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Are Imports to Blame?: Attribution of Injury Under the 1974 Trade Act

29 Pages Posted: 3 Jan 2002  

Robert S. Pindyck

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Julio J. Rotemberg

Harvard University, Business, Government and the International Economy Unit (deceased); National Bureau of Economic Research (NBER) (deceased)

Date Written: June 1985

Abstract

Under Section 201 of the 1974 Trade Act, a domestic industry can obtain temporary protection against imports by demonstrating before the International Trade Commission that it has been injured, and that imports have been the"substantial cause" of injury --i.e.,"a cause which is important and not less than any other cause." To date, the ITC lacks a coherent framework for selecting a menu of other factors which might be considered as causes of injury, and for weighing the effects of these other factors against those of imports.This paper sets forth a straightforward economic and statistical framework for use in Section 201 cases. This framework is based on the fact that if the domestic industry is competitive, injury can arise from one or more of three broad sources: adverse shifts in market demand, adverse shifts in domestic supply, or increased imports. We show how these sources of injury can be distinguished in theory, and statistically evaluated in practice. As an illustrative example, we apply the framework to the case of the copper industry, which petitioned the ITC for relief in 1984. Although that industry has indeed suffered injury, we show that the "substantial cause" was not imports, but instead increasing costs and decreasing demand.

Suggested Citation

Pindyck, Robert S. and Rotemberg, Julio J., Are Imports to Blame?: Attribution of Injury Under the 1974 Trade Act (June 1985). NBER Working Paper No. w1640. Available at SSRN: https://ssrn.com/abstract=227191

Robert S. Pindyck (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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Cambridge, MA 02139
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617-253-6641 (Phone)
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HOME PAGE: http://web.mit.edu/rpindyck/www/

National Bureau of Economic Research (NBER)

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Julio J. Rotemberg

National Bureau of Economic Research (NBER) (deceased)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University, Business, Government and the International Economy Unit (deceased) ( email )

Cambridge, MA
United States
617-495-1015 (Phone)
617-496-5994 (Fax)

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