Thursday, January 18, 2007

Who's Dump is That?

A friend of mine in the manufacturing sector in a foreign country told me a story that a major ‘western’ come to the factory demanding extraordinarily low prices for products with the promise of large contracts and growth. While the price is lower than the factory sold their products domestically, they took the contract because of its size and future promises. Soon after the first delivery was made, anti-dumping laws were applied and all their goods were smacked with destructive fines and taxes. Not only were they not able to get paid for their goods, their future exports were, for all intends and purposes, cut off. Heavily in debt because of the expansion and lost of revenue, the manufacturer declared bankruptcy and closed. Not only is that manufacturer closed, all manufacturers in that sector failed because the anti-dumping measure was applied to the whole sector. Meanwhile, the major company moved on to another country doing business the same way. They had already gotten the discounted products and when anti-dumping laws were applied, they simply get the products somewhere else.
In North America and Europe, we tend to see things one-sided. Other countries dump their good and we lose jobs. Often, however, it was us who demanded the low price that is so damaging. What is missing is this whole discourse is the role of the middle man. If we require the importers, the retailers to buy good at a fair price, fair both to the foreign and local producers, then there is no issue of dumping. Who would rather sell for less when they can sell for more? The problem is then the market place will be fair and the major in the story will not be able to continue their predatory business practises. Ah, what is not good for M&M Enterprise is not good for the country. Pardon me.

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