The ‘Market’ for contingent protection

Anti‐dumping and countervailing duty law and policy has, for several decades, been one of the most contentious issues affecting trading relations between members of the World Trade Organization. A major concern among researchers and policy‐makers is that the decision‐making process of regulatory authorities responsible for the administration of anti‐dumping and countervailing duty (AD/CVD) laws is biased in favour of providing protectionist outcomes for national applicant firms and industries. In this paper a new, broader approach for testing empirically AD/CVD outcome decisions is advocated that analyses the provision of contingent protection as the outcome of a quasi‐market process involving supply and demand behaviour played out in a quasi‐market context susceptible to market failure. This approach provides, arguably, a fairer test of AD/CVD outcomes. Using data from Australia, historically a heavy user of AD/CVD laws and policy, the paper finds support for the hypothesis that regulatory process bias including administrative and statutory biases, are important explanators of AD/CVD outcomes. Moreover the findings of this paper suggest that failure to include variables capturing these effects in other studies that have modelled empirically AD/CVD outcomes may have led to missing variable bias and false conclusions.