Anti-dumping is used by a small number of countries not to ensure that world trade is fair and competitive, but to create monopolies and favour large firms particularly in large and concentrated industries, argues this Centad working paper.

An exploratory analysis of anti-dumping use in the most active user countries

By Aradhna Aggarwal
Head, Department of Business Economics, University of Delhi

This paper investigates the pattern of anti-dumping use, at the industry and firm level, across most active anti-dumping user countries, in the 1995-2004 period. The objective is to show that resourceful countries use anti-dumping mechanisms asymmetrically, and within these countries the presence of anti-dumping policy primarily benefits powerful and monopolistic firms particularly in large and concentrated industries.

The study highlights the following propositions:

  • Pecuniary and economic costs and the need for legal expertise/capacity associated with the use of anti-dumping deter use of the tool by a large number of countries, particularly less advanced developing countries.
  • Large firms can support the litigation costs associated with the investigation process and can lobby to bias decisions in their favour. They are therefore more likely to pursue anti-dumping.
  • Use of anti-dumping is likely to be concentrated in industries that are characterised by scale economies and a small number of powerful firms, particularly in the intermediate goods industries.

The study analyses trends and patterns in anti-dumping use globally and in each of 18 active user countries that have accounted for over 90% of total anti-dumping initiations during 1995-2004. Then, it examines anti-dumping use for each of the active user countries, notification-wise, target-country-wise and product-wise.

It investigates:

  • Distribution of anti-dumping filings by the number of countries named.
  • Distribution of anti-dumping cases by the number of products named in the petition.
  • Sectoral patterns of anti-dumping use at two- and four-digit levels.
  • Distribution of anti-dumping cases by the number of petitioning firms.
  • Use of anti-dumping by dominating firms.

The study finds, first, that only 18 countries across the world account for 90% of total use of anti-dumping. These include five OECD countries, namely the US , EU, Canada , Australia and New Zealand , and 13 developing countries. These developing countries are large and relatively better-off; less advanced developing countries are excluded from use of the tool. They are restricted in use of the tool either due to the costs associated with it and/or the legal expertise required for its use.

Second, within user countries, anti-dumping investigations tend to be disproportionately concentrated in a few industries. Third, in terms of industry or sectoral concentration of anti-dumping initiations, the US and Canada top the list. Among new users, Venezuela, Colombia and Indonesia exhibit a high degree of single-product concentration, with over 67%, 57.6% and 66.7% of cases, respectively, filed in the steel sector alone.

Fourth, within active user industries, there are large and powerful firms that dominate the use of anti-dumping. In most countries, one or two firms account for a large number of petitions for initiating the process of investigation. Since the market share of petitioners should not be less than 25%, under anti-dumping rules, these firms hold a minimum share of 25%. In practice, however, they account for a major share in the industry.

Finally, there are not many firms that file anti-dumping cases. Those that do, do it over and over again to target different competitors at different times. It is therefore a rent-seeking instrument used by powerful monopolists in their pursuit of seeking protection.

The paper concludes that instead of countering monopolies, anti-dumping actually facilitates anti-competitive and unfair behaviour, and, instead of guaranteeing that world trade is fair and competitive, distorts it at the global, country and industry level.