DUMPING - the effects and influences of the  POLITICAL ENVIRONMENT

changes last made to this page 2014 July 23
 

COMMENT

Dumping is like the term terrorism  - if they are an asset of the United States, they are "Freedom Fighters",  - if they are against the United States, they are "Terrorists".  Dumping is the term when it happens to you, .... but when you do it to other people, it is just "competitively exporting".  It is a sensitive issue and virtually every one of the OECD member countries does it. The main motivation of politicians is to get re-elected. Many politicians have to support legislation that will allow them to get re-elected. A number of business sectors and industries, such as dairy products, clothing, steel, wood products, etc. have all been involved in dumping and these are sectors in which a lot of votes can be won or lost by the politician vulnerable to that business in her/his constituency. WTGR

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Students (left to right, David, Sunny, Darren and Eric) from MRK460  (Wed Section) in April 2014  at Seneca  made a video showing a simple explanation of dumping using an example from Blackberry selling Z10's in India

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Click on the screen capture to the left to see the YouTube video made by  David, Sunny, Darren and Eric  regarding dumping Dumping is not just a theoretical concept, it does exist and it can cause problems for the home country of the company that prices products this way, and it can cause problems for companies trying to compete in the target region.

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CBSA

Canadian Government Agencies involved in Dumping: Canada Border Services Agency As explained on their website www.cbsa-asfc.gc.ca Recently created on December 12, 2003, the Canada Border Services Agency (CBSA) operates as an agency under the Public Safety and Emergency Preparedness (PSEP) portfolio. "The CBSA is responsible for providing integrated border services that support national security priorities and facilitate the free flow of persons and goods, including animals and plants, which meet all requirements under the program legislation."

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Screen capture from the CBSA site Knowing about the activities of the CBSA effects many things involved in importing products into Canada, from a practical point of view, to a management and planning perspective

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CBSA

Canada Border Services Agency CBSA used to be part of Revenue Canada - which was formerly called Canada Customs and Revenue Agency. CBSA is the Canadian government agency that will investigate if countries are shipping products into Canada and selling them at a price which is lower than in their host country - the definition of dumping. After completing and investigation, CBSA then has the option of laying a tariff against certain products so that the foreign exporters can't continue to "dump" them in Canada and cause a bad competitive circumstance for Canadian manufacturers.   "With a workforce of approximately 12,000 public servants, CBSA provides services at approximately 1,200 points across Canada and 39 locations abroad. We administer more than 90 acts and regulations on behalf of other federal departments and agencies, and international agreements." from  www.cbsa-asfc.gc.ca/agency/menu-e.html

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CBSA and a DUMPING investigation Bicycles

In Sept 2004 CBSA Canada Border Services Agency concluded an anti-dumping re-investigation concerning certain bicycles and bicycle frames imported from China (PRC) and Taiwan (ROC). "As reported on www.newswire.ca  The Canada Border Services Agency (CBSA) announced today [Sept 01, 2004] that its anti-dumping re-investigation concerning bicycles and frames from Chinese Taipei (Taiwan) and the People's Republic of China concluded yesterday. The CBSA carried out a comprehensive investigation of the Chinese bicycle industry and conducted verification visits at the premises of Chinese exporters. The CBSA found no evidence to demonstrate that pricing of the bicycles and frames is substantially controlled by the government. As a result, the Chinese exporters investigated will now be able to sell to Canada at lower prices without being subject to anti-dumping duty. " What happened? - There was a suspicion that Chinese bicycle manufacturers were "dumping" bikes in Canada at a low price and making it difficult for North American bicycle manufacturers to sell at such a low price.  .The CBSA did an investigation and found that the bikes were made in China at a very low price and this was done without Chinese government intervention [read subsidies] so they will not put a tariff on bikes coming in to Canada from China or Taiwan. WTGR

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In Feb 2005 CBSA Canada Border Services Agency concluded an anti-dumping re-investigation concerning women's leather boots imported from China (PRC). details www.cbsa-asfc.gc.ca/E/pub/cm/cn607/cn607-e.html from the CBSA site  "The review was conducted as part of the CBSA’s enforcement of the Canadian International Trade Tribunal’s (Tribunal) order of May 1, 2000, concerning women’s boots with uppers made of leather and non-leather materials and manufactured in sizes 4 and up, originating in or exported from China. As a result, anti-dumping duty equal to 72.1% of the export price will be applied to imports of subject goods on or after January 31, 2005. "   KEY POINTS What happened? - There was a suspicion that women's leather boots were being shipped in to Canada, from China, at very very low prices and this was creating an unfair competitive situation for Canadian boot manufacturers. CBSA investigated the Chinese manufacturers - the manufacturers did not co-operate, so the CBSA slapped a  72% tariff on the incoming boots from China. WTGR .

