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Title: U.S.-Canadian tomato wars : an economist tries to make sense out of recent antidumping suits
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Permanent Link: http://ufdc.ufl.edu/UF00089819/00001
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Title: U.S.-Canadian tomato wars : an economist tries to make sense out of recent antidumping suits
Series Title: Journal reprint series - International Agricultural Trade and Policy Center ; 03-4
Physical Description: Book
Language: English
Creator: VanSickle, John J.
Evans, Edward A.
Emerson, Robert D.
Publisher: Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville, Fla.
Publication Date: December, 2003
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Bibliographic ID: UF00089819
Volume ID: VID00001
Source Institution: University of Florida
Holding Location: University of Florida
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Full Text

JRTC 03-4


J j




Imu~tute ofC Fexud anrd Agricultural Sdemvs~e

U.S. Canadian Tomato Wars: An Economist Tries To Make Sense
Out Of Recent Antidumping Suits


John J. VanSikle. Edward A. Evans, & Robert D. Emerson

JRTC 03-4 December 2003
..................... ...........-


Q --


MISSION AND SCOPE The International Agricultural Trade and Policy Center
(IATPC) was established in 1990 in the Food and Resource Economics Department
(FRED) of the Institute of Food and Agricultural Sciences (IFAS) at the University of
Florida. Its mission is to provide information, education, and research directed to
immediate and long-term enhancement and sustainability of international trade and
natural resource use. Its scope includes not only trade and related policy issues, but also
agricultural, rural, resource, environmental, fod, state, national and international
policies, regulations, and issues that influence trade and development.


The Center's objectives are to:

Serve as a university-wide focal point and resource base for research on
international agricultural trade and trade policy issues
Facilitate dissemination of agricultural trade related research results and
Encourage interaction between researchers, business and industry groups,
state and federal agencies, and policymakers in the examination and
discussion of agricultural trade policy questions
Provide support to initiatives that enable a better understanding of trade and
policy issues that impact the competitiveness of Florida and southeastern
agriculture specialty crops and livestock in the U.S. and international markets

Journal of Vrit ,iih viil and *-/'rp./ m. Eniooic, 35,2( August 2003 '- !y'h
t 2003 Southern Agricultural Economics Assciation

U.S.-Canadian Tomato Wars: An

Economist Tries to Make Sense Out of

Recent Antidumping Suits

John J. VanSickle, Edward A. Evans, and Robert D. Emerson

U.S. growers filed an .iniiitnimpin ira .,g.iinni Canadian grower' of rTir iienhmj..e rimn
tomatoes .illegrin that I.1' hgrL.-rs were being injured, or hreaienedi with material injury,
by imttports Ililurn C.lr.tl.i. The U.S. MDeparinemn iiL' Cin-iiuiiCnes d4eterlined tiat ifnprts of
greenhiuse-grown tormatos were ibing sold in U.S. markets at less than fair maket value.
The U.S. Interi-tional Trjde Commiission determined the "like pro'du, l to be .ill fresh
market tomatoes, L.LLntludJn- tihe domestic industry was "not il.ler.lll injured Arnecdoal
evidence used by the Commission tDep.lrl..nl in .klekilrninng like product ignores the
wealth of kiin, ledgi that economics can add. An economic model is pr.lpo,'dt for purpose
ofl determining like product

hK i Words: amiduminpinig. law, to tom trade. U.S.-Canada

JEL Chuisificationit. F13. 1- 17, K.3. (17

The U.S.-C.anadi:n trade dispute filed by U.S.
greenhou.Le groiCer against the Canadian
grouer. of L'rcnhi.us.e-gro% n fresh tomatoes
pro idJ- an interesting insight into trade law
and dispute resolution and dcnm,'ns.r.it.c the
need for inrlcrporating mre economic analy-
ses when adJiuJudiL.in trade dispute The
trade dispute aith CamIid in the fresh tomato
market is preceded by the many cases that
have been filed by U.S. growers of fresh to-
Imatoes .;i.inlt tle'\ico. A review Io tlhos pe-
titions provides an interesting and inltrmnaliilL
backdrop for discussion about the U.S,-Ca-
nadian cases and the role of economics in de

John J. VanSickle is professor and director. Edward A.
Evans is ibasstaint hitiar. and Robert D. Eitrson is
pfoie,,ir. International Aricultural Trade and Pohlil.
Center. Food and Resource Econonuis department,
ULiversity of Forida, G. iilit.-i lk FL
Suupprn was provided by Florida \gri.ulitLr.,I
Compecilivencss and Trade project rom the HirniL
TD-eiarlilnllt of ,1:ip ultliun and Consuimer Scrvice.s

icrminini the outcomes in [hich' cases. The
specific concern of this paper is the extent to
which the U.S, International ITade Commis-
sion ITC' makes systematic us of market
data in dchlinng the "domestic like produL.r
and the scope lI the .IIeLIeed "domestic in-
dustry." In view of the critical part such de-
terminations pil.i in a tinjl determination ot
whether injury has occurred, it is p'.icd here
that an approach more transparent than the one
currently employed could be more appropriate
in such determinations. A ,implo. prat.lital.
market-Lbaed approach that would assist the
relevant jagenfic. in drtwing conclusions on
like product is ulc -.ieuil "I'lh ITC looks for
"clear Jli idinri line, inuiong |w)%ihile like
pis ]u Ll and Jdi el~.i d minor variations."' We
begin our discussion with a hrine overview of

Torringtoi Co. v Uinited \'.rtr 747 F '"l'p 744,
74-.'-~1- .(1 I Lit Ir.-d lrul afrd, -Jhi F2d 1278
I-'l Cir I'u l 1,

Journal -1 r %i-; i'ofl~e aid Applie'd F, wI j A I pi~t.I 21)J3

the legal pFredures for jsdiuL ILip.,1 trade dis-
I.'llen in the United States,

Brief Overview of the General Framework
for -Adjudirating Trade Diputes in the
United States

U-S- trade laws are intended to prc, cni unfair
trade practices by brleiLl firms by L-n.I.tlIAir
domestic producers to seek IIUie'rli.ii. lInin
imports that allgedl; iniure '[pk.ifit lirms or
industries,. Tli three main statues thal offlil
such protection are the "-afl'u.ir[L" provi-
sions of Sections 201-3 1I the Ir.ilrC Act of
IL)-74 the \" nllidlmpinlg,"Q provisions under
Section 7 1iia of the Tariff Act of l').1. arnd
the "Cl('uierl. iliii." Duty" provisions under
Section 701 ,'i the T.jnfi Act li 1I33t' Al-
thlough the airal tin. j[ procedures are somewhat
similar in these cases, the I'lmerLr IS.irLLjuarTL
provisions) iphokld, a hither injury standard
than the latter. An affirmative in a "-.it4-_'i,,iiijI
provisions" case requires that the domestic in-
dustry must be materially harmed and that the
injury is bs cause of dumped imports, 'This
Lilien. I'r in tihe iiiljir standard in inldlunlIp.-
ihi. and countervailing duty cases that require
"harm which is not inconsequential, immate-
rial or unimiiportant."' In JuiiiiillM1 ;pl; I and
LLiLunJILai 'aihng duty cases, the criteria can be
satisfied b% .implyl ~lI i ri|: that imponts have
resulted in a decline ir industry capacity.
Hiilwe'cr. in S.ifegu:.rd cases. the evidence
"rulJ have to show that there was actual clos-
ing of lrinn, or a decline in industry capacity,
in addition to other evidence of injury such as
Jeclinc- in prices. i 1iip r -' iernT, '.. es or
Lr!Llith or the .ibilii to raise capital for in-
1he iwo l.edrVLl agencies with mandates t'Lr
.JL.IitLIlliC; nai trade Jiputc, in the United
States are the ITC and the U.S. Department ,'I
Commerce I)t IK), Foll wir i ihec filing ,i, a
couinlcri ilinL duty or .ntidumpirit. petition

