Thomas J. Prusa

English

Research Papers in Economics

This PDF is a selection from a published volume from the National Bureau of 
Economic Research
Volume Title: China's Growing Role in World Trade 
Volume Author/Editor: Robert C. Feenstra and Shang-Jin Wei, editors
Volume Publisher: University of Chicago Press
Volume ISBN:  0-226-23971-3
Volume URL: http://www.nber.org/books/feen07-1
Conference Date: August 3-4, 2007
Publication Date: March 2010
Chapter Title:  Comment on "China's WTO Entry: Antidumping, Safeguards, and 
Dispute Settlement"
Chapter Author:   Thomas J. Prusa 
Chapter URL: http://www.nber.org/chapters/c10464
Chapter pages in book: (338 - 343)338    Chad  P.  Bown
Thomas J. Prusa is an associate professor of economics at Rutgers University, and a research 
associate of the National Bureau of Economic Research.
1. See http://people.brandeis.edu/~cbown/global_ad/.
Comment  Thomas J. Prusa
Any comprehensive discussion of China’s impact on the trading environment 
should include a discussion of rising protection against Chinese exports and 
the looming threat of China retaliating with its own intensive use of contin-
gent protection. Chad Bown does a ﬁ  rst-  rate job of addressing the major 
trends. I have no reservations recommending this chapter to anyone inter-
ested in getting a quick picture of protectionist trends involving China.
Before making some speciﬁ  c comments on Bown’s chapter, I would like 
to take a moment to draw attention to the signiﬁ  cant time and eﬀort Bown 
invested in compiling the trade dispute data set used to write this chapter. 
Data collection is among the least glamorous aspects of the research process. 
Moreover, in the case of Bown’s database, the fact that most of the beneﬁ  ts 
of his time and sweat will ultimately accrue to others makes his endeavor 
even more noteworthy. While the World Trade Organization’s (WTO) Web 
site provides information on trade disputes between member states, the 
WTO’s oﬃcial listing includes only the most basic case information (e.g., 
products and countries involved, dates, outcomes, etc.). Bown spearheaded a 
World Bank eﬀort to compile detailed information on a wide variety of trade 
disputes—antidumping, countervailing duty, safeguards, and formal WTO 
disputes—initiated by WTO members.1 Prior to Bown’s eﬀorts, detailed 
antidumping case information was only available for the European Union 
(EU) and the United States; there were no public databases for any of the 
other types of trade disputes or for antidumping actions by other countries. 
Bown’s database gives researchers an opportunity to better understand the 
incidence and pattern of trade disputes across all WTO members. The cur-
rent chapter is an example of the type of research that is now possible thanks 
to Bown’s eﬀorts. The database is a tremendous public good, and many of 
us owe him a debt of gratitude for his eﬀorts.
Turning now to the current chapter, Bown documents a number of impor-
tant trends in the use of trade remedies against and by China. First, Bown 
documents the widespread use of antidumping measures against China. 
Bown shows that China is the leading target on a worldwide basis, account-
ing for about 20 percent of all the cases reported by the ten most active 
users of antidumping. China is the leading target for six of the ten most 
active users in the early period (1995–2001) and for nine of the ten in the 
later period (2002–2004). Although he does not report China’s share of all 
cases ﬁ  led worldwide, it is reasonable to believe that the trends reported for 
these ten countries are representative of the overall worldwide trend because China’s WTO Entry: Antidumping, Safeguards, and Dispute Settlement    3 3 9
they account for over 80 percent of the new antidumping cases worldwide. 
Simply put, the data presented conﬁ  rm what many of us thought: China is 
in the bulls-  eye of trade protection around the world.
Second, it appears that contingent protection against Chinese exports 
has increased since China joined the WTO. This ﬁ  nding must be carefully 
interpreted—the important comparison Bown is making is the number of 
trade cases against China in the post- WTO era versus those in the pre- WTO 
period. The issue is complicated because China’s exports have increased and 
trade disputes are clearly related the volume of trade. Hence, it is not surpris-
ing that there are more antidumping cases ﬁ  led against China in recent years. 
Bown’s analysis does not tell us whether China has faced more antidumping 
actions than it would have without WTO membership. That is, we do not 
know whether WTO membership has failed to discipline the actions of Chi-
na’s trading partners. At ﬁ  rst blush, however, Bown’s data suggest that WTO 
membership has done little to reduce the contingent protection applied on 
Chinese exporters. This is only a modest complaint as an empirical study 
controlling for the various incentives for industries/countries to name China 
would be a full paper by itself.
Third, Bown documents the potentially alarming rise in China’s own use 
of contingent protection. In the last ﬁ  ve years, China’s use of antidumping 
has tripled; recent trends indicate that China (along with India) will soon be 
the two largest users of antidumping, displacing the two longtime leaders, 
the EU and the United States. Bown highlights one interesting diﬀerence 
in China’s use of antidumping as compared the United States and the EU: 
