A Panel Data Analysis of Antidumping Duties in Seafood Trade: A Gravity Model Approach

ABSTRACT

This study uses a panel of monthly data to investigate the effects of antidumping (AD) duties imposed on shrimp imports to the U.S. The results from the augmented gravity model show that initiating AD investigations and the final AD duty rate harm trade with the named countries. Distribution of AD duties among domestic industry producers stimulates a positive supply response. Rejection of imports by European countries for food safety reasons deflects trade to the U.S. The pass-through effects of the AD duty rate (and exchange rate) on import prices are small, indicating minimal adverse effects of AD policy on consumer welfare.

KEYWORDS:

• Antidumping
• gravity model
• seafood industry
• trade deflection
• trade diversion

Acknowledgments

I am thankful to Renee Berry and John Giamalva from the International Trade Commission and Brittany Bauer and Whitley Herndon from the International Trade Administration for data and comments, to Christopher Liese from NOAA for comments, and to Louis-Pierre Rich for his assistance.

Disclosure statement

The opinions expressed herein are those of the author and do not necessarily reflect the views of NOAA.

Notes

¹ The vast majority of U.S. shrimp imports, except those from the five AD named countries, are duty-free based on the Most Favored Nations (MFN) status of the importers. The only shrimp product that is not MFN duty-free is prepared meals containing shrimp (https://ustr.gov/trade-agreements/free-trade-agreements). Therefore, a free trade agreement (FTA) is not necessary to eliminate duties on shrimp. The antidumping duties have also provided funds to subsidize U.S. producers.

² While Brazil was removed from the AD group in 2022 after a successful sunset review, Ecuador and Indonesia are under investigation based on a petition filed for dumping shrimp in the U.S. market in 2023.

³ In 2017, India supplied one-third of the shrimp imported to the U.S. It also had half of the FDA rejected shrimp entries to the U.S. due to veterinary drug residues and the presence of salmonella.

⁴ There appears to be a rise in the number of rejections as the import volume has increased over time, resulting in the positive sign for the coefficient of the number of U.S. rejection cases. While this correlation is likely to be a natural response to applying seafood safety policies rather than a trade strategy, it resembles a phenomenon known as endogenous protectionism (e.g., Ray 1981; Trefler 1993). The Hausman endogeneity test confirms this suspicion. However, since U.S. safety rejection cases are not the focus of the article and the variable is only used for control, to avoid endogeneity, instead of a 2SLS method, I replaced the U.S. number of rejection cases with its ratio to import volume.

⁵ Expenditures for seafood products was considered as an alternative to GDP for the size of the U.S. and exporting countries’ economies. However, since sufficient monthly data for all countries in the sample for the duration of this study are not available, GDP is used in the analyses.

⁶ The 10-digit Harmonized Tariff Schedules of the United States (HTSUS) codes for shrimp are 0360.17.00.01, 0360.17.00.02, etc.

⁷ In alternative model specifications, the coefficient of the lagged values of the price of oil up to length 6 produced similar negative results. However, using remoteness as an alternative resulted in a positive coefficient of distance.