Section 'iil provisions apply when subjhel im-
pjlrt are from a countrI ty py to the World Trade Or-
..rhnI,',i[I, ni ScCtlion 303 i, applied to iiin .i fruom
CoUtriesF not party to the 5..rld Irj.JI r )ri'.,itall n
'19 U.S.C. 2252 i I'**l,
*ld. .I,'" .

with both agencies, the investigation tIllti t
a broadly classified two-step process. First, the
DOC defines tlle .1iihjiL :utIirh.!ir Llhe to be in-
vestigated in the case and conducts its own
inI'ci-'.iViLtiIn to determine whether an unfair
trade practice occurred. For countervailing
duty cases, the DOC determines whether im-
ports received countervatiable subsidies i ImI
the :, L-ini.llllni r1 the country or any public
entity. In antidumping cases, the DOLC( deter-
mines whether the imported product was being
sold in the United itatetc at less than fair value
LTIV). The standard measure is to rirf'- com-
pare prices r.i< export to home market sales. It
export sales prices are less than home market
prices. then that -cl1 iiiol dumping on the
part of the e-iportei Home market sales are
excluded when jdtci iiniiii fair value when
the home market sales are below cost of pro-
duction over an extended period of time and
in -i1nllic iin quantities and are not at prices
that permit recovery ri all costs ithin a rea-
sonable period of time in the normal course il
trade If there are not sufficient home market
sales above cost ,0 production, then the DO )C
can turn to the third country (est. If the third
country test fails the standard ii sales above
cost il production, the fair value test becomes
constructed value, which assesses the cost of
prldutri,,n1 by iakini_ into account the cost Ilf
pi',.iicliion inputs. The determination tI
dumping margin in many a.JiiitIli.ii.il cases
lii;it onit the constructed value test.
The second 'lep of the process involves the
ITC's inr.cii.tieti,,n to determine whether the
domestic industry is ni.iiiii.illy injured or
threatened with material injury by reason of
the tubjct.1 mercy handise as detemintmed I' the
H'i)" In ..iirt'ill, out this 'LIp. tihe I it is re-
quired to (a) 4Jtlne the domestic like product
to the imporicd priLJdu.1 and the scope II the
domestic industry and ih, subsequently deter-
mine whether iniury has been suffered by the
domestic industry,
RIK .jitlliii point a. above. Section
771(4)(A) of the Thriff Act of I 4 i1, as amend-
ed, provides a;iimdl-lc by Ldillilng the ideli ant
industry as the "pi odtcer-, as a 1T lihile of a

*i'~l.~ril xi A /z2. and Ii6rnr.1nn (l&.S.-Cnain Te oio Pur &

domestic like product, or those producers
whose colleitc output of a domestic like
product constitute a major prnOlkhriol,'n Of the
total domestic production lof the product."' It
further dliinIsc donmesiLl like product as "a
product which is likr. or in the absence of like,
most .,ianl.ar iln cLh.HiLacieri.li:c and uses Uwlh
the article 'uihbecl to an inriieig.tii.ri . ."
11i." I C'. in .ippl ilig the statutory ,I.iiit::in I if
"like" or "'nlo.I similar in characteristics and
uses." does so on a case-by-case basis ( TCr
.0HII. p. 3). -\ltlh,uh the ITC does not rely
ct'L-luil el) on any one factor in arriving at its
decision, invariably wr he such determinations
are made, the preponderance of the evidence
is based on six traditional qualitative factors:
phiiL.il characteristics and uses; interchange-
hbilitl. common produclhin l aciltiuc. prlKess-
es. and 'emrplou.cc. producer and customer
perceptions: and channels of dilinrunioun (ITC
2001 p. 5 -9). In the instances where prices
have been used, they are iii'n prci-enie only
as descriptive statistics, such as mean and
price differeniil ... which ca ofn oft be mis-
lc.iing. Seldom are such determinations based
on econometric modeling, which has the add-
ed advantage of being able to control for "oth-
er factors" and provides a transparent and ob-
jecive approach to such determination,
Follhowi In- idlnnililcati1iOi of the like product
and domestic industry. the ITC' sets out to de-
termine injlr% (point above). As allltiedl to
earlier, the standard in an injury determination
depends on the I p"e of case involved. An af-
lirmi.m e determination by the ITC in an an-
tidtJnpinp case only requires a determination
that an inrll-lr in the United States is mate-
rially injured by reason of imports unldel in-
vestigation. In other IwArd. dumping only
needs to be a cause Il material in.mi L and the
FTC is ,tricll, Iorbiddl n from weighing ihc
effects of causes, The determination of in iur,
must consider the uilume of subject imports.
their effect on prices for the domestic like
product, and their effect on domestic produc-

1 19 US.CC. I f."1 -3 11%
'' 7 1) YuS.C. I l,'1'6-:, Ill
19 U.S.C, li',T-',lin
"19 U.S.C. r.77.1hi,
S. RL'p No. 2-4,. 96th Cong. Ist Sess. 74 I-'t

ers of the like product, but only in the context
ift the domestic operations of the producers.
Several tests can be employed to determine
whether an industry is nm.rerti.llI injured One
is a measure ni the effect of imports on the
relative health of the ililii-nll vhiL'h is ac-
ciipli.he.d by .irIsNiderlling the levels and
trends "I factors that can characterize industry
condition Thc-C include: (1) the price 4it the
dinjlll-cl import relative to domestic product
price(price unlderutiil. (2) increases in vol-
ume of the dumuipe import. (3) price of the
U.S. like product ipri.e suppression or de-
p1rv .Llni 141 domestic output, (5) domestic
sales., ih domestic inventories. (7) domestic
market h.ire. (8) trii~. 4') total volume ni
dumped iiihn rt-. (10) .ipl iit\ utilize tion, (11)
cash 1l4W, (12) pn0lin1 (13) pido ilit, (1-4)
return n inveslnents. i ivese1s investmentsI I Iu i
ability to raise capital. (17) employment, and
( IM Iw.JJ,."1
These factors are weighed by he ITC1 in
reaching their conclusion on injury. One meth-
od used by the ITC to evaluate injury with
these tjL ll. is the Commercial I'llli', Anal-
ysis .5iiylmn (.CO)N1P'. Fr.nimi% and Hjllj.
'.OMIPA. is a set of spreadsheet-based partial
,:iriiri trrii iin models that .ii.ilx te trade-related
.lin or injury to rpe.llilc domestic industries
and the dIper.all ecI-,Lini)s The uildLrl\ ing
model structure iif Ct >MPA.\ is an *\rniiniigton
model 0,lblini il g ncl.'' ,r l lu I IIIn iiIltiiiii about
pii..luli siTmilrity. illdduiir demand, l ll ph
condition, and market shares. The todel dis-
iiiruishe, commodities b% their (liiun yv of or-
igin and assumes a single constant elasticity
of substitution and hLrlnotheiliJilN of i prier-
ence. The COM.PAS model is sensitive to the
value ,f' the elasticity Iof substitution for the
products, and as a rceull. the effects on the
industry from estimated dumping margins can
be understated (Alston ei al.. The Staff Anal-
ysis pertrmicd by the ITC uses the COMPAS
model to estimate injury, not as a definitive
analysis, but as ,uidance in making a final de-
icr niintion

