Free Trade and Deep Integration: Antidumping and Antitrust in Regional Agreements

Abstract

Arguments that common or similar antitrust rules are essential for eliminating antidumping do not have a strong economic foundation and are only weakly supported by existing regional agreements. Preferential trading agreements (PTAs) are increasingly including elements of deep integration-efforts to agree on common regulatory regimes. Hoekman explores what the PTA experience suggests about the relationship between shallow integration-attaining unconditional intra-area free trade (including the abolition of antidumping) - and deeper integration, especially agreement about common antitrust rules.

He argues that common antitrust disciplines in PTAs tend to be driven by a broader agenda - which revolves around attaining economic integration (for example, by creating a single market), not by a need to abolish antidumping. Many PTAs continue to apply antidumping to internal trade flows.

In practice, it may be that the demise of antidumping in PTAs is constrained because governments are concerned about the potential for their partners to engage in beggar-thy-neighbor industrial policies. They may consider antidumping a useful defensive instrument in this connection, as it can substitute for instruments such as countervailing duties, which have a much higher foreign policy content and may be more difficult to pursue.

If so, antidumping is a particularly ineffective and costly instrument. Eliminating it in PTAs would help focus attention on the real source of trade problems (industrial policies and government intervention) rather than on the symptoms (allegations of unfair dumping).

Earlier versions of this paper - a product of International Trade, Development Research - were presented at the Brookings Conference on Private Practices and Trade Policy and at a CEPR/Institut d'Analisi Economica (CSIC) workshop on competition and trade policy (Barcelona, November 1997).