By Daniel A. Sumner, Richard C. Barichello, and Mechel S. Pagi

The use of antidumping, countervailing duties and safeguards and protection measures that are again issues for negotiation in the current World Trade Organization trade negotiations. In addition, disputes related to domestic agricultural subsides are gathering attention as the Uruguay Round Peace Clause expires. This paper considers the application of economics in some high profile agricultural cases. Domestic subsidies for agriculture remain high in many countries, which may make countervail, subsidy and serious prejudice cases more common. At the same time, given fluctuation of farm prices, limited short-term control over farm output and with many farms supplying most agricultural markets, the economic logic of dumping and antidumping is even more troublesome when applied to agricultural commodities.

This paper reviews the role of economic analysis and how the law and economics interact in agricultural antidumping, countervail, safeguard, subsidy, serious prejudice, and cases. The paper reviews where economic analysis enters or does not enter and how some legal concepts may differ from the logic applied by most economists. Measurement of the degree of subsidy, the amount of dumping, and the effects of subsidies are considered. In addition, the paper considers issues related to measurement of losses to the affected home country industry from imports, again with reference to how agriculture may differ from traditional cases applied to manufacturing products. Finally, the paper considers how the spread of the use of trade remedy procedures may affect the economic implications for reform, again with particular reference to agriculture.

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