"" 19 U.S.C. ", ,'i7 i ii ni I

~~ ~~~~~~

JOur x il' &14 -IrC t J alirrr 4; r-dI PAd *IMopirr-a A.lreruwf 2(k)

Review of Reccnl Tomato Trade Dispute

U.S. -A, .tii r Trade Dfilutwc

Trade with Mexico in fresh tomatoes has long
heen a contentious issue in the United Sule,
Mexico became a major player in the market
lullio.ing the embargo placed on Cuba in
1062 (VanSickle 1996. The removal o Cuba
from Ihr U.S. market uprncd a window ti Wop-
portunit that MNeic.Ia growers and shippers
seized. Mexico increased .hipmrcnt- of fresh
tomatoes to the Unilcd States and eroded Flor-
ida's market share to the point where Florlda.
producers filed their first antidumping peititon
in 1978." That petition was withdrawn at the
urging of the Carter AdmrinitraI'in but was
reubhmiriid the I1oluowint year when increased
imports continued to depress returns to Florida
growu er'r "The US. Department of Commerce
did not idcntl dniiipin in that case when it
used the third country test as the measure of
lair market value L'niicJ Slatts to sales of Mexican Irhh to-
mtraoes in Canli.d.i) NowIhii hLtiidiling the out-
clme ol that decision, MNeccJo did ,hift tus pol-
icy reg:ardin priduLce sports. niuagini their
trade over the decade L! the I18O, and in the
early 1990s by imposing minimum quality
standards that had the effect of controlling the
volume of produce they shipped to I i S and
Canadian markets (VjnSickle 1' 9. 1,3). Al-
though short peri(_.b of depressed markets oc-
curred over dl-,i period, the intensity of cor-
petiiion was much less than it had been
iJord.an and V.inSicklh It)95h)
The North American Frve Trade Agree-
ment NAFTA)14 ushered in a new era for the

SCertain Fresh Winter Fresh reihable. f. ~
Mexico: Termnination oi Ainiidumping ine,~iig.ngiinm 44
Fed. Reg, -.13,+7 1979),
'Ceitain Fresh Winter Fresh t gie'uabhl from
Mexico: \nidJuinping Pr.i'ecdling. NiaiL and Tentaiive
tDeterni.ion of s.ile at Not ltei Than Fair Nalu.:.
44 Fed. Rtg 63S88 1979).
Certain Fresh Winter Frsh Vegelables f~i
Mexico: F-rnal .Deirminaicmn of Sales at Not Less I ihin
Fair Market Value 45 Fed. Rit 20.5r1 (1980).
SNorth AC eroicin Free Trade A32inueni. DeC. 17,I
1992. Can -MC.-US,, 32 i.L.M.289.

produce industry and brought with it more
trade disputes that were Laken to the ITC and
DOC. The three main provisions ,l NAITA
rel.l iiiig to tomatoes were (1) elimination of
tariffs over a I n--car transition period, (2) lib-
erai/ition of te ransportation secor, and (3)
removal ot barriers to investment. Of these.
thc investment provisions of NAFTA and pol-
icy change in Mexico concerning land reform
and investment have had the greareil effect on
Mexico's Lomprtiltr c advantage. U.S. growk err
have long held an I'adlantage in the U.S. mar-
ket for fresh produce because of their prox-
imity to the market and because of the rapid
deelnp.rieni and adoption of new technolo-
gies. Investment provisions in NAFTA have
Licrin f'rtreii investors more -eculii and re-
atilled in 'slgnilitan investment in Lhc .Mexican
produce industry.' This investment brought
with it newer leidnologic- that once were the
domain iof the li.S. induilry and diminished
the advantage U.S. gn'mwer held in technolo-
Pg. This dinmiii'hel .dlxa~ltage was argued by
Mexico to be one of the main reasons ftr their
increased presence in the U.S market.
A greater effect on the competitive advan-
tage occurred because o' the large peso de-
valuation beginning in December 199'-
(V'aiiSidi ILJ 3). Prior to N A\FTA, Mexico
macroeconomic policies had lu wr-ed inilaiion
in Mexico and lbroulght reliatv c s stability to the
Mexican peso. The peso became overvalued
in the early 199tIW because policy makers in
Mexico controlled the rate of devaluation. The
peso was allowed to irto.u beginning in De-
cember 1994 and was devalued from 34 new
pesos to the U.S. dollar to 6.7 new pesos to
the U.S. di llar in March 1995, a devaluation
of almost 501; This led to a ,urge in U S
imnpori- ol Mexican tomatoes and depressed
prices that related in a petition that was filed
March 1995 with the ITC seeking relief from
increased imports of Ireh"l tomatoes under
Section 2- I of the Trade Act of 1974.. '~ A See-
tion 201 petition allows .ro~wers to seek relief

s" NL-'VT upr note 14 pL. 3. ch. It (Invmet-
SFresth Winter Tomatoe, 6 Fed. Reg. 16.W3
(IIJY9l : s .- 19 UI.SC. ~2i? ,lldi WlL-1' ,

VawSJ, U/-. FL.J01r aind Emersma. U_.S.-Cttndian Tomato Wars

tfrtm increased imports that cause serious in-
jury to the U.S. industry The producers also
'.ou1ht pruo iiunal relief Linder Section 202(d)
of the Act, which pro% ides for provisional re-
lic for growers ol pcrish.iblc agricullurld
products pending the LumpletKion f a full 184 -
day ITC iiielsigatioii and the 60-day Pici]-
dcnitial review periodd" An affirmative in pro-
vsional relief requires the 1TC to find two
conditions present: (1) on the basis of ail-
able information, increased imports of the sub-
ject article are a substantial cause of serious
injury or threat thereof to the domestic indius-
trV. and (2) the serious iinjry is likely to be
difficult to repair or cannot be time\ prevent-
ed by tinal relief dcermiined after a full 180-
d,,l ITC imre-Iiu..tion w9
The ITC ruled in the nIegtiie in the pro-
visional phase of the I 5 petition because of
the way ihe industry was dehned The peti-
lioncrs sought rclief for the winter Fre-h to-
niato industry, declined as those tomatoes mar-
keted in the January to April market window.
1Te ITC refused to recognize a seasonal in-
dustry, indicating that the case had to be de-
cided on the U.S. industry that included all
domestic productiirn grown Ih-rugJhoui the en-
tire year.21 Petitioner withdrew the Section
201 pliiirt I'o allowing the outcome to the pro-
visional relief" phase, Feelicg the outcome of
the provisional relief pha.'c made it diliu Lill to
wil n an d'lirin'alli in the final determination
ol the Se.iun 20] petition.22
Imports increased qiirn in the 19 15-196'
season, and prices were again depre-sed. A
ectiion 201 petition was filed wilh the 1TC,"2
and an anliduumping petition was filed with the
U.S. Department lo Commerce." These peti-
tions sought relief for the U.S, bell pepper and