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In March 2009 CBSA Canada Border Services Agency concluded an anti-dumping investigation concerning Aluminum Imports The complaint was filed by Almag Aluminum, Apel Extrusions, Can Art Aluminum Extrusion, Metra Aluminum, Signature Aluminum Canada, Spectra Aluminum Products and Spectra Anodizing, claiming they had suffered injury as result of dumped and subsidized imports of aluminum extrusions from China. from the CBSA site  "the dumping and subsidizing in Canada of custom-shaped aluminum extrusions originating in or exported from the People’s Republic of China have caused injury to the domestic industry"   KEY POINTS What happened? - There was a suspicion that Chinese companies were dumping aluminum ingots into Canada at a low low price because they were either subsidized or dumped. What will be the consequence? CBSA says "Antidumping and or countervailing duties will be imposed since the Tribunal finds that dumped or subsidized products are injuring or threatening to injure the Canadian producers." WTGR . On the Chinese side, their media outlets say "China's Ministry of Commerce (MOC) expressed strong protest against Canada's decision on anti-dumping duty rates and countervailing duty rates of aluminum extrusion imported from China"  http://en.cbichina.com/Common/1974268,0,0,0,1.htm

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KEY POINTS

Why is it useful to know these details from CBSA cases? If you were a business manager involved in the clothing business and part of your product line included women's footwear - including some from China, you should be aware that you will be forced to make a high increase to your retail price based on the countervailing tariff being applied. The consequence of this CBSA decision will then effect your marketing promotional activities since you will have to consider how your advertising will handle  the effects of a high price increase. WTGR

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In September 2002, an example of "Dumping", as claimed by the Americans, involved Canadian exports of wheat into the United States. The topic was discussed in several newspapers, including the National Post
 

"U.S. Turns Up Heat in Trade War" by Peter Morton 2002 Sept 17

The subtitle for Morton's article was
"Farmer Group Demands US$ 100 million in duties on dumped Canadian Wheat"
 

"The North Dakota Wheat Commission over the weekend (2002 Sept 13-14)  asked the U.S. Commerce Department  to hit Canadian durum and spring wheat with duties between 23.7% and 37.5%, and complained that a record amount of the grain was sold by the  wheat board in the United States last year."

 "The onslaught of Canadian grain dumped into our markets has  been devastating to U.S. hard red spring and durum wheat  producers," said Larry Lee, chairman of the North Dakota commission, which represents about 19,500 grain farmers. "We can compete with Canadian farmers but not against the unfair pricing of the Canadian Wheat Board," he said. The North Dakota wheat farmers, which are among the country's largest producers, want the Commerce Department and the U.S. International Trade Commission to hit Canadian wheat with both  dumping and countervail duties.
 

KEY POINTS

How will this play out ? - it is effected a lot by the "political environment". Depends on who are the elected members of congress that represent the districts in North Dakota, and how influential are the Senators from North Dakota; and, on the other side, it depends on how much the Liberals in Ottawa want to appease the farmers in Alberta. The farmers in Alberta have traditionally voted for the Conservative party, or the Reform party - the Liberals (in mid-2002) can easily get re-elected based on their popularity in Quebec and Ontario so they might be willing to go to far against the Americans for an issue that will not result in re-elected Liberals - on the other hand, it depends if the Liberals consider this a regional issue or a national issue. WTGR

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"U.S. wheat producers have long complained about the Winnipeg-based wheat board, arguing that the agency deliberately underprices Canadian wheat to grab market share  both in the United States. and internationally. There have been nine investigations of the wheat board over the past 10 years by  the United States."
 
 

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