I think this is an ipse dixit on their part. Just because they invoke antidumping laws does not make this a case of dumping. Dumping means selling below their costs. I have seen no such evidence from the ITC.
I didn't, actually. But just because Joe says it has been substantiated doesn't mean it is. Just like it doesn't mean it's dumping if the ITC says it is.
Quote:I don't need to meet the burden of proof on that charge -- it has already been met. You can read the ITC's preliminary report here (.pdf).
Ok, now I downloaded this again and read it through again. And I still see no evidence in there of dumping. So could you point out where the burden of proof for this charge is met?
Quote:If you, on the other hand, have information that tends to show that the ITC was wrong, then I'll be happy to review it.
This isn't how burden of proof works, but if it's how you like it to work:
"The claim it is dumping has been reviewed and has been found to be unsubstantiated."
Or if you want a more specific argument: there is inherent bias in the methods typically used to allege Chinese dumping. The standard way to determine the dumping margin is to compare export cost to normal cost. However the Chinese market is not considered a market economy so analogue markets are used in its place. The most commonly used analogue market is the US. So often a determination of dumping just means that they are selling it for less than was typical in the US. That isn't dumping, it's selection bias of the "normal cost".
joefromchicago wrote:I know there are some who simply refuse to believe that any company has ever "dumped" its products on the market.
Depends on what you mean by "dumping". It's a very slippery concept once you try to pin it down to specifics. So maybe I should ask: what, specifically, do you mean when you use the word "dumping"?
That's not my understanding. From following the story in the New York Times, my understanding is that the US International Trade Commission has determined that Chinese tires are surging in US market share. Apparently this is all it takes to trigger an anti-dumping clause in the trade agreement between the US and China. I am not arguing with this finding. Still, a surging market share is no evidence of actual dumping, no matter what the clause in question says.
That's because, contrary to media reports, this wasn't a "dumping" case. It was a case of "market disruption." And to anticipate your next question: no, I don't know what "market disruption" means. From the ITC's findings, though, it seems like the two are very similar.
Well, despite the fact that the ITC never really got around to saying that the Chinese were dumping tires on the American market, the fact that the ITC held hearings and issued a detailed opinion is, I think, enough to say that it's decision wasn't merely an ipse dixit. You may disagree with it, but you're off-base if you suggest that the reason behind the ITC's decision was simply an extended "because I say so."
You read that twice? Really? At what point did you realize that I posted the wrong link?
Here is the correct link to the ITC's written findings: Investigation No. TA-421-7.
Perhaps. But are you suggesting that the ITC can't prove any dumping claim by means of circumstantial evidence, or just that its circumstantial evidence in this case is not persuasive?
I think your initial understanding of the case was somewhat better than mine. This was a "market disruption" case, not a "dumping" case.
Market disruption in this context means pretty much what we want it to mean (there might be minimum market share requirements, but they aren't very restrictive if that's the case). We negotiated that clause into China's WTC entry and it doesn't require that dumping take place. It's a general protectionism card we negotiated with the Chinese.
I haven't seen the ITC even say so. I have only seen you say so.
Ok, now I've read this one and I still don't see any evidence for dumping.
What evidence Joe? I haven't seen any of the dumping evidence, I've just seen you say there is evidence. I haven't seen media report it as a dumping case, and I haven't seen the ITC provide any dumping evidence either.
You are the only person I've seen call this a case of dumping laws that apply to both countries.
I now think you were confusing the specific market disruption clause we negotiated with China for the general dumping laws that all nations are bound to but even that isn't clear yet and you might think that the clauses invoked really do relate to dumping. So to clear that up, do you still think this is a matter of dumping laws that apply to both countries or do you acknowledge that it is not dumping and is not a violation of laws that we too are bound to in China?
That very well may be the case. It may also be a way of punishing China for "dumping" that the ITC can't actually prove is "dumping." I'd need to know more about the trade agreement to form an opinion, and that's something I choose not to do at this time.
Say what?
I'm not entirely sure what you mean by that. I never said that American laws applied to China, or that China has the same laws as the US. American laws, however, apply to Chinese firms that do business in the US, just as they apply to American firms doing business here.
This is a case of "market disruption," not of "dumping." I thought I made that pretty clear in my previous response to you. Whether China has any similar laws with regard to "market disruption" is something about which I haven't the foggiest notion.
"Dumping" means the selling of goods below cost in order to gain a competitive advantage in a particular market.
I think your initial understanding of the case was somewhat better than mine. This was a "market disruption" case, not a "dumping" case.
joefromchicago wrote:"Dumping" means the selling of goods below cost in order to gain a competitive advantage in a particular market.
By this definition, dumping is indeed pervasive -- and mostly harmless. Just yesterday, for example, I bought a hugely discounted pile of clothing from a factory outlet. It was hugely discounted because it stemmed from the factory's previous collection, and they wanted to make room for their current one. Perfectly benign, but nevertheless "dumping" by your definition.
joefromchicago wrote:I think your initial understanding of the case was somewhat better than mine. This was a "market disruption" case, not a "dumping" case.
I see. And how, if at all, does this affect your judgment on the wisdom of the tariff?
Are you sure that it was sold below cost? Were they sold in order to gain market share in that particular item, or was it sold to reduce inventory?
Well, if China indeed signed an agreement with the US which permitted the US to impose higher tariffs on those items which posed a threat of "market disruption," and if Chinese tires really do disrupt the American domestic market in tires, then I don't see what the problem is.
