Trade Remedy Provisions
Incidence of Trade Remedy Actions Before discussing the role of trade remedies in PTAs, it is useful to review the incidence of trade remedy actions over the past decade. Table 9.1 presents data from notifications made by members to the WTO over the 1995–2007 period. Whereas the other WTO exceptions—infant industries, balance of payments, national security, and so on—are rarely invoked, the provisions studied in this paper have been used literally hundreds (or, in the case of antidumping measures, thousands!) of times.5 Countries’ clear preference for using antidumping rather than countervailing duty measures or safeguards is striking. As shown, there were nearly nine times more initiations of antidumping measures (3,220) than of countervailing duty (201) and safeguard (163) actions combined.6 A similar discrepancy is seen in the number of measures applied. There has been a significant change in the use of these remedies. The four major users—Australia, Canada, the European Union (EU), and the United States—accounted for more than 90 percent of the contingent trade initiations during the 1980s and were the targets in more than 75 percent of the investigations (Prusa 2001).7 By contrast, countries from all parts of the world are now active users and targets of contingent protection (Prusa 2005). Since 1995, 43 countries have initiated antidumping cases, 18 have initiated countervailing duty cases, and 30 have initiated global safeguard cases. Nearly 100 countries have been the subject of antidumping investigations, and 40 have been targeted in countervailing duty investigations.8 The broadened set of uses and targets of trade remedies reflects increased globalization. Trade remedies can reinforce the trade diversion effects of a PTA: on average, the imposition of antidumping and countervailing duty measures reduces subject imports from the targeted country by about half (Prusa 2001). When faced with contingent protection measures, non-PTA members will be at an even greater disadvantage than under preferential tariffs. The potential for such discrimination is clear for country-specific measures such as antidumping
Table 9.1. Trade-Contingent Initiations and Measures in PTAs, 1995–2007 Trade-contingent instrument Antidumping measures Countervailing duties Safeguards Source: WTO Secretariat.
Initiations
Measures
3,220 201 163
2,052 119 83
181
and countervailing duty measures, but it is also a major concern for global safeguards because provisions in PTAs often allow PTA members to be excluded from these safeguards (Bown 2004). Trade Remedy Provisions in PTAs PTAs vary in size, degree of integration, geographic scope, and members’ level of economic development, and the political and economic demands for trade remedy provisions across PTAs also necessarily vary. The proliferation and diversity of PTAs has produced a complicated pattern in the use and inclusion of trade remedy provisions across PTAs that defies simple characterization. Some PTAs contain long discussions of trade remedy rules; others do not even mention trade remedies. For some PTAs, the trade remedy provisions make protection easier, but in most cases they make it more difficult to impose. A simple characterization is impossible, not only because trade remedy provisions vary from one PTA to the next but also because provisions differ for the same country across different PTAs. For example, PTAs entered into by the United States have no specific antidumping provisions except for the North American Free Trade Agreement (NAFTA), which contains a number of these provisions—notably, the creation of binational panels that review antidumping determinations made by national authorities. Similarly, the EU has entered into PTAs that have no antidumping rules, others that contain many antidumping rules, and even some that prohibit the use of antidumping. Diversity among PTAs Tables 9.2 and 9.3 present a summary of the 74 PTAs surveyed and their characteristics. With only four exceptions, the PTAs mapped were notified to the WTO. The database includes PTAs with members in Europe, North America, the Caribbean, Latin America, Asia and the Pacific, Africa, and the Middle East. The sample reflects the economic diversity of PTAs, covering as it does North-North, SouthSouth, and North-South agreements. Most (46) of the sampled PTAs have a mix of developed and developing countries in their membership; 22 have only developing countries as members, and 6 have developed members only.9 The sample is dominated by free trade agreements: 80 percent of the PTAs in the sample are free trade areas, 10 percent are customs unions, and 10 percent are preferential trade areas.10