Anti-Dumping as Insurance Policy: What the 'Grey Area' Measures Tell Us

BKP Development Research & Consulting Trade and Development Discussion Paper No. 02/2013

24 Pages Posted: 1 Mar 2013

See all articles by Dan Ciuriak

Dan Ciuriak

Ciuriak Consulting Inc.; Centre for International Governance Innovation (CIGI); C.D. Howe Institute; Asia Pacific Foundation of Canada; BKP Development Research & Consulting GmbH

Derk Bienen

BKP Development Research & Consulting GmbH; Addis Ababa University

Timothée Picarello

BKP Development Research & Consulting GmbH

Date Written: March 1, 2013

Abstract

A general argument in support of trade remedies is that they act as an insurance policy that allows countries to take on deeper commitments in trade negotiations than they would otherwise be willing to make. This paper reviews both the negotiating history of major trade liberalization initiatives and the largely unexploited history of the use of so-called “grey area” measures in the pre-WTO era to manage pressures on domestic economies emanating from international trade to shed light on the extent to which this argument holds true. The negotiating history makes clear that across-the-board liberalization in the absence of perfect knowledge about the possible consequences in terms of trade pressures depends on the availability of contingent protection. Economic theory demonstrates that such an insurance role is welfare enhancing. The history of use of grey area measures in the pre-WTO period as successive waves of trade liberalizing initiatives were being implemented to manage excessive pressures in a context where the trade flows were not characterized as “unfair” but simply disruptive makes clear that that they were clear substitutes for trade remedies. This history provides the linchpin that allows the identification of the on-going use of trade remedies as an implicit continuation of the management of transient trade pressures. While the use of trade remedies may be defended as welfare enhancing on these grounds, with the individual instances of application of measures analogous to claims on a pre-existing insurance policy, the paper concludes that the design of trade defense laws and the emphasis on “unfair” trade in their justification, makes them ill-suited for this role.

Keywords: Trade remedies, anti-dumping, insurance, grey area measures

JEL Classification: F13

Suggested Citation

Ciuriak, Dan and Bienen, Derk and Picarello, Timothée, Anti-Dumping as Insurance Policy: What the 'Grey Area' Measures Tell Us (March 1, 2013). BKP Development Research & Consulting Trade and Development Discussion Paper No. 02/2013. Available at SSRN: https://ssrn.com/abstract=2226026 or http://dx.doi.org/10.2139/ssrn.2226026

Dan Ciuriak (Contact Author)

Ciuriak Consulting Inc. ( email )

83 Stewart St.
Ottawa, Ontario K1N 6H9
Canada

Centre for International Governance Innovation (CIGI) ( email )

57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada

C.D. Howe Institute ( email )

67 Yonge St., Suite 300
Toronto, Ontario M5E 1J8
Canada

Asia Pacific Foundation of Canada ( email )

Canada

HOME PAGE: http://ciuriakconsulting.com/

BKP Development Research & Consulting GmbH ( email )

Romanstrasse 74
München, 80639
Germany

Derk Bienen

BKP Development Research & Consulting GmbH ( email )

Jutastr. 14
München, 80636
Germany

Addis Ababa University ( email )

King George VI St
Addis Ababa, 1000
Ethiopia

Timothée Picarello

BKP Development Research & Consulting GmbH ( email )

Romanstrasse 74
München, 80639
Germany

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