The economics of injury in antidumping and countervailing duty cases

International Review of Law and Economics

Volumn 16, Issue 1, 1996, Pages 5-26

  Sykes, Alan O ^a  

^a NONE

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EID: 0030099881     PISSN: 01448188     EISSN: None     Source Type: Journal    
DOI: 10.1016/0144-8188(95)00054-2     Document Type: Article

References (55)

1. 1 GATT, Article VI(1) [now "GATT 1994," reprinted in full in John Jackson, William Davey, and Alan Sykes, Documents Supplement to Legal Problems of International Economic Relations (St. Paul, MN: West, 1995) pp. 15-78]. "Normal value" is equal to the price charged by the same firm for identical or similar merchandise in its home country or in third country markets, or to the "cost of production" for the goods "plus a reasonable addition for selling cost and profit." Id. Cost of production is understood to include an allocation of fixed costs and is thus a very rough approximation to what economists would term long-run average cost.
2. 2 GATT, Article VI(3).
3. 3 GATT, Article VI(6)(a).
4. 4 See 19 U.S.C. §§1671, 1673. Alternatively, the importing nation may find that the unfair trade threatens injury in the future, or retards the establishment of a new industry. My focus is on the analysis of present injury to existing firms, although the paper has indirect implications for threat and material retardation cases as well.
5. 5 As of the end of 1992, 640 antidumping cases had been filed since the Trade Agreements Act of 1979, and 376 countervailing duty cases. See U.S. International Trade Commission, Operation of the Trade Agreements Program 1992 (July 1993), tables A-24, A-26. On the proliferation of antidumping actions in other nations see Michael Trebilcock and Thomas Boddez, "The Case for Liberalizing North American Trade Remedy Laws," 4 Minnesota Journal of Global Trade 1 (1995).
6. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
7. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
8. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
9. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
10. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
11. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
12. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
13. 6 See, e.g., Richard Boltuck, "An Economic Analysis of Dumping." 21 Journal of World Trade 45 (1987); Richard Boltuck, "Assessing the Effects on the Domestic Industry of Price Dumping," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (1991); Seth Kaplan, "Injury and Causation in USITC Antidumping Determinations: Five Recent Approaches," in Policy Implications of Antidumping Measures, ed. P.K.M. Tharakan (Amsterdam: North Holland, 1991); Michael Knoll, "Legal and Economic Framework for the Analysis of Injury by the U.S. International Trade Commission," 23 Journal of World Trade 95 (1989); Michael Knoll, "An Economic Approach to the Determination of Injury Under United States Antidumping and Countervailing Duty Law," 22 New York University Journal of International Law and Politics 37 (1989); Tracy Murray and Donald Rousslang, "A Method for Estimating Injury Caused by Unfair Trade Practices," 9 International Review of Law and Economics 149 (1989). Various sitting Commissioners have also voiced economic criticisms of the analysis of other Commissioners in their opinions. A notable example is the dissenting opinion of Commissioner Ronald Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989). The possibility that ITC decision making may be deliberately incoherent and unpredictable is explored in Ronald Cass and Warren Schwartz, "Causality, Coherence and Transparency in the Implementation of International Trade Laws," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990), p. 24.
14. 7 A thorough legal discussion, with rejoinders from commentators, may be found in the aforementioned volume that contains the expanded version of this paper; see supra introductory note.
15. 8 Among the currently sitting Commissioners at this writing, Commissioners Newquist and Rohr adhere to the bifurcated test. See, e.g., "Certain Stainless Steel Butt-Weld Pipe Fittings From Korea," ITC Pub. 2601, pp. 11-32 (Feb. 1993); "Fresh and Chilled Atlantic Salmon from Norway," ITC Pub. 2589, p. 8 (December 1992). Commissioners Brunsdale, Crawford, Nuzum, and Watson do not make separate findings on injury and causation.
