Antidumping Investigations and the Pass-Through of Antidumping Duties and Exchange Rates: Comment

well in excess of 100 percent based on their understanding of the US antidumping calculation. However, the hypothesis is based on an incorrect understanding of the antidumping calculation under US law; when corrected for this error, the hypothesis would lead to a prediction of simple 100 percent pass-through, at most. Dumping refers to selling a product in an export market at less than its "normal value," a benchmark that is most commonly based on sales in the domestic market of the same product. Antidumping laws set tariffs to offset the amount of dumping, the excess of normal value over export price. In US practice, a dumping complaint is brought on behalf of an industry against rival imports, with the cases defined by product and by country. A successful case results in the potential imposition of antidumping duties over and above any normal tariffs; an unsuccessful case results in no duties being imposed. American antidumping law and practice have the somewhat unusual characteristic that anti dumping duties are estimated and used to set duty deposits for a forward-looking period in an initial investigation, then are recalculated and actually assessed for the same period, now back ward looking, in a later review; with some variation, the later review is typically completed about two years after the initial investigation. The review sets a new deposit rate, and a second review determines the actual assessment rate retrospectively; this can be repeated indefinitely. The ini tial duty estimate, resulting in a deposit rate, allows companies to modify their pricing behavior so as to affect the actual dumping duties that are later assessed. Blonigen and Haynes exploit this characteristic of the US administration of its antidump ing law to examine the effects of the imposition of antidumping duties on the pass-through to US pricing. The dumping investigation and resulting deposit rate provide information that the company can use in its subsequent sales in order to reduce or eliminate its dumping liability in the eventual review. By comparing the antidumping deposit rates with eventual US pricing, the degree of pass-through of antidumping deposits can be estimated, and the effects on exchange rate pass-through of a potential antidumping dumping duty can be studied. Here I focus on the factual underpinnings that lead to Blonigen and Haynes's pricing model, rather than the empirical results. That model predicts that the method by which the US Department of Commerce (USDOC) calculates AD duties will lead to pass-through of estimated antidump ing duties at twice the level of those estimated duties if companies wish to eliminate the eventual dumping duties. By studying the outcomes of a series of AD cases concerning steel from Canada, they conclude that pass-through of estimated duties exceeds 160 percent, broadly consistent with