Report: The Economics of the EU’s Trade Defence Instruments

The fact that the shielded EU companies do not seem to increase their sales was, after all, a bit of a surprise.

Patrik Tingvall Chief economist

patrik tingvall

EU producers do not benefit from EU anti-dumping measures. There are no signs of regained market shares or that EU firms are able to raise prices on targeted goods. This is shown by a new analysis from the National Board of Trade, Sweden.

What is the report about?

In this report, we show how companies, consumers and the EU are economically affected by the EU's anti-dumping and anti-subsidy measures. We have previously analysed how trade flows and prices are affected by anti-dumping and anti-subsidy measures. We have studied whether EU companies regain market shares after measures have been put in place. In this report, we put together the effects on prices and trade flows and translate it into economic effects on consumers, producers and the EU as a whole.

What is the purpose of a trade defence instrument?

The most common measure is anti-dumping duties on exporters from outside the EU who have price-dumped their exports to the EU. This may be when producers sell a product less expensive in the EU than in the home country. When the EU imposes an anti-dumping duty – raises the duty on a certain product from a certain country – the competitive firms´ lose markets shares in the EU market.

What are the most important conclusions?

The single most important result is perhaps that the measures do not appear to be helping EU firms competing with the imported price-dumped products to regain market shares. They neither charge more, nor increase sales.

What surprising results did you find?

The fact that the EU companies shielded by the measures do not seem to increase their sales was, after all, a bit of a surprise. Another result that surprised us was that the measures led to producers from countries outside the EU, rather than our own producers in the EU, succeeded in strengthening their position in the EU market when a trade policy measure was implemented.

We also saw that the measures generally do not lead to higher consumer prices, neither from the EU's own producers nor other producers from outside the EU. This despite the fact that one might think that firms take the opportunity to raise their prices when a competitor is put out of action and competition falls.

What do you hope to achieve with the report?

The EU wants the measures to lead to increased sales from producers within the EU. Our analysis however, and several other studies before that, shows that this purpose is often not achieved. A strength of this investigation is that it is based on a modern analysis method (the synthetic control group method) that allows us to quantify the effects of introduced measures. Therefore, this is a solid, evidence-based analysis that is interesting for trade policy making. The persons who produce the basis for and make decisions on the introduction of anti-dumping and anti-subsidy measures need to know what effects they can expect from the measure.