16. 8 Among the currently sitting Commissioners at this writing, Commissioners Newquist and Rohr adhere to the bifurcated test. See, e.g., "Certain Stainless Steel Butt-Weld Pipe Fittings From Korea," ITC Pub. 2601, pp. 11-32 (Feb. 1993); "Fresh and Chilled Atlantic Salmon from Norway," ITC Pub. 2589, p. 8 (December 1992). Commissioners Brunsdale, Crawford, Nuzum, and Watson do not make separate findings on injury and causation.
17. 9 For a recent example, see "Refined Antimony Trioxide from the People's Republic of China," ITC Pub. 2497, pp. 14-47 (April 1992).
18. 10 See, e.g., American Spring Wire Corporation v. United States, 590 F. Supp. 1273 (CIT, 1984). Affirmed, 760 F. 2d 249 (CAFC, 1985).
19. 11 19 U.S.C. §1677(7)(C)(i).
20. 12 19 U.S.C. §1677(7)(C)(iii)(I),(III).
21. 13 See, e.g., "Nepheline Syenite from Canada," ITC Pub. 2502, p. 55 (April 1992).
22. 14 Id.
23. 15 See, e.g., "Ferrosilicon from Kazakhstan and Ukraine," ITC Pub. 2616, pp. 27, 31 (March 1993).
24. 16 See, e.g., "Certain Carbon Steel Products from Spam," ITC Pub. 1331 (1983) (views of Commissioner Haggart).
25. 17 It might be argued that a correlation between rising imports and declining fortunes in the domestic industry is suggestive of harm due to the unfair trade practice, however, and that the ITC can consider additional evidence that an inference of such harm is mistaken in a given case. The difficulty with this argument is 2-fold. First, its empirical premise is untested and unverified - there is simply no hard evidence that cases involving the more harmful unfair trade practices tend to exhibit the requisite correlation more often than other cases. Second, efforts to disentangle the effects of other factors, thereby to avoid misleading inferences from the correlation evidence, require a great deal of information and sophistication. Yet, the Commissioners who rely on correlation evidence do not undertake systematically to establish that competing hypotheses should be rejected. These Commissioners can hardly be faulted for failing to undertake thorough econometric studies of each industry given the paucity of information and data appropriate to the task and the time constraints that they confront, but as a result their use of correlation evidence is quite unconvincing if the task is to draw a reliable inference about the impact of the unfair practice on domestic firms.
26. 18 See Boltuck, supra, note 6.
27. 19 See, e.g., "Portable Electric Typewriters From Singapore," ITC Pub. 2681 (1993), pp. 24-25 (views of Commissioners Brunsdale and Crawford).
28. 20 Other commentators have criticized the Commerce Department for ignoring the question of whether a subsidy has an impact on marginal cost, urging that subsidies without such an impact should not be countervailed. See Charles Goetz, Lloyd Granet, and Warren Schwartz, "The Meaning of 'Subsidy' and 'Injury' in the Countervailing Duty Law," 6 International Review of Law and Economics 17 (1986); Richard Diamond, "A Search for Economic and Financial Principles in the Administration of United States Countervailing Duty Law," 21 Law and Policy in International Business 507 (1990).
29. 20 Other commentators have criticized the Commerce Department for ignoring the question of whether a subsidy has an impact on marginal cost, urging that subsidies without such an impact should not be countervailed. See Charles Goetz, Lloyd Granet, and Warren Schwartz, "The Meaning of 'Subsidy' and 'Injury' in the Countervailing Duty Law," 6 International Review of Law and Economics 17 (1986); Richard Diamond, "A Search for Economic and Financial Principles in the Administration of United States Countervailing Duty Law," 21 Law and Policy in International Business 507 (1990).
30. 21 A thorough survey is that of Trebilcock and Boddez, supra note 5. A more compact survey may be found in the expanded version of this paper, cited supra. Some other useful papers include Andrew Dick, "Learning by Doing and Dumping in the Semiconductor Industry, 34 Journal of Law and Economics 133 (1991); Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Trade, Growth and Balance of Payment, eds. Richard Caves, Harry Johnson, and Peter Kenen (Chicago: Rand McNally, 1965); John Barcelo, "The Antidumping Law: Repeal it or Revise It," Michigan Year Book of International Legal Studies 53 (1979); Janusz Ordover, Alan Sykes, and Robert Willig, "Unfair International Trade Practices," 15 New York University Journal of International Law and Politics 323 (1983); Paul Krugman, "Is Free Trade Passé," 10 Journal of Economic Perspectives 131 (1987); Alan Sykes, "Countervailing Duty Law: An Economic Perspective," 89 Columbia Law Review 199 (1989); Michael Trebilcock, "Is the Game Worth The Candle? Comment," 21 Law and Policy in International Business 723 (1990).