1' 19 U.S.C. 2251.
"Id, :2 -,;:?: l. '
Fresh Winter Tomatoes. ITC Pub, 2.x I. Inv, No.
1- .2I- --4 (Apr. I'995.i lIprr .
1 Id. at 1-8 Io 14t
Fresh Winter Tomatoes, 60 Fd. Reg. 25.24
I' i i tlTrrninaLi,.n
Freh Tomatocs and Bell Pepprrs 61 F.L R.-:
13.875 1 14l0 i
S'Freh T.ri..rn.o from Mexico. 61 Fed, K4
I Ui6X i 1 IjLh

fresh tomato industries, accepting the defini-
tion of a U.S. indtilry as lelined by the ITC
in the 15 Fresh Winter Tmatoes case.'
The petitions alleged that serious injury had
been incurred by the U.S bell pepper and to-
mato industries and the injury was caused by
increased imports.2"
Mexican prid.liu.crs countered those peii-
tions with claims ihi-, although serious injury
might have occurred to U.S growers. injury
was mainly in Florida and was caused by
weather problems in Florida. The) also con-
tended (haI chaungc in market shares were a
result of increased demand lor Mexico's
"higher quality tomatoes" and Flrind's reluc-
lance to improu their prn iict qu;dlity with im-
proved technology (VanSickle 199,6 p 5). The
ITC decided in the ncitali e in the Srcliin 2(11
petition by a 4-1 vote in July 1996, indicating
that increased impii-1s were not causing seri-
ous injury y to U.S. producers.7 The petitioners
chose to move forward on the antidlumping
petition on fresh tomatoes following the ITC
ne-rati'e determination on the Section 201
case because the standard for) ijging injury
in an antidumping case is lower Ihin thai in a
Setlin 201 case.
The Department of Commerce inme'.iga-
tion in the antidumping case re'ullCed in a pre-
limin.r> determination in October Jl'6 that
fresh tomatoes from ,Mexic. were being, or
were likely to be, sold in the United Statc- at
LTF'.," The DOC estimated dii iipilln ifif.rii s
to .ierapie 17 .5'. NTh case was stopped later
in October I 49t when the DOC negotiated a
suspension agrcemnien with Mexican growers
representing more than XX' of their volume."
The agreement established a floor price of
20 618 cents xpr pound for ii.po'I-nei Me\.1ian

FVesh TornalTm.Ic an Hell Pepprs, 61 Fed. Reg
at 13,875.
'Id.; Fresh Tomatoes and Bell Peppers, 61 Fed,
Reg Wa IS'Mit
Fresh Tomatols and Hell PcppLer. [11(' Pub
2985 Inv. No. TA-201-66, at 1-5, 1-19
-' Noucllli i Prelimrnari I)Deilrrllnansll of Sa es at
Less Than Fair Value and l'lpon.unlcni of |-inm. De-
temaination: Fresh Tomatoes from Mexico. 61 l-ed
KRc 'Sh-,l (194 ).
t SLum~.n.pfi Iiel-.s.l "l'1mciXrKs. from Mexico, 61
Fed. Reg. at 56.61K--191

Jeumed ./A Agridulnrtil and AppliedI F.. -'a %. I~re qav 200-9

fresh tomatoes and put the antidumping case
on hold.110 V.mSickle (1 ^7) noted ihla this
agreement was to the benetit of jTtW.ers and
consumers in both Mexico and the United

U.S.-Canadian Trade in G rretinh,,r'

On March 2t. 2001, a group of six U.S. gruen-
house growers of troeh tomatoes filed an an-
tiduniping petition" wih the ITC and the
D.', alleging that U.S. growers il green-
hoiusei tomatoes were being injured, or thr-aul-
ened wu i material injury, by reason of im-
ports of greenhouse tomatoes from Canada
(ITC 2001).
In this case, the Inri issue to surface was
the dJ.-imeic like product issue. The sl.tauilry
standard for like product is "likL" or "'nII,).
similar in .harac.ceristisc and uses" and is de-
termined on a cJsc-hy -cUse basis. The DOC
and ITC can make separate determinations on
like piridutL Tlhe I )X' determines the subject
merchandise to be investigated in the case a in
this instance, rccrnlhu -traw ii tomatoes
Iromn Canada). and then the ITC determines
what domestic products are like the imported
merchandise. The DOC accepted the definition
in product as greenhouse-grown tomatoes
from Canada and the ITC used that delirinliun
in the preliminary ruling in Jd't.ccr-iuinin.g that
there was reasonable inJiL..tin that the do-
mestic industry was mutcriall. injured by rea-
son ol imports from Canada I.l r-cciinhluoc-
grown tomatoes that were alleged to he sold
in the United Stajic at LTFV .ITC .l200. p..
2). A negative uliimiL at this si.eL'C would have
required the II C to determine that "(1) the
record as a whole contains clear and convinc-

Id. At Sh.th1.
A petition Is required to be joined hy producers
who rep~neti 253% of the total pIoduction of the td
mestic Iluke product and s ,, of the ttal domestic lik
product produced by that poilm .1i the industry ex.
I' 'iiivt suppon for he peition If the petitin does
not r-italihh supporl of iore lthn 50' of the dtomrletiC
like product, then the IX )( must pll the irmlusry or
rely on ouher information to determine whether die re-
qlirrcd suppor exits. 19 U.S.C, pI Tl7a(c)(4Al ad
i )) and $11 ,'il i 14 '1 i \ and (D).

ing evidence that there is no material injury or
threat of snch injury: and (2) no likelihood
exists that contrary evidence will arise in a
final inrlt.1e .i.Aiinr" (ITC 2rH11, p. 3. In es-
sence, a negative would require that clear and
convincing evidence indicates lack of injur)
and that no other evidence is Iikel to Luif tIdL
contrary to that outcome.
Gil~cn this preliminary outcome at the ITC.
the L[)C' and ITC launched separate inveii.
ca'lon, in the case to determine its merit. The
DOC launched its iiJI',tigIiii'n to determine
whether the subject merchandise, imported
rcnhfloul. tomatoes from C.in.ald,. were be'i i
sold in the U.S. market at LTFV. At the same
time, the ITC launched its investigation to de-
termine whether the domestic industry bi' the
like product was being injimed.
Because this was an .inliltumping case
hlr.au;:ll by U.S. producers, the re'c.lnlihllI
of the IDOC was to determine A hclhcr the im-
ported product was being sold in the United
States at LTF. The DOC used the constructed
value approach or fair market value and es-
timated dumping nmarins r.anin'irf1 from 0 to
IS l4Wr .lila an ri tige for all others t
I itl', on imports of Canadian greenhouse
tomatoes in the period of in rligtil.i,.32
These results indicate that sales of gieenliou,.
tomatoes tiroU CianIada averaged 16.53% be-
low the constructed value cost if production.
In its pre limtin>.r assessment, the ITC de-
iL'ctnlilIcLd ih domestic like product to be
greenhouse tomatoes, but reserved the righl to
re-examnine this LqI'iS4 *I'I dJIilini' the final phase
I,' the investigation. The ITC Iollcticd data
for Jnal'is iofthe facts related to inliirt in the
case Frini pthli-,cly reported sources and from
data submitted in response to the ITC quc.-
tionnaires. Table I summaries the data put
torili h- i he ITC in consideration of the con-
dition of the industry gi'icn the period of
inll' ."ligtiitni of 1')JX-2IM)). The e LiL1L: e in-
dicates ihati he U.S. market for greenhouse-
grown tomatoes had grown -rlnillc.,antl over
this IrlriLd. Irnlli -4(1I million pounds in I 99
to 511 million pounds in 20.)0, a 27.5.' in-

I: Anmended Canadian Greenhouse Tominto Dump
ing \t.jr-n in, 67 Fed. Reg. al I" 2. (121)(2}.

