Protectionist pressure and dumping in the U.S.: The case of Japan

Protectionism during the post-World War II era has largely consisted of nontariff barriers to international trade. Principal among these measures is the use of antidumping codes to protect domestic producers from what is perceived as unfair trade. Traditional economics theory identifies the practice of dumping as a form of international price discrimination in which a firm will sell a good at a lower price in the foreign market than it does in the home market. As a result, import-competing firms in the foreign market may seek protection if they find themselves at a price disadvantage when their goods are compared to those that are dumped. Since the early twentieth century the U.S. has been willing to provide relief to those domestic industries that have been materially injured by dumping. In the past twenty years the biggest offender of American antidumping codes has been Japan. Japan, therefore, became the natural choice for a bilateral study of dumping and protectionism. The centerpiece of the empirical portion of this study is the dual inquiry into the influences upon the decision by U.S. firms to demand protection and the decision by the U.S. International Trade Commission to supply protection. It was postulated that U.S. firms would be more likely to seek protection during downswings in economic activity and also when they felt at a competitive disadvantage in trade relations with Japan. These same macroeconomic and trade-related variables were also expected to influence the International Trade Commission\u27s decision to provide protection. The regression results negate a significant role for overall cyclical factors in either of these decisions. The trade-related variables, on the other hand, were found to be a major influence on both decisions and, particularly, on the probability of an affirmative determination by the International Trade Commission