31. 21 A thorough survey is that of Trebilcock and Boddez, supra note 5. A more compact survey may be found in the expanded version of this paper, cited supra. Some other useful papers include Andrew Dick, "Learning by Doing and Dumping in the Semiconductor Industry, 34 Journal of Law and Economics 133 (1991); Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Trade, Growth and Balance of Payment, eds. Richard Caves, Harry Johnson, and Peter Kenen (Chicago: Rand McNally, 1965); John Barcelo, "The Antidumping Law: Repeal it or Revise It," Michigan Year Book of International Legal Studies 53 (1979); Janusz Ordover, Alan Sykes, and Robert Willig, "Unfair International Trade Practices," 15 New York University Journal of International Law and Politics 323 (1983); Paul Krugman, "Is Free Trade Passé," 10 Journal of Economic Perspectives 131 (1987); Alan Sykes, "Countervailing Duty Law: An Economic Perspective," 89 Columbia Law Review 199 (1989); Michael Trebilcock, "Is the Game Worth The Candle? Comment," 21 Law and Policy in International Business 723 (1990).
32. 21 A thorough survey is that of Trebilcock and Boddez, supra note 5. A more compact survey may be found in the expanded version of this paper, cited supra. Some other useful papers include Andrew Dick, "Learning by Doing and Dumping in the Semiconductor Industry, 34 Journal of Law and Economics 133 (1991); Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Trade, Growth and Balance of Payment, eds. Richard Caves, Harry Johnson, and Peter Kenen (Chicago: Rand McNally, 1965); John Barcelo, "The Antidumping Law: Repeal it or Revise It," Michigan Year Book of International Legal Studies 53 (1979); Janusz Ordover, Alan Sykes, and Robert Willig, "Unfair International Trade Practices," 15 New York University Journal of International Law and Politics 323 (1983); Paul Krugman, "Is Free Trade Passé," 10 Journal of Economic Perspectives 131 (1987); Alan Sykes, "Countervailing Duty Law: An Economic Perspective," 89 Columbia Law Review 199 (1989); Michael Trebilcock, "Is the Game Worth The Candle? Comment," 21 Law and Policy in International Business 723 (1990).
33. 21 A thorough survey is that of Trebilcock and Boddez, supra note 5. A more compact survey may be found in the expanded version of this paper, cited supra. Some other useful papers include Andrew Dick, "Learning by Doing and Dumping in the Semiconductor Industry, 34 Journal of Law and Economics 133 (1991); Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Trade, Growth and Balance of Payment, eds. Richard Caves, Harry Johnson, and Peter Kenen (Chicago: Rand McNally, 1965); John Barcelo, "The Antidumping Law: Repeal it or Revise It," Michigan Year Book of International Legal Studies 53 (1979); Janusz Ordover, Alan Sykes, and Robert Willig, "Unfair International Trade Practices," 15 New York University Journal of International Law and Politics 323 (1983); Paul Krugman, "Is Free Trade Passé," 10 Journal of Economic Perspectives 131 (1987); Alan Sykes, "Countervailing Duty Law: An Economic Perspective," 89 Columbia Law Review 199 (1989); Michael Trebilcock, "Is the Game Worth The Candle? Comment," 21 Law and Policy in International Business 723 (1990).