nondiscrimination. That is, Bown shows that China does not often target 
single suppliers in their antidumping investigations; Chinese cases tend to 
target multiple suppliers. As I will discuss in the following, this diﬀers from 
the pattern of protection that China often experiences where Chinese ﬁ  rms 
are the only exporters targeted. While ﬁ  ling against multiple countries does 
make protection more MFN- like, it isn’t clear that this pattern is preferable. 
Is it better to have all foreign suppliers facing high duties or only a single 
supplier? Antidumping proponents will argue that the discriminatory aspect 
of antidumping duties is desirable—only sanction the “unfair” trader(s). 
The fact that China is so often targeted does seem problematic, but we need 
to have a better idea of the motivation for the protection before concluding 
that discrimination is bad.
One reason why I like Bown’s article is that it touches on many issues that 
can be examined in greater detail in future work. Here are some questions 
that Bown’s chapter stimulated; I hope they are pursued in the near future.
Is China Unfairly Targeted?
Bown’s compilations reveal that about 20 percent of all antidumping cases 
target China. Bown argues China’s 20 percent share is unusually large. For 
instance, in the case of the United States and the EU, China’s share of anti-340    Chad  P.  Bown
2. See www.usitc.gov for U.S. antidumping statistics.
dumping cases is about twice as large as its share of the respective import 
market. Similarly large, often signiﬁ  cantly larger, diﬀerences exist for other 
major antidumping users. This is true for both the early (1995–2001) and 
later (2002–2004) periods. For instance, China’s share of antidumping cases 
is about six times larger than its import market share in Argentina, Brazil, 
India, and Mexico. In the case of Canada and Turkey, China’s share of 
antidumping cases is more than ten times larger than its import market 
share. Overall and on a country-  by-  country basis, China is named far more 
frequently than its import market share might predict.
Moreover, Bown’s statistics might be understating the extent to which 
China has been targeted. The reason is that a given antidumping investigation 
may involve multiple foreign suppliers. In a manner consistent with WTO 
reporting requirements, countries tally antidumping cases on a country- by-
  country basis. Thus, one investigation involving seven countries will result 
in seven cases. Unless one carefully controls for the fact that there is usually 
a single investigation, it is easy to understate how important China is to cur-
rent trade disputes. From my perusal of Bown’s database, it appears that the 
vast majority of investigations involve China—to a far greater extent than 
his tabulations indicate.
Let me give an example of my point. As of early 2008, there were thirty-
  eight active antidumping cases in the United States, with China accounting 
for seventeen of the cases.2 Thus, at ﬁ  rst blush, it appears that China is 
involved in slightly less than half the disputes. However, when one looks at 
the products involved it becomes clear that these thirty-  eight cases actually 
involve twenty distinct investigations. Of these twenty investigations, eight 
involve just a single foreign supplier, and in all but one instance, the single 
country investigated is China. Twelve investigations involve multiple sup-
pliers. Of the twelve multiple supplier investigations, China is named ten 
times. Thus, China is involved in seventeen of twenty active investigations. 
No other country is named more than three times. Japan—the country that 
dominated U.S. contingent protection in the 1980s and 1990s, is currently 
only subject to one investigation. It appears that China really is the country 
driving the current contingent protection. It would be useful to construct 
similar tallies for other antidumping users. The issue of an inordinate focus 
on China might be more severe than Bown suggests.
On the other hand, import market share may not be the right basis to 
judge whether China is subject to unusual scrutiny. The WTO antidumping 
code’s de minimis standard for import market share is quite small. Techni-
cally, all that the WTO requires is China’s exporters have at least 3 percent 
of a country’s import market when it is the only country investigated and 
potentially as little as 0.5 percent when multiple countries are investigated. 
One would think that this is an easy threshold to meet. Perhaps another China’s WTO Entry: Antidumping, Safeguards, and Dispute Settlement    3 4 1
pertinent measure would be China’s increase in import market share. In a 
follow- up study, it would be interesting to see if China has gained signiﬁ  cant 
market share in the years prior to the ﬁ  ling of antidumping actions. My own 
sense is the answer will be yes.
Does Contingent Protection Discriminate against China?
Bown documents that China is often the only country named in a given 
antidumping investigation and that the propensity for this to happen has 
increased since its 2001 accession. He then makes a compelling argument 
that application of antidumping against China has become more discrimi-
natory in recent years. I think this is an excellent insight and one that bears 
more consideration.
I have several speciﬁ  c follow- up questions. First, while the number of Har-
monized System (HS) line items involved in these cases might be quite small, 
