False Friends? Empirical Evidence on Trade Policy Substitution in Regional Trade Agreements

In this paper, we examine the interplay of regional economic integration and the use of bilateral antidumping (AD) measures. Our empirical analysis brings three central findings to light: (i) We find that regional trade agreements (RTAs) generally reduce the likelihood of AD activity among integration partners. (ii) In addition, an improvement in tariff treatment of trading partners —regardless of whether expressed in absolute or relative terms— generally leads to a lower likelihood of bilateral AD activity. (iii) Regarding the interaction of both events, however, an improvement in the relative tariff treatment among fellow integration partners leads to a higher likelihood of bilateral AD activity than an equal improvement in the relative tariff treatment among non-integration trading partners. The latter effect seems to be primarily driven by those RTAs with a participation of “South” countries.