_ ~ ~II__ ~

'V'1n.Sh iAl, t.LOIT, Iuad Emerson: U.S-Canadian Tornato Warv

Table 1. Ci'ndiiion. in the CiIceiilLI.E0-tjrs'. -n TomatOoS Industry, I t$JX-2[(XMP
Item 1998 1999 2L If I
U.S. C. I % U I IP i ,,
QLI.LFX16VY 4014A52 459,844 51 1.-47
U.S. Share 34,6 35.5 35J.
Cabnda Share ;1, 382 ;.2
Other Imports
Shaur 31.5 21.3
U.S, IM[Np'11 fI. 11. ar 'ii l.M
Quan i1y j75.3x-I 2.2 s
Value 111 '-fl I2I. oi I II 1 574
Unit V.1hiiL 0.76 0.69 .073
U.S. Pruducers
Quantity 144.982 172,620
U.SI Shipments
Quduli ''~I ~ t' I I r~Y' Ii 17',.i*n
Value 114 78C 119.1 kI
Unit Vutlo 1 4i7 1 410h9
Nne.: Quijrnjts epoitej inj I 41Mh PpuuILIHI: JAue rWFnMU in $jltL. tjfrii( vaes reputed in .4..ar, pcr paund.
Sinre: U.S. InitrinatiOnai Tradc 29iY1on. 1, 00.tajbk I112, p. I1t-A and table IV-1, p. IV-l.

crease. The U.S. share I the market remained
flat at .5'. while the share of the market con-
Irtolled hb Ca('.adii.it rc\ trom 3.I9% to 43 7'.
The share of other import .uiprlie., appeared
to have -uffered the most from the increase in
market share by Canada ilh other import
shares declining f'romn 31.5% to 21.3%, al-
Ihuiigh the quantity of ithei sources of im-
Fpimrt' remained lat at near 1i 3mi nll liin pounds.
The quantity *,i iinimi'o.'r Irom Canada of
grcenhLouic.-groL' n tomatoes increased Iromr
136 million pounds in 1998 to 221 5 million
pounds in 2(Hl1l Ihe unit value on these im-
ports decreased from 76 cents per pound in
I LWn to (ij cents Fr picund in 1999, Unit val-
ues increased in _W(H') to 73 cents per pound.
U.S sales increased in volume over this
same period, but far less than the increase in
C.'anidian quantlilic. from 144.') million
pounds to 183.4 million pounds in 2'(tHI. Unit
values for U S. production declined from 83
cents per pound in 1998 to 73 cents per pound
in 19WI.L Imecrcirinj to 7, cents per pound in
2IWOO. The number of workers and the total
number of hours worked increased over this
period for U.S. worker' Optrilinr income nIir

Iirims rteuIolllng to rhe ITC questionnaire,
however, declined from a pr ili of $2.9 million
in 1998 to a loss rof $11 million in 2I11W1. The
ITC reported that profitability declined over
the period of tIll iei'i.tlilkiiin withl 2 of P]l
producers reporting loss in W19. 8 of I1
reporting losses in I' N, and 8 of 14 reporting
losses in 2l'l0 ITC 2il 12. p. 3.',
In its final ruling, the ITC determined from
the record the were able to assemble that an
indu,'tr in the United States was not materi-
ally injured or threatened with material injury,
and the er.ihllliiricen of an industry in the
United States was not materially rei..rded by
reason of imports of prccnhoui. tomatoes
from CanIad sold in the United Si.ati; at
LTrF '
The opinion of the Commissioners decid-
ing this case revolved around the deli nAiknu of
the domestic like product and industry. Peti-
tioners ariued that the domestic like product
in this case should consist of tomatoes grown

9 The II(' voed 4-1 in the negative with Com-
misrsienr i.,ri i Hr.gp timing ihe J1,un iiilg nincuber
SIre Yit: p, 3)

Jouirnl of A,1, rL rderhrrri andJ Apllpe ci -r~'rvyru% .1..kiia1 2N0f.3

in greenhouses onlk RcKpondiJntc to the peti.
tion argued that the domestic like product con-
sists of all tomatoes grow n ifr the ifreh mar-
ket, whcther grown in greenhouses or in the
field. In its evaluation of like product, the [TC
considered ph%.ii.l characteristics and uses;
i[ncrchanc'abil[lyv channels of dir-ihutirn.
common production facilities. prr.Cec,, and
employees: and price. In considering these
flctr.-r the Commissioners dei acting this case
crmin.liteid. "Except with reCard to manufac-
iuring facilities. processes, and employees,
there is iub'arii.il overlap between green
house and ieLI tomatoes w ih respect to the
like product factors" (ITC 2002. p. 91. The
ITC rccr~rdl its earlier definlnll.n of the do-
mestic like product as !.wing only greenhouse
tomatoes and r.%p.uided the scope to include
all fresh tomatoes h1hcher grown in green-
house or in fields.
Commissioner Lynn Bragg dissented from
the miaiorily view, irt arguing that the do-
mestic like product included only greenhouse-
grown tomatoes (ITC 2011. p. l3i. Brag g.
.argLulnrrn noted that three-quarters of pLI hd.-
ers contirned that grcenhulu.et and field-groin
tomatoes are not inruerhangeable. She also
noted the dirtinct prodlucIion tmliltic'. pri'-
cesses. and employccs; unique channels of dis-
nbutlon. different characteristics and uses;
producer and consumer pcrccptions inJ~i.,itin
no inicrchangcibiliL y and premium prices for
6rcetnhoue tomatoes.
The tilnl view by the ITC of whether or
not injury had occurred was driven by the de-
iermin.ili.n on domestic like prodnut Imports
of Caniadian greenhoule-ro.u n tomatoes rep-
resented only 4 .6 of the U.S. market for all
fresh market tomatoes in calendar year 2tiH).
whereas greenhouc-grown tomatoes friom
Canada represented 4-.7% -l' the U.S. market
for grccrih',I e gro%' n tomatoes. The mijijori
in this case ruled that the ',luiie and the in-
crase in ~uOiuine of object imports were not
significant in absolute terms or relative to total
Ireh tomato production or consumption in the
United States and, rtherclore had no si nifiiant
adverse effect on the domestic fresh tomato
industry. Commissioner Bragg's more narrow
derlrnition of the industry found the volume

and increase in volume to be .Eignicanlt caus-
inI' "'SignSfi1ant price supprcs.ion and depres-
sion in the U.S. market even as apparent U.S.
consumption of greenlhous.e tomatoes in-
%re1.te'd dr.AM.lically" (ITC 20(12. p. 38).

