Detecting Anti-dumping Circumvention: A Network Approach

TL;DR

This paper introduces a network-based methodology to detect anti-dumping circumvention by analyzing trade flow patterns, achieving high classification accuracy in identifying potential evasion cases for European Union trade.

Contribution

It presents a novel network approach and a proxy measure to identify anti-dumping circumvention, improving detection accuracy over previous methods.

Findings

Correctly classifies 86% of trade flows related to anti-dumping cases

Identifies potential circumvention via re-routing trade through third countries

Provides a practical tool for authorities to detect evasion

Abstract

Despite the increasing integration of the global economic system, anti-dumping measures are a common tool used by governments to protect their national economy. In this paper, we propose a methodology to detect cases of anti-dumping circumvention through re-routing trade via a third country. Based on the observed full network of trade flows, we propose a measure to proxy the evasion of an anti-dumping duty for a subset of trade flows directed to the European Union, and look for possible cases of circumvention of an active anti-dumping duty. Using panel regression, we are able correctly classify 86% of the trade flows, on which an investigation of anti-dumping circumvention has been opened by the European authorities.