34. 21 A thorough survey is that of Trebilcock and Boddez, supra note 5. A more compact survey may be found in the expanded version of this paper, cited supra. Some other useful papers include Andrew Dick, "Learning by Doing and Dumping in the Semiconductor Industry, 34 Journal of Law and Economics 133 (1991); Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Trade, Growth and Balance of Payment, eds. Richard Caves, Harry Johnson, and Peter Kenen (Chicago: Rand McNally, 1965); John Barcelo, "The Antidumping Law: Repeal it or Revise It," Michigan Year Book of International Legal Studies 53 (1979); Janusz Ordover, Alan Sykes, and Robert Willig, "Unfair International Trade Practices," 15 New York University Journal of International Law and Politics 323 (1983); Paul Krugman, "Is Free Trade Passé," 10 Journal of Economic Perspectives 131 (1987); Alan Sykes, "Countervailing Duty Law: An Economic Perspective," 89 Columbia Law Review 199 (1989); Michael Trebilcock, "Is the Game Worth The Candle? Comment," 21 Law and Policy in International Business 723 (1990).
35. 21 A thorough survey is that of Trebilcock and Boddez, supra note 5. A more compact survey may be found in the expanded version of this paper, cited supra. Some other useful papers include Andrew Dick, "Learning by Doing and Dumping in the Semiconductor Industry, 34 Journal of Law and Economics 133 (1991); Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Trade, Growth and Balance of Payment, eds. Richard Caves, Harry Johnson, and Peter Kenen (Chicago: Rand McNally, 1965); John Barcelo, "The Antidumping Law: Repeal it or Revise It," Michigan Year Book of International Legal Studies 53 (1979); Janusz Ordover, Alan Sykes, and Robert Willig, "Unfair International Trade Practices," 15 New York University Journal of International Law and Politics 323 (1983); Paul Krugman, "Is Free Trade Passé," 10 Journal of Economic Perspectives 131 (1987); Alan Sykes, "Countervailing Duty Law: An Economic Perspective," 89 Columbia Law Review 199 (1989); Michael Trebilcock, "Is the Game Worth The Candle? Comment," 21 Law and Policy in International Business 723 (1990).
36. 21 A thorough survey is that of Trebilcock and Boddez, supra note 5. A more compact survey may be found in the expanded version of this paper, cited supra. Some other useful papers include Andrew Dick, "Learning by Doing and Dumping in the Semiconductor Industry, 34 Journal of Law and Economics 133 (1991); Harry Johnson, "Optimal Trade Intervention in the Presence of Domestic Distortions," in Trade, Growth and Balance of Payment, eds. Richard Caves, Harry Johnson, and Peter Kenen (Chicago: Rand McNally, 1965); John Barcelo, "The Antidumping Law: Repeal it or Revise It," Michigan Year Book of International Legal Studies 53 (1979); Janusz Ordover, Alan Sykes, and Robert Willig, "Unfair International Trade Practices," 15 New York University Journal of International Law and Politics 323 (1983); Paul Krugman, "Is Free Trade Passé," 10 Journal of Economic Perspectives 131 (1987); Alan Sykes, "Countervailing Duty Law: An Economic Perspective," 89 Columbia Law Review 199 (1989); Michael Trebilcock, "Is the Game Worth The Candle? Comment," 21 Law and Policy in International Business 723 (1990).
37. 22 See note 21 supra.
38. 23 For a diagrammatic exposition, see John Jackson, William Davey, and Alan Sykes, Legal Problems of International Economic Relations, 3d ed., Ch. 1 (appendix) (St. Paul, MN: West, 1995).
39. 24 See Avinash Dixit and Victor Norman, Theory of International Trade (Cambridge: Cambridge University Press, 1980) pp. 150-152 (general equilibrium treatment); Peter Lindert, International Economics, (9th ed. Burr Ridge, IL: Irwin, 1991) pp. 132-136 (partial equilibrium treatment).
40. 24 See Avinash Dixit and Victor Norman, Theory of International Trade (Cambridge: Cambridge University Press, 1980) pp. 150-152 (general equilibrium treatment); Peter Lindert, International Economics, (9th ed. Burr Ridge, IL: Irwin, 1991) pp. 132-136 (partial equilibrium treatment).
41. 25 Elsewhere, I have argued that the "serious injury" test in escape clause actions might usefully be construed or modified to limit escape clause relief to industries with labor market adjustment problems. See Alan Sykes, "GATT Safeguards Reform: The Injury Test," in Fair Exchange: Reforming Trade Remedy Laws, eds. Michael Trebilcock and Robert York (Toronto: C.D. Howe Institute, 1990).
