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Economía 6.2 (2006) 178-182

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Osmel Manzano: This paper represents an important contribution to the literature on the effects of trade liberalization in Latin America. Antidumping measures are generally seen as providing governments with the tools they need to respond to imports that are deemed to have unfairly harmed domestic producers. According to the most straightforward (or even naïve) interpretation, these measures serve to correct for imperfections in international markets stemming from noncompetitive behavior on the part of foreign firms and governments. Some analysts consider antidumping measures, together with other forms of contingent protection, to be critical for the success of the trade liberalization process taking place around the world. Dam argues that the inclusion of these exceptions was crucial for the success of the early GATT rounds, because such instruments offered assurances to local producers that the liberalization process would be accompanied by measures of protection against unfair competition.1

Latin America and the Caribbean have a long history with the liberalization process. As Sanguinetti and Bianchi argue, however, little research has been done on the use of antidumping measures in the region. Their main findings are important. The evidence presented here shows that the initiation of antidumping measures is affected by negative macroeconomic conditions. In particular, real exchange rate appreciations and GDP contractions increase the likelihood that an antidumping measure will be initiated. The authors also find that the likelihood that an antidumping measure will be initiated is not correlated with variables related to political-economy arguments about the use of such measures—specifically, with industry concentration. Finally, the authors find that the likelihood of an initiation rises if the level of protection previously received by a sector (measured by the lagged value of the tariff level) was high.

The next issue to be addressed involves the implications of these results for policymaking purposes. Specifically, are the design and use of antidumping measures in Latin America welfare improving? The authors suggest that any [End Page 178] negative welfare effects are likely to be small. Nevertheless, a more precise and in-depth analysis is required to explore this issue. In this regard, the question posed above should be framed differently: are antidumping measures necessary from a welfare perspective? In other words, are they welfare-improving policy interventions? I presented one justification for antidumping measures at the beginning of this comment—namely, that they serve to correct for imperfections in international markets stemming from noncompetitive behavior on the part of foreign firms. I know of no evidence that this is relevant for import markets in Latin American countries, and the paper does not provide such evidence, either.

Fischer and Prusa formalize an alternative argument in which trade exceptions serve as insurance to sectors that might be injured by liberalization.2 Such exceptions could help reduce the risk of sectors that might be exposed to more shocks under trade liberalization than in a closed economy. For example, a policy intervention along the lines of contingent protection could be welfare improving in the presence of temporary exchange rate fluctuations combined with some irreversibility in the production process.3 The case for protection against abrupt changes in domestic GDP could be harder to make under this argument, but it is still possible.4

This raises a second question, however. Given that the government wants to insure local producers against shocks that were not present (or were less pronounced) when the economy was closed, is contingent protection the best policy intervention? Fischer and Prusa show that this type of insurance can be provided by other means—specifically, a scheme of taxes and subsidies.5 They argue that antidumping measures may indeed be associated with protectionist pressures rather than welfare-improving policies.

In this regard, Sanguinetti and Bianchi find that lagged tariffs have a positive impact on the likelihood of an antidumping case initiation. This finding supports the view of antidumping measures as protectionist policies. Moreover, in their test, the effect of local and foreign GDP fluctuations on case initiations becomes insignificant once the effect of tariffs is...

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Additional Information

ISSN
1533-6239
Print ISSN
1529-7470
Pages
pp. 178-182
Launched on MUSE
2006-12-12
Open Access
No
Archive Status
Will Be Archived 2022
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