This document discusses a study on the effectiveness of Canada's antidumping regime in restricting trade. It provides context on antidumping investigations and debates in the literature around whether such duties restrict trade from named countries or divert trade to non-named countries. The study uses data from 1990-2000 to examine the impact of Canadian antidumping measures on imports at the 10-digit HS code level. The results suggest Canada's antidumping duties are an effective protectionist tool, significantly reducing imports from named countries by 76% in the first period after duties are imposed, with little evidence of trade being diverted to non-named countries.

1. Effectiveness of the
Canadian Antidumping
Regime: Is Trade
Restricted?
Nisha Malhotra and Horatiu Rus
WE would like to thank TARGET (UBC) for
funding the above project

2. Motivation
 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.

3. Importance
 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.

4. Literature
There is no consensus
 Prusa (1997) : trade effects of US antidumping
actions
 antidumping duties restrict trade named countries.
 Trade diversion to the ‘non-named’ countries
 Vandenbussche et all (1999): case of European
Union.
 antidumping duties restrict trade ‘named’ countries
 No trade diversion to the ‘non-named’ countries
 Niels (2003) shows that for Mexico there isn’t
significant trade diversion after AD duty is
imposed on the named countries.
Does not help infer - trade effects of AD policy in Canada

5. Importance of AD in Canada
Number of Properly documented cases

6. 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

7. 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

8. Canada-Antidumping law
 Canada's anti-dumping and countervailing law is
contained in the Special Import Measures Act
(SIMA).
 Canada Border Services Agency (CBSA) formerly
- Revenue Canada (CCRA) and the Canadian
International Trade Tribunal (Tribunal) are jointly
responsible for administering SIMA
 If an industry in Canada believes that it is being
injured by unfair competition through dumping, it
may request the imposition of antidumping duties
by filing a petition with CBSA.

9. Canada-Antidumping law
 Steps undertaken in an AD investigation
• Petition filed by the firm/firms on behalf of the
industry (petitioners must represent at least
25% of domestic production )
• CBSA starts an investigation and decides
whether to begin a formal investigation or drop
the case (Sends a copy to the Tribunal)
• Tribunal’s preliminary Injury finding
• CBSA preliminary dumping finding
• CBSA final dumping finding
• Tribunal’s final injury finding

10. Difference in ANTIDUMPING
legislation
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.

11. Question
 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.

12. Question-Why?
 imports might be diverted away from the
alleged source country to the non-alleged
countries rendering AD law ineffective in
benefiting the domestic Industry.
• beneficiary of AD duties is not the domestic
industry, but exporters to whom trade is
diverted
 These questions are also relevant from a
policy point of view; AD duties like any
other tariff translate into higher prices.
• These higher prices penalize industries that
use these protected goods and also hurt final
consumers

14. DATA
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)

15. Empirical Specification
 lnm: Log Imports
 a: affirmative
 n: negative
 u: Undertaking
 t(1-3): Years after AD
is filed; t1: one year
after petition is filed
 Interaction terms
 Include year
dummies
Models:
 Ordinary Least
Square
Regressions
 Fixed Effect Models

16. Results
 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

18. Comparing 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

20.  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?
Conclusion