WPS4014

# **The World Trade Organization and Antidumping in Developing Countries**

## **Chad P. Bown**<sup>**†**</sup> **Department of Economics & International Business School Brandeis University**

### **Abstract**

Since the 1995 inception of the World Trade Organization (WTO), developing countries have become some of the most frequent users of the WTO-sanctioned antidumping trade policy instrument. This paper exploits newly available data to examine the pattern of actual industrial use of antidumping in nine of the major “new user” developing countries – Argentina, Brazil, Colombia, India, Indonesia, Mexico, Peru, Turkey and Venezuela. For these countries we are able to match data from two newly available sources: data on production in 28 different 3-digit ISIC industries from the _Trade, Production and Protection Database_ to data on antidumping investigations, outcomes and imports at the 6-digit Harmonized System (HS) product level from the _Global Antidumping Database_ . Our econometric analysis is to estimate a two-stage model of the industry-level decision to pursue an antidumping investigation and the national government’s decision of whether and how much antidumping import protection to provide. First, we find evidence consistent with the theory of endogenous trade policy: larger industries that face substantial import competition are more likely to pursue an antidumping investigation, and larger and more concentrated industries receive greater antidumping protection from imports. Second, we find that industries that use antidumping are more likely to face the changing economic conditions specified by the technical evidentiary criteria of the WTO Antidumping Agreement: industries that face rapidly falling import prices are more likely to pursue an investigation, and industries that are more susceptible to cyclical dumping due to greater capital investment expenditures and that face rapidly increasing competition from imports receive greater antidumping protection.

JEL No. F13 Keywords: Antidumping, Developing Countries, WTO, Political Economy World Bank Policy Research Working Paper 4014, September 2006 The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the view of the World Bank, its Executive Directors, or the countries they represent. Policy Research Working Papers are available online at <u>http://econ.worldbank.org.</u> ___________________

> **†** Correspondence: Department of Economics, MS 021, Brandeis University, PO Box 549110, Waltham, MA, 02454-9110 USA. tel: 781-736-4823, fax: 781-736-2269, email: <u>cbown@brandeis.edu, web: http://www.brandeis.edu/~cbown/.</u>

> I gratefully acknowledge financial support from the Development Economics Research Group at the World Bank. Thanks to Rachel McCulloch, Meredith Crowley, Jim Durling and Jorge Miranda for useful discussions and comments on an earlier version.