposed on the named countries.. Does not help infer - trade effects of AD policy in CanadaDoes not help infer - trade effects of AD policy in Canada Video.edhole.com
- 6. Importance of AD in CanadaImportance of AD in Canada Number of Properly documented casesNumber of Properly documented cases Video.edhole.com
- 7. Proportion of AD cases initiated by the countries 0 0.05 0.1 0.15 0.2 0.25 0.3 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 India United States Canada China European Community Video.edhole.com
- 8. Percentage of AD cases initiated in each sector 11 0 3 0 0 7 3 0 4 2 67 2 0 2 9 2 13 8 0 1 1 2 0 1 58 5 1 12 0 16 8 1 3 0 13 2 1 34 13 2 4 0 10 20 30 40 50 60 70 80 Agri M ineral Chem Plast/rub VIII wood X Textile XII XIII Base M etal M ach/AppliancesTransp.equip XX Sectors Canada United States European Community Video.edhole.com
- 9. Canada-Antidumping lawCanada-Antidumping law Canada's anti-dumping and countervailing law isCanada's anti-dumping and countervailing law is contained in thecontained in the Special Import Measures ActSpecial Import Measures Act (SIMA).(SIMA). Canada Border Services Agency (CBSA) formerly - Revenue Canada (CCRA) and the Canadian(CCRA) and the Canadian International Trade TribunalInternational Trade Tribunal (Tribunal)(Tribunal) are jointlyare jointly responsible for administering SIMAresponsible for administering SIMA If an industry in Canada believes that it is beingIf an industry in Canada believes that it is being injured by unfair competition through dumping, itinjured by unfair competition through dumping, it may request the imposition of antidumping dutiesmay request the imposition of antidumping duties by filing a petition with CBSA.by filing a petition with CBSA. Video.edhole.com
- 10. Canada-Antidumping lawCanada-Antidumping law Steps undertaken in an AD investigationSteps undertaken in an AD investigation • Petition filed by the firm/firms on behalf of thePetition filed by the firm/firms on behalf of the industry (petitioners must represent at leastindustry (petitioners must represent at least 25% of domestic production )25% of domestic production ) • CBSA starts an investigation and decidesCBSA starts an investigation and decides whether to begin a formal investigation or dropwhether to begin a formal investigation or drop the case (Sends a copy to the Tribunal)the case (Sends a copy to the Tribunal) • Tribunal’s preliminary Injury findingTribunal’s preliminary Injury finding • CBSA preliminary dumping findingCBSA preliminary dumping finding • CBSA final dumping findingCBSA final dumping finding • Tribunal’s final injury findingTribunal’s final injury finding Video.edhole.com
- 11. Difference in ANTIDUMPINGDifference in ANTIDUMPING legislationlegislation WTO ADA: harmonization of ground principles (normal values, need to prove injury etc.), still allows for national/regional regulatory variation 1. ‘two-track’ AD determination, like the US, unlike the EU prospective system, unlike the US (retrospective) 1. no lesser duty rule: “full duty rule” - unlike the EU regime, but similar the US (more protectionist?) 1. the cumulation principle repeatedly maintained (pool exporters to determine injury) 1. the 2% de minimis principle rarely used, at country level (expect lower diversion if C.A. national) 1. Some results may be interpreted from the perspective of these institutional and procedural differences in AD legislation. Video.edhole.com
- 12. QuestionQuestion Trade effects of AD policy in the manufacturing Industry in Canada. • Are antidumping duties effective in restricting trade from Countries named in the ANTIDUMPING petition? • Is there any trade diversion to other non-named countries thus making AD ineffective as a protectionist tool. Video.edhole.com
- 13. Question-Why?Question-Why? imports might be diverted away from theimports might be diverted away from the alleged source country to the non-allegedalleged source country to the non-alleged countries rendering AD law ineffective incountries rendering AD law ineffective in benefiting the domestic Industry.benefiting the domestic Industry. • beneficiary of AD duties is not the domesticbeneficiary of AD duties is not the domestic industry, but exporters to whom trade isindustry, but exporters to whom trade is diverteddiverted These questions are also relevant from aThese questions are also relevant from a policy point of view; AD duties like anypolicy point of view; AD duties like any other tariff translate into higher prices.other tariff translate into higher prices. • These higher prices penalize industries thatThese higher prices penalize industries that use these protected goods and also hurt finaluse these protected goods and also hurt final consumersconsumers Video.edhole.com
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- 15. DATADATA Data : 1990 - 2000 • Level of Imports: Detailed 10-digit HS-level import data was obtained from Statistics Canada. • Antidumping Data: Canadian antidumping measures was constructed using the report from the Canadian Border Services Agency’s Historical Listing of Antidumping Cases. • confirmed from WTO Antidumping Gateway and complemented from Statistics Canada’s directory of HS codes (The ANTIDUMPING data is available from the authors. nisha@interchange.ubc.ca/ horatiu@interchange.ubc.ca)Video.edhole.com
