Do Protectionist Trade Policies Protect? The Unintended Consequences of an Antidumping Tariff

r buyer's signed to petition. ion Introduction Economics is an essential input into policy decision making if for no other reason than its ability to identify unintended consequences of otherwise well-intended policy initiatives (Harberger, 1993). This is perhaps especially true for trade policy, where interest groups seek policy benefits while ignoring the feedback effects from international markets. The costs of these feedback effects are often borne by others. Over the past decade, farmers and food processors in the United States have sought domestic protection from foreign competition for various commodities. Examples of such efforts include tariffs, duties, and/or quotas on imports of pasta from Italy and Turkey (1996), fresh tomatoes from Mexico (1996), wheat gluten from the European Union (1998), live cattle from Canada (1998), lamb from Australia and New Zealand (1999), sugar from the European Union (1999), honey from Thailand and China (2001), greenhouse tomatoes from Canada (2001), frozen red raspberries from Chile (2001), mussels from Canada (2001), durum and hard red spring wheat from Canada (2002), and softwood lumber from Canada (2002). In the trade environment (as in other policy areas of public policy), policy advocates sometimes suffer buyer's remorse from unintended consequences of such policy pursuits. A prime example is provided by the antidumping and countervailing petition against the Canadian cattle industry filed by the Ranchers-Cattlemen Action Legal Fund (RCALF) in 1998. R-CALF, a producer organization created in 1998, claimed that fed and feeder cattle price declines between 1993 and 1998 (about 27% in real terms) were largely due to increased US imports of fed cattle from Canada (see sidebar, page 42). Many of R-CALF's members were ranchers in the Northern Great Plains and Rockies region. These ranchers typically sell feeder cattle to US feedlots. In January 1999, the US International Trade Commission (ITC) ruled that US cattle producers may have been materially injured by US imports of Canadian fed cattle. On June 30, 1999, the US Department of Commerce's Import AdministraDo Protectionist Trade Policies Protect? The Unintended Consequences of an Antidumping Tariff