Rules on Contingent Protection Revisited Once Again'''

1
Rules on Contingent Protection Revisited Once
Again...

• Patrick A. Messerlin
• Director, Groupe dEconomie Mondiale at Sciences
  Po
• Professor of Economics, Sciences Po
• 2007 Seoul International Forum on Trade Remedies
• in celebration of the 20th anniversary of the
• Korean Trade Commission
• June 26-28, 2007

2
A quick look at the past

• Traditionally, contingent protection is a late
  issue because it is (was?) of second order of
  importance for
• Protectionist-minded WTO Members focus on
  keeping their protection rather than eliminating
  these barriers
• Offensive-minded WTO Members focus on new
  markets because contingent protection induces
  these countries to look for new markets and for
  new products
• The US dilemma, and to a lesser extent, the EC
  dilemma
• Paragraph 28 of the Doha mandate creative
  ambiguity at its best (worst?)
• clarifying while preserving...
• plus needs of developing and least-developed
  participants
• a basic flaw nothing on safeguard
• A caveat the paper focuses on antidumping
• Anti-subsidy a sleeping bomb?

3
Recent Antidumping Activity (1)

• Major antidumping initiators
• 5 Industrial countries and 7 developing
  countries, all of them large countries
• Source of 82 AD cases (vs. 65 world trade)
• Major antidumping enforcers even stronger
  features
• Looking at productivity in antidumping activity
• productivity (measures in force/initiations)
• world ratios 64 (longer run) 95 (shorter run)
  gt reveal severe biases in the procedures
• ratios by major user
• Major antidumping targets
• Major users are targets in only 50 AD cases

4
Recent Antidumping Activity (2)
5
Recent Antidumping Activity (3)

• Measuring antidumping activity per trade flows
  (US billions)
• Developing countries as the most active countries
• Combined with high antidumping measures suggests
  high welfare costs
• The case of Australia
• Balance source vs. target
• All major users vs. China, Korea
• The case(s) of the US (and Brazil)

6
Recent Antidumping Activity (4)
7
Activity in the Doha Negotiations
8
A Practitioners View
9
The Economists View (1)

• Raise the same fundamental systemic questions...
• Wide consensus on antidumping
• AD is a plain protectionist instrument
• AD has nothing to do with competition
  like-product vs. relevant market
• Dumping based on acceptable market behavior
  (price discrimination) or unlikely to be frequent
  (predatory pricing)
• Less than 5 of AD cases would have been possibly
  examined by competition authorities
• Wide consensus on anti-subsidy
• transfer from the subsidizing country to the
  importing country
• raises the adjustment problem gt more appropriate
  policies than anti-subsidy measures
• Wide consensus on safeguard as the best solution
  in principle
• because it shifts the burden on the domestic
  firms inefficiency
• but many problems for defining adequate
  procedures (the 2002 steel and 2005 textile
  safeguards are worse than AD cases)

10
The Economists View (2)

• Focus on economic analysis as a basis for a
  better determination of injury and causal
  relationship
• the trend approach
• the decomposition approach
• the modeling approach (CADIC, COMPAS)
• the econometric approach
• Focus on estimating the costs of contingent
  protection
• generally very high (square of protection level)
• but, very few estimates of the pro-cartel
  effect of contingent protection

11
Conclusion suggestions

• Highly skeptical on WTO-based legal
  clarifications (the wide range of biases among
  national regulations) but focus on
• everything to be measured in terms of domestic
  consumption, not of imports
• consumers (households and firms) to be more
  involved, and earlier
• Domestic reforms provide more information
  allowing to make the cases more challengeable
• pre-measure market structure of the investigated
  case,
• market shares (complainants, defendants),
• ownership relations, technological links
  (patents),
• assessing the risks on non-competitive
  (collusive) behavior after the measures
• Systemic reforms allow other institutions to be
  involved in the analysis of the markets under
  contingent protection
• the case against contingent protection to be won
  in the street
• failure of the Competition authorities
• decisive role of independent public agencies
  (such as the Swedish Kommerskollegium or the
  Australian Productivity Commission) and
  independent think-tanks gt make a world
  coalition?

12
Thank you for your attention!