The Trade Impact of Indian Antidumping Measures against China: Evidence from Monthly Data
| Date | 01 February 2013 |
| Author | Christian Viegelahn,Hylke Vandenbussche |
| DOI | 10.1177/001573251204800101 |
| Published date | 01 February 2013 |
| Subject Matter | Articles |
The Trade Impact of
Indian Antidumping
Measures against China:
Evidence from Monthly
Data*
Hylke Vandenbussche
Christian Viegelahn
Abstract
China’s importance for India as a trading partner has increased tremendously
over the recent years. At the same time, China has become the main target of
Indian antidumping measures with a number of measures that is unprecedented
worldwide. This article provides a detailed analysis of trade flows between
the two emerging economies and investigates on which type of products and
in which sectors the Indian government applies antidumping measures against
China. Then, this article estimates the trade impact of those measures that were
imposed during the Great Recession, using monthly data on exports from China
to India. The use of monthly data is relatively new to the literature and allows
a detailed examination of the trade impact of antidumping measures and its
dynamics. This article finds that antidumping measures decrease the Chinese
export value and quantity to India immediately and to a significant extent. The
impact is quite stable over time.
JEL: F13, F14, F52, G01
Keywords
Antidumping, China, crisis, India, monthly data, trade impact, trade policy, WTO
Article
Foreign Trade Review
48(1) 1–21
©2013 Indian Institute of
Foreign Trade
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
DOI: 10.1177/001573251204800101
http://ftr.sagepub.com
Hylke Vandenbussche, Professor in International Economics, IRES-CORE (Université
catholique de Louvain), Centre for Economic Policy Research (CEPR), LICOS Centre
for Institutions and Economic Performance (KU Leuven). E-mail: hylke.vandenbussche@
uclouvain.be
Christian Viegelahn (corresponding author), Ph.D. Candidate, Université catholique de
Louvain. E-mail: christian.viegelahn@uclouvain.be
* Any views and opinions expressed in this article are those of the authors and not
necessarily those of the institutions they are afliated with.
Foreign Trade Review, 48, 1 (2013): 1–21
2 Hylke Vandenbussche and Christian Viegelahn
Introduction
Over the past two decades, there is no other trading partner that has gained as
much importance for India as China. While the magnitude of trade flows with
China was close to zero before the onset of Indian trade liberalization in 1991, the
trade between the two emerging economies has steadily gained momentum until
2011. In terms of numbers, China’s share in Indian goods exports has risen from
below 1 per cent in the early 1990s to 1.7 per cent in 2000 and 5.5 per cent in
2011, making China the fourth largest recipient of Indian goods in 2011. Relations
are even more pronounced for trade flows that go into the opposite direction with
India importing goods with a value of more than US$ 50 billion from China. This
corresponds to an increase of the Chinese share in the Indian import value from
0.1 per cent in 1990 to 2.8 per cent in 2000 and 12 per cent in 2011.1
In the past few years, several high-level government meetings have taken place
to discuss trade relations between India and China. One topic that is frequently on
the agenda of these meetings is the use of antidumping (AD) policy and disputes
related to it.2 While China has initiated only four cases against India, India has
initiated 147 cases against China, of which 120 ended with the imposition of
measures against Chinese producers.3 In relative terms, this corresponds to 22.4
per cent of all Indian AD initiations and 25.1 per cent measures that India imposed
against its trading partners worldwide between 1995 and 2011. Roughly, every
fourth Indian AD case is directed towards China. No other country worldwide is
targeted by its trading partner as frequently as China is by India.
The AD rules are part of the General Agreement on Tariffs and Trade (GATT)
and allow members of the World Trade Organization (WTO), under certain condi-
tions, to impose restrictions against foreign imports. If a particular product is
dumped into the domestic economy, which legally means that it is imported at a
price below ‘normal value’,4 and if, additionally, dumping causes or threatens
material injury to the domestic producers, then the domestic industry can file for
AD protection. Article VI of the GATT and the AD Agreement stipulate that the
government can then impose protection, which usually comes along with the
introduction of an AD tariff on the ‘dumped’ imports that are imported from the
producers in the target country under investigation.5
Among economists, AD measures are widely regarded as a form of protection-
ism that allows governments to safeguard the domestic economy from foreign
competition whenever there is demand for protection from domestic producer
industries. However, as most economists would agree, trade protection had a det-
rimental impact on trade flows during the Great Depression of the 1930s, thereby
worsening the economic situation at that time. For this reason, economists and
policymakers have been wary of a repetition of such a scenario in the current
economic crisis, referred to as Great Recession.
Indeed, trade policy has increasingly come under monitoring worldwide.
International organizations such as the World Bank have been analyzing exten-
sively the use of temporary trade barriers which provide governments with a way
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