- 16. Empirical SpecificationEmpirical Specification lnm: Log Importslnm: Log Imports a: affirmativea: affirmative n: negativen: negative u: Undertakingu: Undertaking t(1-3): Years after ADt(1-3): Years after AD is filed; t1: one yearis filed; t1: one year after petition is filedafter petition is filed Interaction termsInteraction terms Include yearInclude year dummiesdummies Models:Models: Ordinary LeastOrdinary Least SquareSquare RegressionsRegressions Fixed Effect ModelsFixed Effect Models Video.edhole.com
- 17. ResultsResults Sizeable trade restriction effects: strong evidence of substantial (76%) trade restriction from named countries, one period after the imposition of duties a time-effective protectionist tool: initial drop not followed by subsequent import decreases in later periods no strong indication of an “investigation”/“harassment” effect of Canadian AD: a negative dumping determination has no significant trade effects for both named and non- named sources (transparency, prospective AD?) Canadian Antidumping - timely and effective as a protectionist instrument Video.edhole.com
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- 19. Comparing the resultsComparing the results Prusa(2001): substantial (50%) import drop from the named sources in the first period Vandenbussche et al.(2001): comparable imports restrictions of 67% determination Video.edhole.com
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- 21. Canadian AD = timely and effective as protectionist tool: significant reduction in imports from named sources, concentrated in the period immediately after the imposition of duties little to no evidence of imports being diverted toward non-named countries or firms Possible refinements: does product homogeneity/heterogeneity matter? Why no effect for undertakings? ConclusionConclusion Video.edhole.com
Editor's Notes
- In my presentation today, I will talk a little about why some countries might undertake dumping and the Antimdumping legislation in the US I he main aim of this presentation is to consider, the impact that restricting imports might have on domestic competition I am not here to discuss whether AD legislation is just or not. But to look at some cases in the chemical industry and see the impact of import restriction on domestic competition.
- Dumping: Surplus Shock or Demand shock Strategic behaviour: Entry; Predatory pricing behavior Price competition between markets
- The process takes about seven months from when the CBSA starts an investigation until the Tribunal makes a final decision on the injury matter. The process takes about seven months from when the CBSA starts an investigation until the Tribunal makes a final decision on the injury matter. The process takes about seven months from when the CBSA starts an investigation until the Tribunal makes a final decision on the injury matter. The process takes about seven months from when the CBSA starts an investigation until the Tribunal makes a final decision on the injury matter.
- Antidumping an important trade policy that affects a large proportion of imports in Canada, and requires better understanding of its use and its effect on trade.
- Chemical industry-Is the second largest user of Antidumping duty after the steel industry An important feature of the chemical industry is that the optimum scale of production is rather large. Implying that one would observe fewer and larger producers in an industry. In this industry the impact of AD legislation on competition is relatively strong. Since, the domestic producers are few in number. Between 1990 and 1999, there were 55 petitions for import restriction Out of which 73% of the cases were filed by single firms. (IN other industries you would observe a few firms getting together to file a petition) And, in most of these cases single firms were the sole producers of the product. (statistics-can’t say because the reports where I go the data tend to mention the larger producers)
- Here is a list of the cases for which I was able to get complete data. These cases account for 22 of the 55 cases Let me explain this table- Take polyvinyl alcohol, 4 petitions, or cases were filed against 4 countries. 3 of these cases were given an affirmative decision and 1 was given a negative decision So imports from 3 countries were imposed with ADD Most of these products are produces by a very few firms and this is where one has to be concerned about reducing competition. Sulfanilic acid also has only one large producers, an affirmative decision in this case also somewhat eliminates the domestic competition.
- Rhone-Poulenc. Facing competition from imports coming in from china. The petitioner not only filed a case under the US AD ligislation but also under the EU AD legislation. Thus restricting imports from china in both it’s market.
- The Antidumping legislation in the US is designed to protect the domestic industry from unfair imports. In case imports are being dumped in the country, AD authorities would impose restrictions on the imports This would protect domestic industries from unfair trade but at the same time this would reduce competition in the domestic markets This shouldn’t be of concern if the domestic market had a large number of producers but for industries consisting of a few producers this can drastically impact the domestic competition. Chemical industry-one important feature of chemical industry is that the optimum scale of production are rather large. Which would imply that one would observe fewer producers in an industry. And, of course, the benefits or gains from competition would be adversly affected. There might be lesser of an incentive to innovate and grow.