The Effectiveness of Canada's Antidumping Policy

The policy question

Antidumping duties are intended to protect domestic producers from imports judged to be sold below normal value and to cause injury. But their actual effectiveness depends on what happens after a case is decided. Imports from the named country may fall, yet competing suppliers in non-named countries may expand their sales and fill the gap.

The paper therefore addressed two linked questions: do Canadian antidumping measures significantly restrict imports from named countries, and is that protection offset by trade diversion toward countries that were not targeted?

What this paper contributed

Data and empirical strategy

The dataset covered Canadian antidumping cases and detailed import flows between 1990 and 2000. Antidumping information was compiled from the historical case listings of the Canada Border Services Agency and checked against Canadian notifications to the World Trade Organization. Import data were observed at the 10-digit Harmonized System product level.

The empirical analysis separated countries named in an antidumping case from countries supplying the same product but not named in the investigation. This made it possible to estimate both the direct reduction in targeted imports and any corresponding expansion of imports from alternative sources.

Key findings

• Affirmative decisions produced a large immediate decline in targeted imports. Under the preferred fixed-effects specification, the value of imports from named countries fell by approximately 76% one year after duties were imposed.
• The strongest effect was concentrated in the first post-decision period. Later coefficients remained negative but were not statistically significant, indicating a rapid rather than gradually accumulating restriction.
• There was little evidence of trade diversion. Imports from non-named sources did not increase significantly after affirmative decisions against their competitors.
• Negative determinations did not produce a clear harassment effect. Cases ending without duties generally had no statistically significant effect on imports from named or non-named countries.
• Canada’s regime differed from the US evidence. The findings were closer to European results, where trade diversion was limited, than to studies finding that US antidumping protection was substantially offset by alternative suppliers.

How the Canadian regime operates

Canadian antidumping cases are governed by the Special Import Measures Act. The system divides responsibility between two institutions. The Canada Border Services Agency determines whether imports are dumped and estimates the dumping margin. The Canadian International Trade Tribunal determines whether those imports cause or threaten material injury to Canadian producers.

Canada also applies duties prospectively. Duties are collected on subsequent imports rather than retrospectively recalculated in the manner used by the United States during the study period. These institutional differences may help explain why Canadian market responses were not identical to those reported for other major users of antidumping policy.

Policy and research implications

• Antidumping duties can provide substantial product-specific protection when affirmative decisions sharply reduce imports from targeted countries.
• Evaluating trade remedies requires examining both named and non-named suppliers; measuring only the decline in targeted trade can overstate protection when diversion is substantial.
• Institutional design matters. Transparency, prospective duties and the division of responsibility between dumping and injury determinations can shape market responses.
• Product-level data are essential because aggregate trade statistics can obscure the effects of measures aimed at narrowly defined goods.
• The findings remain relevant to current discussions of trade remedies, supply-chain redirection and the use of contingent protection within rules-based trade agreements.