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Oxford Economic Papers 2001; 53:297-317
Copyright © 2001 Oxford Universty Press

Article

Unionization and European antidumping protection

H Vandenbusschez, R Veugelersz,y and J Koningsz

z Catholic University of Leuven, Leuven, Belgium
CEPR, London, UK
y Catholic University of Leuven, Naamsestraat 69, 3000 Leuven, Belgium
E-mail: reinhilde.veugelers@econ.kuleuven.ac.be

Abstract

In recent decades, the WTO has resulted in a worldwide reduction of tariffs and VERs. Instead a new type of trade policy has emerged in the form of antidumping measures. In principle their use should be limited to instances of unfair foreign imports. However, even without unfair pricing, a foreign importer can fall within the scope of the European antidumping legislation. The purpose of this paper is to analyze the interaction between unionization and the likelihood, type and effects of antidumping measures. We present a simple theoretical model which is well embedded in EU legal practice, to show that the presence of European unions leads to an increase in both the likelihood and the level of antidumping protection. In addition our results indicate that a cost asymmetry in the form of a unionized wage differential can alter the relative probability of a duty versus an undertaking. These effects depend on the intensity of product market competition. The paper concludes with some evidence from EU antidumping cases between 1985-95.


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