Making Sensi of It All?

U.S. IaniduilupinF law is intended to ensure
fair trade by offsetting market distortions
caused by foreign gtcnintemlCil or foreign
producers. Specifically, it targets price dis-
crimination and sales below cost of produc-
tion, imposing extra duties on got>l, from a
particular country or group of countries if
two i.,litiiion. are met. First, it must be dem-
onstrated that the subject merchandise is be-
ing sold in the U.S. market at LTFV. Second,
the imports in question must be i.iaing. or
ihreaecning to cause, material injury to do-
mestic producers of a like product. The laws
have been criticized because "in actual prac-
tice. the methods of determining dumping un-
der the law r;iil. repeatedly and at multiple
levels, to dlliinguish between normal com-
mercial pricing pra;lice' and ihose that reflect
Lgo -rnineil-caused market distortions"
i I.imiJse. p. 19). It might be f.t.- to criticize
the definition of dumping when considering
ag.n0uilirilr products, given the seasonal and
c-clic.jl nature of the industries. It is not in-
frLILILnti that. producers sell iheii product at
prices below the cost of produicion. but the
expectation over the product cycle is that
those losses will be offset by profits realized
at different pIIInT nf the market season or cy-
cle. VW ilhlul that expectation, no form of eco-
nomic model can j%-'ily the practice.
A common measure of dumping used in
agriculTural cases is the constructed value
cost of production measure. This is used after
the DOC in.estigdtor determine that home
market sales over the period of investigation
are in sufficient volume below cost l' pro-
duction that recovery of all costs cannot be
achieved within a reasonable time frarme It
seems only reasonable that producers w il ra-
iinall make prildultion decisions on the
premise that illt will return a normal profit
over the long run-. hatl might keep those

Vefiu.s Ur. Evany. O)V I meron: I '. -Calladin rf omvo Wars

producers frim making these decisions is
poorly managed igocrnnmcni programs that
mislead producers into making poor produc-
tion decisions or poor nilln.uagcinelii on the
par of producers who control a significant
portion of the inmdui y. These laws allow do-
mestic producers to seek relief from these
poor decisions. It does not protect producers
who are at a competitive disadi ;tanil~ For-
eign producers who hold a c niil ;tii\e ad-
%;intl.ig in a product will be allowed i, take
.addlloniial market share without redress from
the antidumping laws.
The greenhouse tomatoes from Canada
case either was not as coirpltk.tited as the I IC
made it when determining ith like product is-
sue or was more ..1.lVpJiilled than the DOC
made it in determining the subject merchan-
dise. The criticism in this invre-tiJgaiun comes
by way of the analysis used to judge like prr.l-
uct, which ultimately drove the decision on
injury. The ITC ucsd anecdotal evidence on
physical .har.zcririi~c a;ind uses; interLlh;Inte.
ability: channels of diilribulioni. common pro-
duction fIl.ilics. processes, and emp. lia.C.
and price. [)unng the finid hearing with the
ITC, respondents supplied greenhouse-grown
tomatoes and high-quaijiy ticld-grown toma-
toes as visual evidence that the two were like
plrIdLi l%
rield-grown and reclnh,)uLc-gro)n to-
nlatoes are ,ilil'if in their outward .ippear-
ance. Properly handled hei lii- gro n tomatoes
can be \i--tiill .tiir.adiiv. appearing very
l ril]ri to prFenhlrMe-er~in tomatoes. In
the IWq6 aintidunping petition filed by U.S.
ro.'wer ;iegainslnI Mexican Ircsh tomatoes,
Metsc.an respondents .rguud that vine-rip-
ened tomatoes were ditinctly diftleren1T from
mature green tomatoes. Mexico was primar-
ily a shipper n' vine-iipened tomatoes, and
Florida was primarilI a shipper of mature
green tomatoes. The re'spndenit centered
their argument on pricing, consumer prefer-
ence, and market channels. Evidence provid-
ed by respondents in that case indl.icated tha
-ine-ripened tomatoes received higher prices
than mature erten Cioniatesc. consumers pre-
ferred vine-ripenerc tomatoes, and the retail
market was controlled more by vine-ripened

tmrnatics. whereas the food service sector
was controlled more by mature green toma-
toes. Pe(ilironIc in that case countered with
.iturrnumntl' that (1) outward appearance
demonstrates the likeness in product id]s-
playing vine-ripened and properly handled
mature green tomatoes before the Commis-
sioners); (21 there is r.ig.intiL.. overlap in
production practices and in markets, with
mature green tomatoes .o'npcting vigorous-
ly with vine-ripened tomatoes in the reti.l
nm.rkctl and (3) lsudic% show no consistent
consumer prcfcrencc for one over the other.
Pctii4oncr% also provided the study by Jordan
and VanSickle ( l1'-9.i thla demonstrated
imr.ijkL integration between mature uieen
and %inc-ripencd tomatoes (Jordan and
VanSickle I '5.,i.
ThL arguments in the I.' -Canada case
were inmilar. except the petitioners were trying
to limit the scope of the like product to a nar-
rower deftirliolln o' greenhouse tomatoes,
whereas r-espondeni were tr-ing to expand
the definition to include all tresh market to-
matoes. The [TC TLrcIoni/:-d the diille-rim.c'. in
production practices bctwen field-grown and
Lrccnhlouc-vrwlil tomatoes but rblic\cd the
products to be iintie.hn.ingcblk. even though
rciail members ol the trade etikeii to the con-

Testing for like Prnduct

The foregouiiir anal'..i sugge~.- the strong
p '',hl1ii1'y IlI i\ hlllcreni outcome had the def-
inition of the "di--Jdomei lik product" been
grccnhluuc tomatoes instead of all tomatoes.
It further suggests the need for a more objec-
tive and transparent approach to be used by
the ITC in such determinations. The approach
decioped below lollo' s from earil work
done on the integration of spatial markets
(Lele; Rnallmluai Rather than .aLdrL-%ing
spatial closeness of markeis. market inltgr.L-
tion in the present context is addressed from
the perspective of closeness Ol' Ir racteristics
of commodities as evaluated Ib the market-

rcel Toniatcrs rao m Melico, ITC Pub. 2967.
Inv. No, 7 1I-T.'-77 'f riin *J I ,', awn u 6 to I I,


Journal 4,' '..di~uirwa and I ppJfiJ4 d Econlomc,fl. Aix:rfr1 Jro

place. The basis *.' the determination of "like
product" centers on the economic priisiple
that if two or more gtiol are perfectlyv ho-
iln(IgciicuiLi' then all ,* lheir prices must
move together h ritcll) If a market consists
of' "like god,." the prices of these rooJd.
would also move ir~gihei. although not per-
Il c [ If the prices ol gu .od, in a market move
independent I. then the ioodsI. cannot he "like
Jordan and VanSicklc (I''15..i used this ap-
proach to determine whether FlhnriLi and Mex-
ican fresh tomatoes were integrated in the
same market. Thc, concluded Ilr'i their study
that Florida and Mexico were in fact intelgt-l-
ed in the same market. Mexico was primarily
a shipper of vine-ripened tomatoes and Florida
was priin.irily a shipper of mature ngrLenI to-
matoes. Within the context of trade Llipue..
the conclusion reached by the authors ueg-
ec'-ted that the two producIt could be consid-
ered as "like prtodilt."
The ,.pcL lil u.1,n used by Jordan and
VanSickle ( 995.1 to determine whether two
commodities, a and b, could be al.litineul as
"like products" in the same market was

(1) P. = + p, + .

