Re: Economics of "Dumping"

In a message dated 11/6/00 6:51:15 AM, yibin.xiang@biodiv.org writes:

<< Dumping is often related to governmental or business strategies.

***Exactlty!***

I do not

think Chinese farmers would even think of dumping american farmers.

***I agree again...Chinese business people are too smart for that when they
are free, and the products they would grow if they were free to do so would
be superior to what they grow now, and command a superior price.***

They

actaully feel quite weak. My general impression is that anti-dumping

measures would benefit poor countries more than developed countries.

***No, never, as you said dumping is related to government strategies. If
dumping is real, then USA is the #1 dumper, and it is based in strategies put
into law as the Perishable Agricultural Commodities Act of 1933. 1933!!!
this is here to stay, and any anti-dumping law that americans do not like
they will simply ignore.***

The

price in poor countries is so low that they do not even need to lower the

price in order to gain access to American and European markets.

***correct again***

In

addition, they do not have necessary capacity to pursue dumping strategies.

***But governments do by moving others people money over to the farmers, as
we do in the USA***


However, developed countries have overall much high price, and they need to

reduce their price in order to feed poor people.

*** Whenever, and wherever the USA has offered cheap food (subsidized by usa
taxpayers) to a country, within a few years famine follows. Cheap food ruins
the domestic systems of socialist economies. We have a higher overall price
of food because we throw away about 40% of the food we produce...this is
perfectly fine nutritious food, but to keep the prices high, we destroy
massive amounts (which we could avoid growing in the first place if our
agriculture was not socilaized.)

Of course, they have all

means to expand their capacity to dominate the markets of poor people. I

wish I were wrong in this respect. >>

*** And poor countries have the perfect defense. Free markets. Allow the
cheap USA subsidized goods in, sell to highest bidder, who will end up
selling the goods back on the USA market. This is precisely the crisis the
pharmaceutical companiesa are facing in the USA, with the relatively more
free pharmaceutical industry in Mexico selling USA made medicines that were
exported on subsidies overseas (and "dumped") are being resold to consumers
in the USA. Charles Dow did the same thing in the 1910's when the Germans
tried to dump bromide on the USA market to destroy his business. He simply
bought up the cheap german bromide and exported it around the world from the
usa. He became quite wealthy, and the germans lost a tremendous amount of
wealth. Dow chemical is his company. Freedom to trade is the key.

John Spiers



Mon Nov 6, 2000 9:22 am

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In the first years I were in North America, I spent a lot of time reading
China-related reports. Now I simply quited.

Your message raised an interesting issue on China's price system. Although
we strived to set up a free price system for years, price system there is
still not fully free. You must ask why? The first step in China's price
reform was to free industrial goods, which took place in middle 1980s. Then
came agricultural goods. As in all western countries, China has been
subsidizing agriculture. China used to subsidize agricultural inputs. As a
result, Chinese agricultural prices tended to low and governmental
expenditure tended to be very high. Based on the suggestions from World
Bank and of course many american economists, China reformed the system and
privides agricultural subsidies at the end of the pipe: farmers pay full
price on whatever they have to and at the end of day, government helps to
cover the loss.

Your question therefore is more related to price system than to dumping.
Since consumers and farmers receive subsidies not through the price system
but through direct grants, the production cost often comes out higher than
demostic market price. So far, this system does not cause much domestic
problem. However, it seems to cause misunderstanding internationally as in
the case you cited.

The whole price system in China is still under reform. After so many years
in price control, this can not be done overnight. Fortunately, Chinese
government is strongly commited to pursuing this. Your question and USA
reactions would actualy prompt even earlier actions. I believe they have to
assess the whole system in order to resolve the problem: it is not a minor
one.

Dumping is often related to governmental or business strategies. I do not
think Chinese farmers would even think of dumping american farmers. They
actaully feel quite weak. My general impression is that anti-dumping
measures would benefit poor countries more than developed countries. The
price in poor countries is so low that they do not even need to lower the
price in order to gain access to American and European markets. In
addition, they do not have necessary capacity to pursue dumping strategies.
However, developed countries have overall much high price, and they need to
reduce their price in order to feed poor people. Of course, they have all
means to expand their capacity to dominate the markets of poor people. I
wish I were wrong in this respect.


-----Original Message-----
From: WileyCCC@aol.com [mailto:WileyCCC@aol.com]
Sent: Friday, November 03, 2000 11:05 AM
To: yibin.xiang@biodiv.org
Subject: Re: RE: [tradeforum] Economics of "Dumping"



In a message dated 11/3/00 7:14:58 AM, yibin.xiang@biodiv.org writes:

<< What I intended to argue is that dumping is

a bad practice. >>

I agree completely...I use in my class on the topic of becoming an importer,

a recent news article, and intersperse my comments (noted with * * and
here
is what I am teaching my students...:

Panel Finds Juice Imports Hurt U.S.