42. 26 See, for example, the debate between Commissioners Eckes and Cass in "New Steel Rails from Canada," ITC Pub. 2217 (1989).
43. 27 The excluded case involved a consolidated dumping and countervailing duty proceeding encompassing imports of various industrial belts from eight different countries.
44. 28 The paper by Ronald Cass and Warren Schwartz, cited in note 6 supra, makes this point forcefully.
45. 29 See the expanded version of this paper, cited supra.
46. 30 The literature on the public choice or "political economy" of international trade is voluminous. Leading contributions include the essays in Robert Baldwin, The Political Economy of U.S. Import Policy (1985) and Jagdish Bhagwati, Political Economy and International Economics, ed. Douglas Irwin (1991).
47. 30 The literature on the public choice or "political economy" of international trade is voluminous. Leading contributions include the essays in Robert Baldwin, The Political Economy of U.S. Import Policy (1985) and Jagdish Bhagwati, Political Economy and International Economics, ed. Douglas Irwin (1991).
48. 31 The political economy perspective on the GATT is developed in Robert Baldwin, Trade Policy in a Changing World Economy, Chicago: University of Chicago Press, (1988), pp. 137-147; Jagdish Bhagwati, Protectionism (Cambridge, MA: MIT Press, 1988) pp. 40-41; and Beth Yarbrough and Robert Yarbrough, Cooperation and Governance in International Trade: The Strategic Organizational Approach (Princeton, NJ: Princeton University Press, 1992).
49. 31 The political economy perspective on the GATT is developed in Robert Baldwin, Trade Policy in a Changing World Economy, Chicago: University of Chicago Press, (1988), pp. 137-147; Jagdish Bhagwati, Protectionism (Cambridge, MA: MIT Press, 1988) pp. 40-41; and Beth Yarbrough and Robert Yarbrough, Cooperation and Governance in International Trade: The Strategic Organizational Approach (Princeton, NJ: Princeton University Press, 1992).
50. 31 The political economy perspective on the GATT is developed in Robert Baldwin, Trade Policy in a Changing World Economy, Chicago: University of Chicago Press, (1988), pp. 137-147; Jagdish Bhagwati, Protectionism (Cambridge, MA: MIT Press, 1988) pp. 40-41; and Beth Yarbrough and Robert Yarbrough, Cooperation and Governance in International Trade: The Strategic Organizational Approach (Princeton, NJ: Princeton University Press, 1992).
51. 32 Complicating this task is the fact that each term, viewed in isolation, need not generate gains for all parties ex ante. Instead, some terms may yield benefits only to a few parties, yet they may be accepted by others as a result of side payments.
52. 33 "Protectionism as a Safeguard: A Positive Analysis of the GATT Escape Clause with Normative Speculations," 58 University of Chicago Law Review 255 (1991).
53. 34 Formally, I develop a model in which "escape" is optimal if the utility gains to officials in the country that "escapes" exceed the utility losses to officials in exporting nations. Appropriate shadow prices allow such a utility comparison to be made.
54. 35 On the notion of efficient breach in contracts generally, see Steven Shavell, "Damage Measures for Breach of Contract," Bell Journal of Economics 466 (1980).
55. 36 For example, suppose that the long-run competitive equilibrium price for a good, which covers variable costs and yields a competitive return on all fixed investments, is $5. If the initial price start is $4 and trade protection would increase the price to S5, protection will increase the profits of firms without attracting entry, and they will gain $1 per unit of output as long as their fixed investments remain in service. If the initial price is $5 and protection would increase it to $6, by contrast, the gain in revenue per unit will attract entry, which will compete the price back down to $5 afterward. Thus, as long as the period required for entry is, on average, less than the remaining life of fixed investments - imminently plausible - protection will be more valuable to an industry in which prices are initially below long-run break even levels, other things being equal. See David Friedman, Price Theory, (2d ed., Cincinnati, OH: South-Western Publishing, pp. 549-550, 1990).