A Centennial of Anti‐dumping Legislation and Implementation: Introduction and Overview

A century has passed since the Government of Canada adopted the first recorded anti‐dumping law in 1904. The Canadian legislation was soon followed by similar legislation in most of the major trading nations in the industrialised world prior to and after World War I. Anti‐dumping provisions were later incorporated into the General Agreement on Tariffs and Trade (GATT) following World War II. Nowadays, virtually all of the industrialised and developing countries in the world economy have adopted anti‐dumping legislation. In view of the long and increasingly widespread use of anti‐dumping measures, we marked the centennial of Canada's 1904 legislation with a symposium at the University of Michigan on 12 March, 2004. The symposium papers document the experiences with anti‐dumping and then ask whether and how anti‐dumping can be reformed. Although we all would probably agree that the best solution would be to retract all anti‐dumping legislation, this is unlikely to happen in the foreseeable future. Anti‐dumping laws serve a variety of purposes, and powerful political forces stand in the way of eliminating these laws. Anti‐dumping provides a stronger and more focused means of safeguards protection against surges of imports than GATT‐legal safeguards laws permit. Anti‐dumping also formalises a meaning for ‘unfair trade’ that, though essentially meaningless from an economic standpoint, strikes a chord in public perception. And finally, in spite of its appearance of being constrained by objective administrative rules, anti‐dumping in practice is a potent political tool that governments are able to manipulate in order to satisfy powerful constituents. With all this going for it, anti‐dumping is unlikely ever to be relinquished as an economic policy tool by governments.     

Does Growth Encourage Factor Price Equalization?

This paper first notes the importance of "one-cone" versus "multi-cone" equilibria in the Heckscher–Ohlin model of international trade, then asks whether economic growth in neoclassical growth models leads toward one or the other. The one-cone equilibrium arises with internationally similar factor endowments. It has a single set (cone) of relative factor endowments, within which countries diversify and have global factor price equalization (FPE) under free trade. The multi-cone equilibrium arises with larger factor endowment differences. It has FPE within cones, but not between them. The two configurations differ in important ways. The paper examines several neoclassical trade-and-growth models, distinguished by their assumptions about saving, asking whether factor endowments converge into a single cone. None of the models suggests convergence, while some strongly imply that countries will end up in different cones. This suggests a preference for the multi-cone version of the model.     

Effects of smuggling under african conditions: A factual,institutional and analytic discussion

Zusammenfassung Wirkungen des Schmuggels unter afrikanischen Bedingungen. Eine faktische, institutionelle und analytische Diskussion.— Die Verfasser untersuchen die faktischen und institutionellen Bedingungen des Schmuggels in Afrika und verwenden sie, um einige Modifikationen am theoretischen Modell des Schmuggels von Bhagwati und Hansen zu begründen. Aus diesen Modifikationen ergeben sich einige Gründe, die den Schmuggel für die beteiligten L?nder als vorteilhaft erscheinen lassen. Zu den Annahmen, die diese Modifikationen bewirken, geh?rt erstens, da\ illegaler Handel keine gr?\eren realen Kosten verursacht als legaler Handel, zweitens, da\ der Schmuggel das gleichzeitige Auftreten zweier verschiedener Preise für das gleiche Gut in einem Land erlaubt, drittens, da\ Handelsbeschr?nkungen Verzerrungen auf den Güterm?rkten hervorrufen, die durch den Schmuggel beseitigt werden, und viertens, da\ die Rationierung importierter Zwischenprodukte die allgemeinen Produktionsm?glichkeiten verringert.

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Résumé Les effets de la contrebande sous les conditions africaines. Une discussion des faits, des institutions et de l’analyse. — Les conditions de la contrebande en Afrique, données par des faits et des institutions, sont examinées et utilisées pour motiver quelques modifications du modèle théorique de contrebande par Bhagwati et Hansen. Ces modifications donnent quelques raisons pourquoi on peut attendre que la contrebande serait avantageuse pour les pays impliqués. Les hypothèses qui créent ces modifications incluent: (i) que le commerce illégal ne cause plus de co?ts réels que le commerce légal; (ii) que la contrebande permet la présence simultanée de deux prix différents pour la même marchandise dans un pays; (iii) que les restrictions au commerce augmentent les déformations aux marchés qui sont disparues par la contrebande; (iv) que le rationnement des importations des produits intermédiaires réduit les possibilités générales de la production.

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Resumen Los efectos del contrabando bajo condiciones africanas: una discusión institucional, analítica y de los hechos. — Se examinan los hechos relacionados con y las condiciones institucionales del contrabando en el Africa con el fin de motivar varias modificaciones del modelo teórico de contrabando de Bhagwati y Hansen. Estas modificaciones proveen varias explicaciones para la hipótesis de que el contrabando sería beneficioso para los países participantes. Los supuestos que generan estas modificaciones incluyen: (i) que el comercio ilegal no justifica costos reales más altos que el comercio legal, (ii) que el contrabando permite la aparición simultánea de dos precios diferentes para el mismo producto en un país, (iii) que restricciones al comercio dan lugar a distorsiones en los mercados de bienes que son superadas por el contrabando y (iv) que el racionamiento de bienes intermedios importados reduce las posibilidades totales de producción.