+ 2" V + e,

61. + p,

where P .in- I (: represent the price and quan-
tity of L.IIII.mIm1dJi\ a in time period and like-
wise P/ and Q represent the price and quan-
tity I' ~m.illiiin .lu4 b in time period t. I'h
Iclnglh of the lags used in the .inial\.i (as-
sumed here to be / prii r0. can be determined
Lhrou Lh a series of statistical tests. The distur-
bances ,' the equations arc assumed to have
the rlllh int. priq lnic,.

* 1 I I l .-[ .0
r[... 1 = 0 for t ~ ., and
for i.J 1. 2

Lir-.. 1 = a

It is re.iitil seen that the parameters of
each equation are irlkittd, I"The above sicin
can be estimated by any simultaneous eqila-
tions estimator. However. i.elln the cross-
equation h.poihii' tests to be examined,
thret-l.isc le.i-ia-quare is a convenient esti-
mation procedure with Lksrirhlc properties.
The ft\ll,_,-inig tests are conducted to deter-
mine whether ilhe markets for commodities a
and h are inrteLraicJ (the iL.i'iiinioiJiiic are
"like pridlut" I or, if not, lich extent to which
the markets are separated (market segmenta-
ion The null hI.t pthe-i, is that the market is
not inti-Ir.ie.i (i.e., it is Lrien teid). iher est
the alternative hb p ithic.,' is that it is integrat-

4 1 I ,

1 0 t i I ,

Hence, rejecting the nill hilp.the'.i. in the
above test implies that the products are inte-
t.ruted in the market and can be considered to
be "like products."
A more gencrl approach can be specified
fI.r an arbitrary number tOf coLnmmndiCtle. In the
presence 'I more than two ..uimni tiiie., how-
ever, the system is most v.i..ily seen in matrix
form. (.i.'i.'r.tnil/iin to In Lomltii illiik. the
.elliialiuln, can be written as:

(4) YV + -B E.

with the IOiull..i iiL te Jdtrllliiiii l '

I 'i



X=lI P-1 -P Q -QI Q ]

Pill P .0 PP2I
pitl PIE

I P~, .I

I iis a Tcricimcni ivlum.n of oneCs


i t d rr,- r viSr-( waia.Ain Teniejp Mfrs


Q oil

QI,, I

QI ~-I

Q2.C? I IT

(r i


B IA' B; B; Ai

A = :



B;= :
I '









The final matrix, E. consists of the distur-
bance terms re, with Elf.. = 0 for all -tliin-
tions i I .. n and all observations r 1,
... T. The covariance matrix of E is

:j cr cr,
iri> V.iiKT-.1 r /-

.C 0 r

where 1, is the Ti'rl-ordr idnciriL matrix."
The earlier two equations -peitic.ltion is
clcarl% a special case of this Lcnerarl r'p.ii-
cation, The matrix represents the parameters
relating current prices of goods to each other.
The [, matrix is the set i.11 paraeters Iie all
prices lagged one time periMo: there are ad-
ditional ,B matrices up through Bl correspond-
ing 1 to the number of lagged prices included in
the equations. The As, again with as many pa-
rameter matrices as there are L.i, in the qu.ll-
tity variables, are di:igonil matrices since only
own lagged quantities are included in each

The NpccLtihIlion assumes the variables
are stationary, In the absence of 'lt(iil,nrill.
the most likc-Ir scn.ilrii is variables inte-
grated ,t order I, Then ihl notion of the
price variables moving loticilici over time. ul
course, would be dealt with in the context oii
Lrinller.ilion Hwvt'eLr. our experience with
this approach for .irriicuilirl products has
not Iound nonstationarity ,ti the variables to
be an issue. Similarly, we have found only
lir.1 order lags of the variables to hr or in-
terest, In the :|hs-v .pec-itc.'IIin. that leaves
,ill,, H, among the B matrices, and 1 among
the A matrices.
At first ighi. examination ,' like product
issues appears highly problematic with this
iiotdcl itcii the iii |i, po '-itl'ic combina-
tions. However, in the context it trade dis-
putes involving like product issues, piodut l,
can gfiierailly be separated into two groups
of commodities. The question then becomes
whether or not commodities in giIuIp I are
lihk products w itlh .,ImJinIIdilie, in gloup II7.
Assume for the moment lhal only lirst order

hii s..pL.IIILJiFlIn assumeB no serial orrelation
that one would want to examine and adjust the spcci-
ticiiotn accordingly.
Il ylls. one of the two groups will consist of
only one commodity: the one whose source is charged
with dumpming

-- -------------~ ~ -- ~-----

l. ., are ilev0..mi. as was -uggtiiId above.
The hvp,,heLi- tests for market inieyratlion
then involve part .ular elements til the F and

B, paraimeter matrices. PjirllluinllLi the r
matrix with nm ..llnulllinullICe in group I and n
commodities in group II.

I YL2 -
Y l 1 ...


7,...' :Yscllrmrll Ya.3.3..'-~

The corresponding partitioned 1, marix is (dropping the third subscript since we are s-
suiing a %ingle la l:

U., 0. Pi P ... P. =.,. "- Pl...

m. 13..: ... .- .t- P; *. i *l -, n.

P...l.l PI -. a. ... .. ..2.ar. .... '. 1 .* P -. -.. .

Reci-iin- the null hlIpIthlies that the ele-
ments ilb the upper rihln-h.ind hilK.ks and lower
left-hand blocks of and H, are jointly zero
implies th;i the markets between lommlllodliie.
in group I are inltgratld ith the commodities
in gnip IIt. The products in grunip I cnlJd be
considered lke products w ilI the owni iunldies
in group I,. Conversely, failuie to reject ihe null
hypothesis ,uget IhaJL thei rei is mn.uljicnl ev -
idence to .n'*,lu'hde that the commodities inthe
two groups ae Iike prOuctl; their prices move
independently. so they are egmnented markets,
Additional tests could be done to confirm that
onu'lniiiitieie' uwitihin each group are integrated
with each other, foir example. re.icLin.i the null
hvwlphe'.is that the upper lf blocks 4t I and
II. are joiinll% zero would confirm that the mar-

kets for commodities u lhin r.ip I are inte-
gr:L[rel with each other. However, the primary
interest is presumably the first test between the
cl.nlc.'std tonmiruldiily groupp Il versus thc ques-
tioned like li-idic' (group I),
Es'tmation of the above system can be
done by any simultaneous equaiimon4 estimator.
GCten the cross-equation re"lr.iiionsl' to be
tested, ihrec- a~gc least squares is a reasonable
choice I'm an estimator. By inspection, each of
the equations in the system is idennuied via
exclusion restrictions on the lagged quantity
variables The hypotheses are all linear and

Because tljh test is .',li'.iiril n ll on the result of
the first test, iL!'niLdniLe levels of the se"A d amn sub-
sequCet icsi should be .dNIICCJ accordingly.