It guess it depends on what you mean by 'cost'. I'm pretty sure they sold below average cost. They may or may not have sold below marginal cost, too. As to your point about the purpose of their reduced cost, I submit you're asking a trick question: Gaining market share and reducing inventory are not mutually exclusive.
I admit it's a valid argument against my charge that it's bad ethics towards the Chinese. I don't, however, see how it refutes my charge that it's bad policy. As you well know, policies can be both perfectly hideous and perfectly legal.
Not a trick question at all -- it's the kind of question that an American court would ask in an antitrust case.
The difference is whether the clothing store is attempting to drive its competitors out of business by offering its merchandise for sale below cost, or whether it's a transitory measure to reduce inventory.
On the other hand, if you're looking at this as a political policy rather than an economic one, then it might be a good idea to impose tariffs on Chinese products if it will serve the administration's broader political objectives.
In general, again, the two attempts are not mutually exclusive. In the particular case of myself and the garment factory, I'm sure you could persuasively argue both sides.
I don't think 'dumping' is a helpful concept for anything, be it antitrust or trade.
Yes. And my question to you is: Do you think this is a good political policy? If so, how?
Thomas wrote:I don't think 'dumping' is a helpful concept for anything, be it antitrust or trade.
Because it's difficult to prove or because it just doesn't happen?
Both prongs of your test involve concepts that are wobbly in practice:
(a) "Selling below price": what does that mean? Which price -- marginal or average, variable or with overhead included?
(b) "To gain market share": Isn't that part of what all profit-maximising firms ultimateltry try to achieve, whatever the details, and whatever the market structure?
Without attempting to answer these questions, my point is you need legal standards to firm up the wobbliness.
To not impede the ordinary workings of free, competitive markets, the standards can't condemn benign or even beneficial bycatch. My garment factory would be one example. Another would be a new entrant into a market trying to get the consumers' attention by temporarily selling below cost. New entrants make a market more competitive and less cartelized, and are thus a net benefit under the general policy of anti-trust law. (It is, after all, anti- trust law, not incumbent-protection-law.) And yet, new entrants like this would seem to match your test, if taken at face value. Your legal standard needs to avoid this problem.
I don't remember what measure the government uses. And it appears that the measures may change from one presidential administration to the next.
It's not illegal to increase market share, it's illegal to increase market share by means of predatory pricing/dumping. There might be a fine line between the two in some cases, but the law is able to draw that line
As long as the Justice Dept. uses a rational standard that businesses can follow, however, it really doesn't matter from a legal perspective what measure it uses.
On the other hand, if an established business in market X decides to enter market Y, and uses the power that comes from its monopoly position in market X to increase its share of market Y, then its practices might have antitrust implications, and it can't shield those practices by saying that it's a new entrant in the market.
Evidently ,I am more skeptical than you are about bridging the gap between your following two statements:
first, joefromchicago wrote:I don't remember what measure the government uses. And it appears that the measures may change from one presidential administration to the next.
then, joefromchicago wrote:It's not illegal to increase market share, it's illegal to increase market share by means of predatory pricing/dumping. There might be a fine line between the two in some cases, but the law is able to draw that line
In particular, I'm skeptical about the bridge you suggest in the middle:
joefromchicago wrote:As long as the Justice Dept. uses a rational standard that businesses can follow, however, it really doesn't matter from a legal perspective what measure it uses.
... because lawyers can be so infuriatingly lenient about what they consider 'rational' -- which, I guess, is why 'rational review' is barely better than 'no review at all'.
But I digress. Finally, I don't see the point in the following:
joefromchicago wrote:On the other hand, if an established business in market X decides to enter market Y, and uses the power that comes from its monopoly position in market X to increase its share of market Y, then its practices might have antitrust implications, and it can't shield those practices by saying that it's a new entrant in the market.
Why should this distinction make a difference if the general policy of the law is to prevent monopolization in both markets? Market X, at worst, sees no difference. Market Y gets more competitive and less monopolized because of the new entrant into it. That's a good thing, no? So why should the law condemn it?
PS: We still, agree, don't we, that none of this matters to the Chinese tire case, because there is no finding that the Chinese are guilty of predatory pricing. For all we know, they could just be making better tires at lower costs, in which case American tire makers should be in trouble. If Darth Vader was to say: "I sense a disturbance in the force, let's bomb the rebel fleet", you would have no problem exposing his reasoning as threadbare and pitiful. Since you agree that 'market disturbance' basically means whatever the president wants it to mean, how can you deny that Obama's reasoning is any better than Darth Vader's would be?
I'm not sure what the problem is here. I think it may stem from the fact that you want the government to follow a policy that is economically rational.
Thomas wrote:Market X, at worst, sees no difference. Market Y gets more competitive and less monopolized because of the new entrant into it. That's a good thing, no? So why should the law condemn it?
Because a company with monopoly power in one market shouldn't be able to use that power to dominate another.
Gee, if I were Darth Vader and I felt a disturbance in the Force, I think it would be perfectly rational to bomb the rebel fleet.
Certainly in its anti-trust law, where the public policy and the legal norms to be enforced are explicitly economical. I agree I would have a harder case to make if this was a question of, say, criminal law, where it's more debatable that approaches like utilitarianism or law and economics apply. But not in anti-trust law. And not in trade policy either.
Now you're moving your goal-posts. Your definition of "dumping" only demands an intention to gain market share -- not dominance.
joefromchicago wrote:Gee, if I were Darth Vader and I felt a disturbance in the Force, I think it would be perfectly rational to bomb the rebel fleet.
Your neighbor George Bush appears to be a bad influence on you.
