Do Domestic Producers Benefit from Safeguards? The Case of a Japanese Safeguard on Chinese Vegetable Imports in 2001

This study examines the effects of a safeguard policy imposed by Japan in 2001 using detailed product-level transaction data from domestic markets. The market prices of imported and domestic goods are almost always higher during the safeguard period compared with those in the previous year. However, the safeguard measure decreases the margins for imported goods, but does not affect the margins for domestic goods. As temporary import restrictions are expected to enable structural changes in the domestic industry, we also estimate the long-term effect on margins. We find that five years after the safeguard period, the margins remain similar for domestic goods and are smaller for imported goods. These results suggest that the temporary import restrictions were both harmful to imported goods producers and consumers and unbeneficial to domestic producers.