     

Developing country growth and developed country response

This paper makes a theoretical argument that growth in developing countries is likely to worsen the income distribution in developed countries and lead to a protectionist response that undermines the incentives for developing country growth. The model for this purpose is the two-cone version of the Heckscher–Ohlin (HO) trade model, in which countries have different factor prices even with free trade, and in which they produce mostly different groups of goods. In this model, unlike the HO model with factor price equalization, growth by the poor country expands the output of its capitalintensive good, which is also the labour-intensive good of the other country. Regardless of whether factors are mobile or immobile across sectors, this reduces the real wages of factors that are either intensive or specific in the labour-intensive sector of the rich country. The paper argues that this will then lead to the rich country restricting trade. This, in turn, will lower the return to capital in the poor country and reduce the incentive for further growth.     

Buyer Concentration in Markets for Developing Country Exports

The authors explore the implications of buyer concentration in markets for primary commodity exports of developing countries. Simple partial equilibrium models of monopsony and oligopsony show that the best available policy for the exporting country may be to tax exports so as to extract some of the profits of the monopsonist, even though doing so will actually worsen the distortion caused by the buyer's market power. They also explore the general equilibrium implications of these results for factor markets and for patterns of trade.     

Diverging Populations and Endogenous Growth in a Model of Meaningless Trade

The endogenous growth literature raises the possibility that countries may grow without bound in terms of per capita income, and that they may do so at different rates. This possibility also exists in neoclassical growth models with diverging populations—populations that grow at different rates. In both cases, however, this means that international inequality of per capita incomes will not only exist but also get worse over time. This paper examines that possibility within a very simple one-sector model that allows for both diverging populations and endogenous growth.     

Multilateral,Regional and Bilateral Trade‐Policy Options for the United States and Japan

We have used the Michigan Model of World Production and Trade to simulate the economic effects on the United States, Japan, and other major trading countries/regions of the Doha Round of WTO multilateral trade negotiations and a variety of regional/bilateral free trade agreements (FTAs) involving the United States and Japan. We estimate that an assumed reduction of post‐Uruguay Round tariffs and other barriers on agricultural and industrial products and services by 33 per cent in the Doha Round would increase world welfare by $686.4 billion, with gains of $164.0 billion for the United States, $132.6 billion for Japan, and significant gains for all other industrialised and developing countries/regions. If there were global free trade with all post‐Uruguay Round trade barriers completely removed, world welfare would increase by $2.1 trillion, with gains of $497.0 billion (5.5 per cent of GNP) for the United States and $401.9 billion (6.2 per cent of GNP) for Japan. Regional agreements such as an APEC FTA, an ASEAN Plus 3 FTA, and a Western Hemisphere FTA would increase global and member country welfare but much less so than the Doha multilateral trade round would. Separate bilateral FTAs involving Japan with Singapore, Mexico, Chile and Korea, and the United States with Chile, Singapore and Korea would have positive, though generally small, welfare effects on the partner countries, but potentially disruptive sectoral employment shifts in some countries. There would be trade diversion and detrimental welfare effects on some non‐member countries for both the regional and bilateral FTAs analysed. The welfare gains from multilateral trade liberalisation are therefore considerably greater than the gains from preferential trading arrangements and more uniformly positive for all countries.     

Weak links in the chain of comparative advantage

This paper examines the proposition that trade in many commodities can be explained by a chain of comparative advantage. It is first shown, in a two-country, two-factor model, that trade accords with the ranking of goods by factor intensity if there are unequal factor prices, free trade, and only final goods. This result continues to hold if either trade impediments or intermediate products are introduced. However, if both are present, the chain proposition breaks down. Finally, with many countries, it is shown that trade impediments alone can invalidate the chain proposition.     

Patterns of Trade and Growth across Cones

This paper examines the implications of the Heckscher-Ohlin (HO) Model for the patterns of production and trade that will emerge as a country grows. It focuses primarily on world equilibria that include two or more cones of diversification. Starting with the textbook model of two factors and two goods, growth paths for production and trade are derived in terms of a country's capital-labor ratio relative to that of the world. With additional goods and countries, multiple cones create a ladder of comparative advantage that a country will climb as it accumulates capital relative to the world. With additional factors as well, more complicated patterns can emerge. In a three-factor model based on Krueger (1977), a country with fixed land, growing labor, and faster growing capital can first work its way down the ladder of comparative advantage before climbing back up. Using a graphical representation due to Leamer (1987) of a more general three-factor model, cones of diversification with large numbers of goods take the form of polygons that a growing country may pass through, then cross between. In all cases, the lesson of the HO Model is that growth causes repeated and extreme changes in patterns of specialization and trade over time.