Economic Rationale, Trade Impact and Extent of Antidumping – A Case Study of Pakistan

Abstract

This paper has analyzed the economic and political justification, trade impact and extent of antidumping measures initiated by Pakistan. Screening models for anti-predatory behaviour, Herfindahl-Hireshmann Index (HHI) for concentration and descriptive statistical measures are used to test the antidumping (AD) behaviour. The results are consistent with the earlier literature that AD duties have both a trade reduction and diversion effect. It is evident from the results in half of the cases studied that an economic rationale has been followed in the application of AD duties in Pakistan. Although the number of AD cases is limited, Pakistan has emerged as one of the intensive users of AD, relative to its total import share. It is also evident from the fact that intensive use of AD reduces trade and increases trade barriers, similarly, trade diversion reduces the chances of trade reduction. The key message emerging from this research is that trade diversion persists and in some cases trade diversion is substantial and it offsets the effect of AD measures on named countries to the benefit of non-named countries.