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RESEARCH AND ANALYSIS: WORKING PAPERS

Trade Remedy Provisions in Regional Trade Agreements

This paper maps and examines the provisions on anti-dumping, countervailing duties and safeguards in seventy-four regional trade agreements (RTAs). The RTAs vary in size, degree of integration, geographic region and the level of economic development of their members.

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The key policy concern of the paper is that the elastic and selective nature
of trade remedies may lead to more discrimination, with reduced
trade remedy actions against RTA partners, but a greater frequency
of trade remedy actions against non-members. The adoption of RTAspecific
trade remedy rules increases this risk of discrimination, with
trade remedies against RTA members being abolished outright or being
subjected to greater discipline. The templates used for mapping
the trade remedy provisions reflect this central concern.

The results of the mappings suggest the need to be vigilant about
increased discrimination arising from trade remedy rules in RTAs. A
number of RTAs have succeeded in abolishing trade remedies. Probit
and multinomial logit model estimations suggest that these RTAs
are characterized by a higher share of intra-RTA trade and deeper
forms of integration that go well beyond the dismantling of border
measures. A fairly large number of RTAs have adopted RTA-specific
rules that tighten discipline on the application of trade remedies on
RTA members. In the case of anti-dumping for example, some provisions
increase de minimis volume and dumping margin requirements
and shorten the duration for applying anti-dumping duties relative to
the WTO Anti-dumping Agreement. In similar fashion, many of the
provisions on bilateral safeguards lead to tightened discipline or reduce
the incentives to take safeguard actions. Safeguard measures can be
imposed only during the transition period, have shorter duration periods
and require compensation if put in place. Further, retaliation is
allowed if there is no agreement on compensation. RTA provisions on
global safeguards require that, under certain conditions, RTA partners
be exempted from multilateral safeguard actions. This conflicts with
multilateral rules which require that safeguard measures be applied
to all sources of imports and highlights the problem of trade diversion.
A small number of RTAs give a role to regional institutions to
conduct anti-dumping and countervailing duty investigations and to
review final determinations of national authorities. There is a theoretical
presumption and some empirical evidence to suggest that this
reduces the frequency of anti-dumping initiations and final determinations
against RTA members. In the case of CVDs, we are unable to
find major innovations in CVD rules and practice by past and present
RTAs. A major reason for this may be the absence of commitments in
the RTA on meaningful or significant curbs on subsidies or state aid.

No: ERSD-2007-03

Authors:
Robert Teh — WTO
Thomas J. Prusa Department of Economics, Rutgers University,
New Brunswick, New Jersey 08901-1248, USA
Michele Budetta University “Cattolica del Sacro Cuore”,
Largo Gemelli 1, 21123 Milan, Italy

Manuscript date: September 2007

Key Words:

Regional trade agreement, anti-dumping, countervailing duties, safeguards.

JEL classification numbers:

F13, F15, F53

 

Disclaimer  back to top

This is a working paper, and hence it represents research in progress. This paper represents the opinions of the author, and is the product of professional research. It is not meant to represent the position or opinions of the WTO or its Members, nor the official position of any staff members. Any errors are the fault of the author. Copies of working papers can be requested from the divisional secretariat by writing to: Economic Research and Statistics Division, World Trade Organization, Rue de Lausanne 154, CH 1211 Geneva 21, Switzerland. Please request papers by number and title.

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