DP6486 Did US Safeguards Affect Mark-ups of EU Steel Producers?

Author(s): Hylke Vandenbussche , Ziga Zarnic

Publication Date: September 2007

Keyword(s): firm data , price-cost margins , safeguard measures , steel industry , trade diversion

JEL(s): F13 , L13 , L61

Programme Areas: International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP6486.asp.asp

This paper empirically investigates the effects of the US safeguard protection on steel imports in 2002 on the mark-ups of EU steel producers. We identify a large panel of EU steel producers between 1995 and 2005 affected by the safeguards. Using the Roeger methodology, our results show that the protection signifcantly reduced the EU firms' mark-ups. Single-product firms suffered relatively more from the safeguards than multi-product firms. Our evidence further suggests that the US protection resulted in some diverting of the EU steel especially towards China, aggravating the situation on the Chinese steel market and ultimately resulting in the Chinese trade protection of steel imports.