it would be interesting to know how much larger the tariﬀ diﬀerentials are for 
the aﬀected products. How steep is the discrimination? Did China face less 
discrimination in the pre- WTO era? Second, even in light of what will likely 
be large diﬀerences in tariﬀs, what is the impact of antidumping actions on 
Chinese exports? Is the elasticity of Chinese exports to antidumping duties 
similar to that for other suppliers? Third, are Chinese exports prone to more 
diversion to third markets? Fourth, if diversion is indeed found, to what 
extent does one country’s use of antidumping trigger others?
How Much Do Current Rules Discriminate against China?
As discussed in the preceding, Bown documents that Chinese ﬁ  rms are 
often the target of contingent protection. He also shows that (a) a greater 
fraction of Chinese cases result in measures taken and (b) Chinese cases 
result in higher duties than others.
On the ﬁ  rst point, Bown may understate the diﬀerence between China and 
other countries. Given that China accounts for so many cases, it would have 
been useful for Bown to report statistics for “all targets but China” rather 
than “all targets” in table 8.2. To get a sense of why, I took the data reports 
in table 8.2 and recalculated the percentage of cases resulting in measures. 
In my tabulation (see table 8C.1), the “others” category means all countries 
except China. As is clearly seen, China fares far worse than other targets 
for most major antidumping users. In the United States, for example, for 
the most recent period, 76 percent of Chinese cases result in duties, which 
compares with only 33 percent of non-  Chinese cases. In the EU, 94 percent 
of Chinese cases result in measures taken; by contrast, only 48 percent on 
non-  Chinese cases result in measures taken. In India, currently the world’s 
most active antidumping user, 88 percent of Chinese cases and 65 percent 
on the non-  Chinese cases result in duties. Only in the case of South Africa 
does China fare better than other targets.
The next question is how much do these diﬀerences matter? Using these 342    Chad  P.  Bown
statistics, along with the number of cases ﬁ  led by each country, I estimate 
that Chinese exporters would be subject to about 25 percent fewer measures 
if they had the same success rate as non- Chinese ﬁ  rms. Let me stress that this 
is a back-  of-  the-  envelope calculation and really should be carefully redone 
control for other mitigating factors. The next step would be to also do an 
adjustment for the size of the duties imposed and the Chinese export elastic-
ity so as to get a sense of how much trade is aﬀected by the discriminatory 
application of the rules.
Certainly Bown’s chapter makes me wonder why China fares so poorly. 
One possibility is that current antidumping rules are designed particularly 
to restrict exporters like China. If so, what rules and do those rules make 
economic sense? Perhaps, the rules are particularly eﬀective for sanctioning 
nonmarket economies. If so, how does China compare with, say, Vietnam? 
Another possibility is that the evolution of discretionary practices empha-
sized by work by Bruce Blonigen has particularly made matters diﬃcult for 
the Chinese. Of course, this means Blonigen’s insight about U.S. practice has 
spread to other antidumping users. It would be interesting to see the answers 
to these questions in future work.
Is China Motivated by Retaliation?
Many antidumping provisions are broadly deﬁ  ned. Depending on your 
perspective, this is one of its failures or its virtues. What really constitutes 
injury? How much impact is necessary to satisfy “causation”?
One consequence is that it is often hard to know the true motivation for 
not just a particular dispute but also for a change in policy application. For 
many users, there appears to be some evidence that countries are ﬁ  ling cases 
with strategic incentives in mind. Bown has a ﬁ  ne paper exploring this idea, 
and I have also written on this idea. In this case of China, public statements 
by government oﬃcials have explicitly mentioned that they view their own 
Table 8C.1  Fraction of cases resulting in measures taken
Early period (1995–2001) Late period (2002–2004)
Importer   China   All but China   China   All but China
United States 0.68 0.51 0.76 0.33
European Union 0.53 0.62 0.94 0.48
Australia 0.15 0.31 0.75 0.57
Canada 0.60 0.61 0.71 0.55
Argentina 0.88 0.66 0.83 0.80
Brazil 0.80 0.54 0.67 0.56
India 0.93 0.83 0.88 0.65
Mexico 0.79 0.72 1.00 0.77
South Africa 0.87 0.66 0.20 0.31
Turkey   0.89   0.78   0.91   0.83China’s WTO Entry: Antidumping, Safeguards, and Dispute Settlement    3 4 3
use of antidumping as partly motivated by retaliation for what they perceive 
as unjust application by other countries. It would be an interesting to see 
whether there is any statistical evidence for this or whether Chinese oﬃcials 
are simply making vague threats.
Overall, my comments point to future work rather than any particular 
shortcomings with the analysis in this chapter. I think Bown provides an 
excellent summary and overview of trade protection against and by China 
since the inception of the WTO in 1995. The data and analysis contained 
in the Bown article will serve as an excellent reference for many graduate 
students, researchers, and policymakers in the future.

China's Growing Role in World Trade

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