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Antidumping protection hurts exporters: firm-level evidence from france


Academic year: 2023

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While anti-dumping protection increases the domestic sales of the more "traditional" non-exporting firms in the protected market by about 5%, it negatively affects firm-level exports of similar products to those protected. Finally, we find that exporters' productivity decreases while non-exporters' productivity increases under antidumping protection. It is also important to note that anti-dumping policy is an EU-wide policy that applies to all European countries, which will prove to be a useful feature of our empirical identification strategy to estimate the effects of the anti-dumping protection on French firms.

But for exporters, we find that antidumping protection decreases their exports to foreign countries by about 8% and this decrease is not compensated by an increase in their domestic sales. A first plausible explanation is that antidumping protection at home limits French exporting firms' ability to lower their prices on non-EU export markets. A third likely explanation is that antidumping protection may adversely affect those exporters that outsource part of their production to the countries targeted by the antidumping protection.

The firm-level exports of these "global firms" fall by 16% under anti-dumping protection, which is significantly higher than the average decline in firm-level exports of all exporters of 8% during the same period. 7 Anti-dumping protection on imports of leather shoes from China was not supported by all EU shoe producers. The decrease in imports, typically due to anti-dumping protection, can also negatively affect business productivity.

Arguably, anti-dumping protection can be thought of as an increase in short-term trade costs.


Their findings suggest that trade liberalization targets initially high-productivity firms that become even more efficient after trade liberalization. Translated into AD protection, this would imply that we expect trade protection to generate efficiency gains for the initially low-productivity firms. In Table 1 we provide an overview of all new AD cases21 that started in 1997 and 1998 and for which we included all the income statement variables necessary for our analysis and for which AMADEUS provided us with observations in the previous years and observations during the AD protection.

In total, our data set includes 20 new22 AD investigations when counting by product group, which corresponds to 57 cases when counting cases by defending country. For each case, Table 1 shows the year of initiation, the corresponding 4-digit industry NACE revision 1, the average number of 8-digit HS codes involved, the year of decision, the average duty and the importing countries involved. We collect firm-level data for the firms in the French import-competing sector based on the 4-digit NACE sector in which the product under study was classified.23 In 12 of the new cases (by product group), the outcome of the case was protection. 24 Under the Sunset Clause, AD protection remains in place for five consecutive years.25 Duties vary between 10%.

Furthermore, we observe that exporters are more productive and have more foreign subsidiaries than non-exporters.

Empirical Methodology and Results 1. Antidumping Protection and Exporters

From column 1, we find that AD protection results in a significant decrease in export turnover of about 8% on average in the protected sectors. This suggests that even those exporting firms that do not have branches abroad suffer from AD protection in terms of their foreign sales. In Table 4, we report the results of a similar equation as in (1), but we now focus on the effect of AD protection on domestic sales.

So far, we have focused on the effects of AD protection on exporters' intensive margin. AD protection has a small but significant positive effect on the probability of starting to export for those firms that were not original exporters before protection. The expansion of the domestic market size for non-exporters as a result of the AD protection is a likely explanation for this observation.

The effect of AD protection on the extensive margin is small, especially compared to the effect AD protection has on the intensive trading margin documented in the previous section. In that sense, we would expect the effect of AD protection to have a different effect on exports within versus the EU. The results of the effect of AD protection are listed in Table 6, where we show the results of the following dif-in-dif estimation.

From the results in Table 6, we clearly see that AD protection has a strong negative effect of about 37% on the volume of extra-EU exports while intra-EU exports. These results also indicate that the AD effect previously measured at the firm level, where we estimated the effect of AD protection to reduce firm-level exports between about 8 and 24%, is a "lower bound" estimate as due to the multi-product nature of businesses. In fact, for the products in the AD protection cases, there is a strong positive correlation between product-level imports and exports of 79%.

The interaction effect indicates whether the productivity effect of AD protection is different for initial exporters than for purely domestic firms. Extending the findings of Konings and Vandenbussche (2008), the effect of AD protection on productivity is positive and statistically significant. The interaction of the AD effect with initial exporter status is always negative and larger than the direct effect of AD protection.

When we interact the initial share of exports in turnover instead of the initial_exporter dummy in column (3) of Table 10 , we again observe that the interaction effect is negative and significant and larger than the effect of the protective AD dummy. Indeed, column (3) suggests that the effect of AD protection on firm-level productivity is particularly negative for export-intensive firms.


Finally in the fourth column we apply an approach suggested by Bertrand et al. 2004) which collapses the treatment period into one period and the pre- and post-treatment period into another period. And fourth, exporters who belong to a global network and engage in fragmentation of production may be subject to anti-dumping measures, which increase their production costs and reduce exports. These considerations are particularly important given the recent large increase in the number of new anti-dumping investigations.

In the first half of 2008, the figure was 22% higher than in the same period of the previous year. In the original data set, initial exporters represent 25% of all firms, but when dropping the firms with missing observations on operating income and employment, the number of initial exporters rises to 33%, which means that especially small non-exporters do not report all variables. 0.081) Year Dummies Yes Yes Yes Yes Yes Yes Yes Yes Fixed Effects Yes Yes Yes Yes Yes Yes Yes Yes Yes.

Notes: (1) Products in termination cases serve as a control group in the difference-in-difference regressions reported in the table. Year Dummies Yes Yes Yes Yes Yes Yes Yes Yes. Fixed product effects Yes Yes Yes Yes Yes Yes Yes Yes. Bown., 2003, Antidumping and Retaliation Threats, Journal of International Economics, Vol. 2009), A Monitoring Update to the Global Anti-Dumping Database, May. Crowley, 2007, “Trade Deflection and Trade Depression”.

Rodriguez-Clare (2009), Trade Policy under firm-level heterogeneity in a small economy, Journal of International Economics, issue 1, pp. McCalman, 2008, "The Impact of Trade Liberalization on Productivity within and across Industries: Theory and Evidence", Manuscript, August. 1984), Import Protection as Export Promotion: International Competition in the Presence of Oligopoly and Economies of Scale.

The Trade Effects of US Antidumping Actions, in Feenstra, R. Ed.), The Consequences of US Trade Protection and Promotion Policies. Wolak Trade Effects of Antidumping Investigations: Theory and Evidence", in Alan Deardorff and Robert Stern (eds.) Analytical and Negotiating Issues in the Global Trading System, University of Michigan Press, 1994. Wolak .1995,"Differences in the Use and Effects of Antidumping Law Across Import Sources", in Anne O.

The Long and the Short of Canadian-US Trade Liberalization and the Dimensions of Efficiency Change in Mexican Manufacturing Industries. What Explains The Proliferation of Antidumping Laws?, Economic Policy, January, pp Trade, Quality Upgrading and Wage inequality in the Mexican Manufacturing Sector”, Quarterly Journal of Economics, 123(2).

Figure 1: Evolution of Tariffs versus Antidumping Measures
Figure 1: Evolution of Tariffs versus Antidumping Measures


Figure 1: Evolution of Tariffs versus Antidumping Measures
Figure 2: Initial Export Shares of Exporters
Table 3: Antidumping Protection and the Intensive Margin of Exports  (1)
Table 5: Antidumping Protection and the Extensive Margin.

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