17, r=-


i :



~Ym+~ x

I~t~L. ~III

Jorrrimfol ond Appfird 40CF1V YAW


VanSikle. FIV', in Wnd grervin.- LS-Cnadiwr Tomato Wars

can be con~.riicinlii tested wilh a Wald test in
must lO.'tt c.r packages.
A three-commodity appliation)i of the
above speciflicalion was applied to the U.S.-
Canada greenhouse tomato dispute. The group
I commodities consisted of two )i pe of fleld-
grx '.n tomatoes fi ine ripened and mature
green.-): the group II LornmmdiI.i was green-
house tomatoes. The an.ily..is demonstrated
unambiiguou-'l that the group I (field gro wn)
and group 11 (greenhouseI .ornimodilic' were
not intcgraIcd with each other. Cnrierlcly. the
vine-ripened and nature green tomatoes were
indeed integrated within the ficll-erown
Herein lies the inconsiistent in marker
ealu-iron of like prJOdutwi relative to the ITC
determination. The procedure in the earlier
U.S.-Mexican case demonstrated that the
tine-ripened and mature green tomatoes were
indeed an integrated market. The ITC"' deci-
sion in ihe case was consistent with this in.d-
ing. The rcsulhs for ihe Li S.-Canada green-
house tomato case found ithu the greenhouse
tomatoes were not integrated with licdJ-grn n
tomatoes. However, the ITC chose to rule that
the relevant market was ll tomatoes, field-
grown and grecnhIou-c. obio'u'-ly in conflict
with the econometric results. The latter pro-
cedure has the advantage thii the determina-
tion ot "'narkLt" is as ev.alumiied by private
transactions in the market place.


The U.S.-Canada grenhou.c tomato case
sdoe prli ide an interesting case study for ap-
plication of trade law related to .nliilumping
peiiiiont filed in the United Slates. i.nt is
provided here is an overview ot the process
that was 'ill1wed and the logic thai was fol-
lowed to test economic oncplt. This over-
view points to two weaknesses in he proce-
dures ftIlli'ed by the ITC in determining
injury. The fir't and most obvious is the ap-

"1 Vi'Sn.likl. John J. "Intgrgnti and Behavior in
the U.S. Market for Fresh Tnmates." Petitionrcr PoIt-
He.-nng Brief. Greenhouse Tomates fron Canada.
Inm. No. 7T1 .T-9'25 March 25, 2002:6.

proach used to determine like product in these
types of cases. The statutes identify those fac-
tors that should be considered by the ITC in
decrmnmiing like product but gie no guidance
on how to weight the various components into
a determination or how to p.,I luJrdwni when
it is Lquclstioedl F.mpirical evaluation of the
extent of market inlcigrritoii l Cti Cmin.riLii-iCi a
illustrated wih the above models is an alter-
native market-based approach that the ITC
could uiili,/ An argument that might be po-
ited against tih treatment is the data require-
ments to conduct such tests. The ITC is gisen
statutory authority, however, to collect data
Irom the industry to help in judging injury.
Such dlaa collccilon could be mandated to in-
clude the necessary data to test for like prod-
uct frum all pltiMle products that could be
piopolcd as %imilar to the subject merchan-
The second weakness suggested in Ihis re-
view points to the use of the COMiPAS model
for j.idinn injury. The COMPAS model uss
the Amlinkltn Ir.incwork to estimate the ef-
l'-l of dumping on the dornem-ii inlduiry. Al-
ston et al. pointed out the wcakncsses in this
model and demonstrated how it could lead to
false conclusions in jutdginig injury. To its
credit, the ITC relies on more than the (-'M-
PAS model and encouragee. peritioner- and re-
spo ndenl. to submit economic analyses that
demonstrate the level of injur% to an industry
from dumIping. The breadth and complexity of
cases that come before the ITC make it diffi-
cult for them to conduct thC 'e anlv.se inter-
The title i this paper implies that an econ-
onmist makes sensc of the U.S.-Canada tomato
trade di(pme What has been a-ouiplllhicd is
to provide an overview that might allorw some
trade economists to understand the process in-
volved in deter mining the outcome in a trade
Although the paper might have failed at
making sense out 1o the US.-Canad tomato
irrade dispute, it does raise a number of weak-
nesses in the decision fra-mework u Nd by the

Journal "f Agricultural and .-AI'fir., Economics. August 201X3


Alston, J.M. C.A. (.ulki. R. Green, ain D. Pck.
"Whither Arrmington TrJdc Mlls..l%-" Arneri-
can Journal .' Agricultural 1. ari rrit
-21 [I''l) 455 "-(,7,
Francois. J F. and H.K. Hall. COMPAS: Commer-
cial Pf .ta Anaivsis .! t ii. W.lrIniiiLr, DC.'
U.S. International TIade C.i.iiiisum .n 1993.
Jordan, K.I and J-J. \..iiASllkr Iniigr:iriimn and
Behavior in the 1 .. Winier Market for Fresh
Toi.,11h.i Journal ,f .-. gri,'lhtW i cI .d .i' 'lpl.'d
Econ-mic.s 27,tr0hrI) 1 95 I 127-37.
--- "N -I'l -\ ad Florida Tomatoes: How ill
florida GroweCr Survive?" P'rIJ'Lt',,itrrv of/' t h
f1 ,riula Stote Horticultural .Sr-nr, I 8i 19%h )
2T"'-.l) l
IxL, U. "Market Inlteri atin, A SIidJy iII %,S.rtliuin
Prices in %,ei'ern India "o JIurndal 'of F.dr' F.r -
nomIs 49(Febntary I'r -7 I 14-59,

LinJ-ey. B. The LUS. nrintnirinf';r lw Rih'rt-,i.
versus Reality Wa-hingnn. DC: Cato Institute
libde PlkV Analysis Paper No. 7, August 16.

iRuH .llinn. M. leing Market Ini':r.ioin Amenr-
ican Journal i 4yrii rrihir.l Ecronomics
Jl, 1,86): [102- I .
U,S. International Traij Comminssion (ITC) Green-
house Tonatoes from Canada. Ineiatiari jn
No. 731-TA.1.,2 (preliminary). PublM.0aiiin
1"42-. Washington. IK. May 201.
- Grce'nhixse ,i-iiii,. i fror, Canada. In-
vesiitiaon No. 7 I-1 -A-'925 i in.li j Plhli.cau.in
i42.4. Wi"ngr[,. ii. DC, April 2002.
VanSickle, J. "Florida Tomatocs in a Global Mar-
ket," IU I', PrI'LedIng--. of the HI-lrild Tomato
[rin.litue. PRO IO l I 1 -6. (G.aun- ile I FL
"A Ciropinminii.. in the Fresh Tomato
Tr.,.lIt Dispute." Florida Journal of nlteation-
al Law I 1997):404-404 5

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