Trade remedy: a stumbling block for ASEAN economic integration?

Abstract

This thesis investigates ASEAN’s use of trade remedy instruments and their impact on trade and liberalisation efforts. With the growing number of trade remedy cases worldwide, ASEAN member countries are exposed as targets of anti-dumping (AD), subsidy and countervailing measures, and safeguards. They are also new users, primarily of Anti-dumping. Focusing on AD, this thesis presents the landscape, implementation and application, and effects of trade remedy instruments in the South East Asian region. Under the ASEAN Trade in Goods Agreement (ATIGA), ASEAN members are permitted to use trade remedy instruments as stipulated in agreements of the World Trade Organization (WTO). Although the use of trade remedy instruments are sometimes seen as contrary to the WTO’s most favoured nation (MFN) principle, their use is permitted in exceptional circumstances. How does the decision to make AD – a trade limiting policy – readily available for ASEAN members affect industries, trade flow and integration efforts with the establishment of ASEAN Economic Community in 2015 and goals of becoming a more integrated region?. This thesis examines three main questions as an indication of trade liberalisation and integration efforts: (1) What motivates ASEAN member countries in initiating AD investigations? (2) How does AD affect trade? and (3) Does AD contribute to the reduction of tariffs? This thesis utilises ASEAN trade remedy, imports and applied tariffs data from 1995 to 2012. To investigate the motivation behind the use of AD, this thesis uses binomial probability to look at whether AD use is triggered by strategic or economic motives. An econometric model is applied to Indonesian import data to find evidence of the investigation, trade diversion and destruction effects on trade flows. The relationship between average applied MFN tariffs and the use of AD is estimated to identify its contribution to liberalisation. The results reveal that, for ASEAN members, the use of AD is driven more by strategic motivations. In the case of Indonesia, AD use does halt the movement of import products when AD duty is imposed at least from the named countries in the case, but this effect is offset by the diversion of trade to non-named countries. The analysis of this thesis also found evidence of the AD’s contribution to the reduction of average applied MFN tariffs, particularly so for the reduction of applied tariffs at the product level. Furthermore, for ASEAN, it was found that the contribution of the use of the AD instrument is more significant for countries with lower GDP per capita than for countries with higher GDP per capita.