Trade Diversion and the Initiation Effect: A Case Study of U.S. Trade Remedies in Agriculture

36 Pages Posted: 25 Jun 2018

See all articles by Colin A. Carter

Colin A. Carter

University of California, Davis - Department of Agricultural and Resource Economics

Sandro Steinbach

Center of Economic Research

Date Written: June 2018

Abstract

This paper estimates the impact of U.S. trade remedy (TR) actions on agricultural trade from 1990 to 2014. Most previous studies of the effects of TR actions have left out agricultural products. We use a four-country oligopolistic trade model to study the impact of TR duties on imports from non-named countries, and we improve on methodological issues present in earlier studies. Our empirical results show that TR investigations benefit non-named foreign exporters and U.S. imports from non-named countries increase even before the implementation of a TR duty. The extent of trade diversion is positively related to the size of the duty. Moreover, we find evidence of an initiation effect revealed by a significant increase in imports from non-named countries that did not previously trade the relevant product with the United States. The considerable extent of trade diversion in agriculture provides robust evidence for leakage effects of TR laws which has a detrimental impact on their protective effect.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Carter, Colin A. and Steinbach, Sandro, Trade Diversion and the Initiation Effect: A Case Study of U.S. Trade Remedies in Agriculture (June 2018). NBER Working Paper No. w24745. Available at SSRN: https://ssrn.com/abstract=3202048

Colin A. Carter (Contact Author)

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
Davis, CA 95616
United States

Sandro Steinbach

Center of Economic Research ( email )

Zürichbergstrasse 18
8092 Zurich, CH-1015
Switzerland

Register to save articles to
your library

Register

Paper statistics

Downloads
5
Abstract Views
76
PlumX Metrics