Protecting the Chain: Globalization of Production and Firms' Use of Anti-Dumping Protection

The nascent literature on the so-called global value chains (GVCs) increasingly demonstrate the trade liberalizing impact of the internationalization of production. While scholars have shown that GVCs boost open trade and contain protectionist interests, little attention has been paid to the increasing amount of trade barriers erected in sectors that are highly integrated into GVCs. This paper addresses this gap and argues that GVCs also create a demand for protective trade barriers from the most internationalized economic actors - i.e. multinational companies (MNCs). These actors take advantage of their multi-country operations and orchestrate the raising of Anti-Dumping (AD) barriers that protect their value chain operations. MNCs mobilize and seek to impose AD duties on the products they import as well as the products they produce with semi-processed inputs. Regarding final products, MNCs lobby for AD duties in order to increase their competitors' variable costs. While such barriers also raise the costs for their own products, highly productive MNCs can use transfer pricing to accommodate additional expenses. Moreover, while MNCs often outsource their production, sometimes they keep the latest part of their value chain in their export markets. This fragmentation allows their subsidiaries and affiliates to seek AD duties as home-market producers, which increases the costs of their competitors while increasing their market share. I show the validity of my argument with two case studies involving European MNCs in the chemical and the automotive production sector.