Industry Level Petitioning for Import Relief: Why do some

industries petition for antidumping duty while others

don’t?

Nisha Malhotra

• Dumping- selling a product in the US at a price lower than those prevailing in the exporter’s home market or at a price lower than the cost of production.

• Antidumping law-Designed to help domestic firms or industries injured by unfair imports. – Under the GATT article VI countries can impose

duties on imports from a particular country or countries to protect domestic industries against dumped imports

US Antidumping Procedure

– An AD procedure can be initiated by a firm or an industry by filing an import-relief petition with the International Trade Commission (ITC) and the International Trade Administration (IA, under the US Dept. of Commerce)

– IA determines whether and to what extent dumping is occurring.

– ITC determines whether there is material injury to the domestic industry due to dumped products.

– In case both, the IA and the ITC make affirmative findings of dumping and injury, an AD duty equivalent to the dumping margin is imposed on imports of that product.

Petitioning ProcessAn injured party in it’s petition has to provide the following information• Petitioner- extent of their involvement

• year in which production began, range of products they produce, extent of investment etc.

• Domestic Industry- identify other non petitioning US producers• Size and location of production facilities

• To show material injury• Production, capacity, domestic sales and end of period inventories,

employment, and recent investment. • Imported product-

• Quantity and value of imports, the price difference between the imported good & US produced good

• Importing Country or Countries, contact information of the foreign manufacturers, producers and exporters.

• Evidence of dumping by reporting sales price in the foreign country or the third country market.

Existing Literature• Finger(1981): Aggregates data by 3 digit SITC, (1975-1979)

OLS: Percentage of imports under investigation

• Herander and Shwartz (1984): 4 digit SIC, (1976-1981) OLS: Percentage of imports under investigation

• Hansen (1990): 4 digit SIC, (1975-1984) Nested Logit : Binary variable, one if industry petitioned and zero

otherwise

• Tan and Lichtenberg (1994): 4 digit SIC, (1958-1985) Poisson and Logit

• Krupp (1994): 4 digit SIC, 1976-1988, Chemical Industry only Poisson

Data

– Panel data set for the Manufacturing industry, the data set covers 450, 4-digit SIC groups in the manufacturing industries for the period 1979 through 1994.

DATA SOURCE

1 Antidumping Data2 The data converted from SIC 87 classification to SIC 72

using concordances provided by Jon Haveman.3 Industry level Data: Constructed by Eric Bartelsman and

Wayne Gray database, BLS and BEA.4 Import Prices- Bureau of Labor Statistics.

DATA - Statistics• Panel data set for the Manufacturing industry: 450, 4-digit SIC groups in the

manufacturing industries for the period 1979 - 1994.

Number of Petitions by Industries (1979-1995)

190

21 130 2 11 2

101

0 10 0

34

307

70 67

30 21 14 11

0

50

100

150

200

250

300

350

20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39

2 Digit SIC Industries

No

. o

f P

etit

ion

s

33-Primary Metal Industries331-Blast Furnaces, Steel Works, and Rolling and

Finishing Mills(273)28-Chemicals and allied products

21:Tobacco products24:Lumber and wood products

29:Petroleum and coal products31:Leather and leather products

VariablesVariables

Import share = Value of imports/domestic consumption Domestic consumption = Value of shipment - Exports + Imports K/L = Real Capital Stock / Number of Production workers TFP5 = percentage increase in gross output less the percentage increase in

(weighted) inputs. Inputs: Capital, Production workers, non-prod. Workers, Energy, Other

material inputs Labor Productivity = Value of Shipment / Number of Production Worker Hours (hrs.) Lag Investment = New capital spending Value added = Value of shipment – material cost + change in finished

goods and work-in-process inventories during the year Plant = Real structures capital stock Chg. Employment= percentage change in employment

Differences in Mean for Petitioning Vs. Non Petitioning Industries

  NP P DIF

Variables Average Average Average

Import Penetration 0.13 0.16 0.19***

Average Wage 19.05 21.48 0.11***

Employment 32.69 62.08 0.47***

vship 4338 9939 0.56

Value added 1976 4545 0.57***

Capital 1798.98 5338.03 0.66***

plant 749.12 2067.55 0.64

Total factor productivity 0.99 1 -0.005

Export 348.61 1187.16 0.71***

Change in imports 0.27 0.14 -1.01

Import 421.13 1766.55 0.76***

Unionization 25.46 27.15 0.06***

eprdun 34.01 36.77 0.08

Capital/Labor 103.08 147.76 0.3***

Tariff rate 6.03 5.29 -0.14***

Columns report mean value for all the variables; Dif: Percentage difference between petitioning and non petitioning Industries [(P-NP)/P]Average: Average of means over the entire period 1979-1995“t” test is used to check for differences in mean ***significant at 1%, ** significant at 5%, * significant at 10%

Differences in Mean for Petitioning Vs. Non Petitioning Industries

  NP P DIF NP P DIF

Variables 1983 1983 1983 1993 1993 1993

Import Penetration 0.1 0.12 0.17 0.16 0.18 0.11

Average Wage 16.33 18.63 0.12*** 23.53 26.43 0.11***

Employment 31.95 61.68 0.48*** 31.58 57.96 0.46***

vship 3598.12 7786.7 0.54 5303.12 12395.77 0.57

Value added 1519.25 3419.53 0.56*** 2526.71 5838.84 0.57***

Capital 1691.73 5076.3 0.67*** 1972.14 5793.65 0.66***

plant 750.66 2088.89 0.64 752.31 2048.41 0.63

Total factor productivity 0.97 0.95 -0.02 1.01 1.04 0.03**

Export 231.51 742.3 0.69*** 537.86 1942.96 0.72***

Change in imports 0.21 0.23 0.06 0.13 0.1 -0.32

Import 263.27 1062.27 0.75*** 644 2691.09 0.76***

Unionization 26.35 28.21 0.07*      

eprdun 35.19 38.09 0.08      

Capital/Labor 92.13 139.1 0.34*** 127.77 166.98 0.23

Tariff rate 6.15 5.45 -0.13      

Differs from Earlier WorkProcedure

literature lacks a study of the petitioning process for the later years - Drastic increase in Petitioning activity after 1979- mainly due to the change in Antidumping regime

Improving on the Poisson regression by using Negative binomial form

Poisson: events are independent. When an event occurs it does not affect the probability of the event occurring in the future.

This paper differs from other papers in that it looks at the decision to petition rather than the import coverage of antidumping cases petitions