Antidumping duties, undertakings, and foreign direct investment in the EU

We study the effects of EU antidumping policy when foreign firms can ‘jump’ antidumping duties through foreign direct investment (FDI) in the EU. We show that duty jumping or duty pre-empting FDI occurs if the EU administration has broader objectives than protecting EU industry's profitability and if cost advantages of foreign firms are transferable abroad. The (expectation of) price undertakings reduces the incentives to engage in FDI and may even discourage FDI as long as products are not too differentiated. The results are consistent with recent empirical findings on antidumping jumping FDI.     

Import Diversion under European Antidumping Policy

This paper studies empirically the effects of European antidumping cases on trade diversion from importers named in an antidumping investigation, to countries not named in the investigation. For this purpose we use a unique data set at the 8-digit product level. The amount of import diversion can be regarded as an indication of the effectiveness of antidumping policy. We find that trade diversion in the European Union caused by antidumping actions—in contrast to the United States—is limited, suggesting that the European Union's antidumping policy is more effective in keeping imports out. This result holds even after controlling for selection bias in the antidumping investigation procedure. A number of explanations for this difference in trade diversion as a result of antidumping policy between the European Union and United States are formulated.     

Verti-zontal differentiation in export markets

Many trade models of monopolistic competition identify cost efficiency as the main determinant of firm performance in export markets. To date, the analysis of demand factors has received much less attention. We propose a new model where consumer preferences are asymmetric across varieties and heterogeneous across countries. The model generates new predictions and allows for an identification of horizontal differentiation (taste) clearly distinguished from vertical differentiation (quality). Data patterns observed in Belgian firm–product level exports by destination are congruent with the predictions and seem to warrant a richer modelling of consumer demand.     

Disfavored Nations: Anti‐Dumping at the WTO

The proliferation of Anti‐Dumping actions may be explained by the Most Favored Nation rule of safeguards, the advantages of unilateral retaliatory measures as an alternative to formal dispute resolution, and the exercising of discipline in a risk‐sharing agreement. Use of unilateralism is attractive to developing members that are constrained by legal capacity. The expression of the Anti‐Dumping Agreement appears to be a hybrid of rules and standards. However, a lack of interpretive guidance from the WTO and the opportunities for discretion in the implementation of rules render them standards in a shroud of rules. This is due to the presence of large proxy spaces, or the domestic investigative authority being substantially the arbiter of satisfaction with the agreement.     

Antidumping protection hurts exporters: firm-level evidence

This paper estimates the impact of antidumping protection on export behavior of French firms covered by antidumping cases. Traditional models suggest that all domestic firms covered by antidumping protection should benefit from protection. However, in an environment of globally fragmented supply chains, firms may be damaged by protection if duties increase input costs for firms covered by the protection. Results from this paper indicate that while non-exporting firms benefit from protection, domestic sales of export-oriented firms and exports in general, are depressed due to protection. This effect is more severe for multinational firms.     

Accounting for Stylised Facts about Recent Anti‐dumping: Retaliation and Innovation

Recent work has found certain stylised facts about anti‐dumping (AD) actions. (i) AD actions are mostly between industrial and developing countries; (ii) developing countries use AD to retaliate against industrial countries; and (iii) AD is concentrated in R&D‐intensive industries. This study develops an analytical framework that can account for these empirical findings. The model suggests that market expansions and/or improvement in R&D capability in the South are essential in avoiding AD wars with the North. Interestingly, stricter enforcement of intellectual property rights in the South has little effect on stopping AD wars between the North and the South.     

Growth, distance to frontier and composition of human capital

We examine the contribution of human capital to economy-wide technological improvements through the two channels of innovation and imitation. We develop a theoretical model showing that skilled labor has a higher growth-enhancing effect closer to the technological frontier under the reasonable assumption that innovation is a relatively more skill-intensive activity than imitation. Also, we provide evidence in favor of this prediction using a panel dataset covering 19 OECD countries between 1960 and 2000 and explain why previous empirical research had found no positive relationship between initial schooling level and subsequent growth in rich countries.     

Is there Regional Tax Competition? Firm Level Evidence for Belgium

Summary This is the first paper that looks at regional tax competition within one single country. In many countries in Europe, regions within a country differ substantially in their economic development and attractiveness to firms. Belgium is a typical example of a country where the economic situation of its three regions is very different. Our findings are indicative of regional tax competition, with a lower Effective Tax Rate (ETR) in the peripheral region of Wallonia than in Flanders. In addition to location variables, our empirical model explaining firm level heterogeneity in ETRs includes firm characteristics, sector membership and variables capturing statutory tax breaks. We thank the Research Council of the Catholic University of Leuven for funding this research. A special thanks goes to Jozef Konings, Willem Buijink, Laurence van Lent, Wim Moesen, Christophe Croux and Frans Vanistendael, for providing useful feedback on this project. We also thank participants of a LICOS-K.U.Leuven seminar and a doctoral workshop at the Universities of Maastricht and Antwerp for useful comments.     

Is European antidumping protection against Central Europe too high?

Is European Antidumping Protection against Central Europe Too High? —In this paper, the author finds that the average level of European antidumping protection against Central Europe in 1985-1990 was by 14 to 20 percentage points too high. Her simulation results on the Central European antidumping cases show only ‘de minimis’ injury margins. Hence, the European Commission would have dismissed all European antidumping complaints against Central European imports and no antidumping measures would have been imposed. In view of these results, the author feels that European antidumping legislation and its implementation seriously undermine the credibility of the Association Agreements recently signed between the European Union and the countries of Central Europe.