WASHINGTON -- The International Trade Commission ruled Monday that apple
juice concentrate imports from China are harming U.S. producers
economically.

*Please understand to earn such a ruling you need only assert there is a
problem. Then the other side, China, must defend itself. This always means

the defendants must reveal trade secrets. they will not. Therefore,
everyone
accused is convicted. Always. But note how no one asks "were the consumers

benefitted?"*

The ruling clears the way for the Commerce Department to impose duties
of
nearly 52 percent, retroactive to last November, on most apple juice
concentrate imported from China.

* Now keep in mind, you love fruit juice, Chinese fruit juice is more
flavorful since they use natural fertilizers and have newer trees and newer
varieties...(older the tree and variety, the less flavor), and you find Chna

is the best place in the world to have apple juice made. So you import. And

then you find not only is your duty shooting up enough to end your business,

since the penalty is retroactive, you no doubt will go bankrupt.*


"This is tremendous news for the apple industry," said Kraig Naasz,
president of the U.S. Apple Association in McLean, Va. "This was the final
hurdle our industry had to clear in seeking relief from the damage of
unfairly priced imports from China."

*I know Kraig Naasz, he is a talented and well paid advocate for apple
growers. he is not afraid to say things such as he was quoted here.*


The Commerce Department ruled last month that China was selling the
concentrate at prices 52 percent below production costs, a practice called
dumping. Commerce officials said they would impose an anti-dumping duty of
51.74 percent on most of the imports.

*The US complainant merely asserts, the Chinese will not defend, the Chinese

lose, the importer loses, the consumer loses.*

But Commerce officials were unable to go forward with the duties until
the trade commission found the dumped imports injured U.S. producers. All
five commission members found Monday there was injury.

*They are required by law to find injury, if it is asserted and not
defended.*

Commerce officials are expected to begin applying the duties in about two
weeks.

*As well as Customs will break the importer by demanding duties going back
to
November previous; the importer has already sold the goods and cannot cover
the huge dutiy increases.*

The two agencies' decisions will remain in place for about five years,
although the duties could be recalculated in one year.

*A monoply in place for 5 years.*


Between 1995 and 1998, the average price for Chinese concentrate imports d
ropped by more than 53 percent, from $7.65 a gallon to $3.57 a gallon. The
volume imported by the United States increased by more than 1,200 percent,
from 3,000 metric tons to 40,000 metric tons,federal statistics show.

*so, an importer does a crackerjack job of supplying consumer demand in USA,

getting better value for the money, and the apple growers fight back. What
is not mentioned, but commonly known, is the apple growers in USA,
particularly Washington, used government subsidies and cheap credit to
vastly
over cultivate apple orchards, knowing full well recored crops (and record
low prices, record bankruptcies, etc) were on the way. I know, because I
was
there selling and exporting fruit... to the Chinese*

At the same time, the average price for U.S.-made concentrate fell by 50
percent. Growers nationwide lost more than $135 million, federal figures
show.

*Of course, and I know for a fact US producers were selling fruit for less
than it cost them.*

The import of cheap concentrate hit Washington state

- the nation's No. 1 apple producer - particularly hard in 1998, driving
down prices in both the juice and fresh apple markets in a year of record
production.

*as was the year before that, and the year before that...smart companies
were
tearing out trees, while others were planting more...your tax dollars at
work.*

With some Washington growers getting as little as $10 a ton for their
juice
apples, down from 1995's $153 a ton, many apples were left in the orchard to

rot.

*they knew this was coming, and they new the taxpayers would bail them
out...*

An apple industry group, the Coalition for Fair Apple Juice Concentrate
Trade, filed an anti-dumping petition last June asking the federal
government
to impose a duty of 91 percent.

The International Trade Commission made a preliminary decision in July that
the Chinese imports hurt U.S. producers.

The Commerce Department in November made a preliminary decision that the
Chinese were guilty of dumping and set duties at 54.55 percent. Those
duties were lowered to 51.74 percent by Commerce's final decision in
April.

*The overproduction of produce in the USA presently about 40% too much,
means there is over-diversion of water resources, over fertilization of
crops, over-immigration to harvest, over-welfare to support the human
services of the immigrants, over financing of the harvests, and so on.
Why environmentalists do not complain, I am not sure. In any event, the
upshot is the smaller growers cannot stand these swings in fortune, and go
bankrupt or sell out. What is left is Archer Daniels Midland...huge
corporations wherein predatory practices, such as price fixing worldwide in
food products. *

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