TAKING STOCK: Please welcome dumping

The Doha round of WTO talks failed. At the heart of this failure is the intransigence shown by Europe over the subsidies to their farmers. Poor countries of Africa and Asia cried foul.

“These subsidies make our own economies uncompetitive”, said the representatives from Asia and Africa. “If you drive down the price of corn, wheat, cotton, and tobacco by subsidizing your farmers, what will happen to our farmers? Our products will never be able to compete with your subsidized produce if markets are open”, cried the delegates of the developing nations.

These charges are nothing new. Country after country protests dumping. India tells China, “your toys are too cheap, you are dumping them on us and destroying our industry and therefore we will levy antidumping duties on you.”

US tells the world, “if you don’t stop dumping cheap textiles on us, we will protect our industry by quotas and tariffs”.

Over 150 years ago a French journalist and economist Frederic Bastiat petitioned his government on behalf of French manufacturers of candles, lanterns, street lamps and producers of tallow, oil and everything connected with lighting. At that time electricity had not yet been harnessed for our use.

In the petition Bastiat complained about the candle makers, “suffering from ruinous competition of a foreign rival who apparently works under condition so far superior to our own for production of light that he is flooding the domestic market with it at an incredibly low price; from the moment he appears, our sales cease, all consumers turn to him, and a branch of French industry is at once reduced to complete stagnation.”

Bastiat enumerated the benefits to France if the government banned this foreign dumping: more people will be employed in not only producing candles, lanterns, etc, but tallow and oil too; shipping activity will go up as thousands of vessels will engage in killing whales as that was an important source of tallow in those days; demand for tallow will also increase rearing of cattle and sheep.

Said Bastiat, “there is perhaps not one Frenchman, from the wealthy stockholder of the Anzin Company to the humblest vendor of matches, whose condition would not be improved by the success of our petition”.

Bastiat was protesting against the merciless competition from the sun. “Pass a law”, he said, “requiring the closing of all windows, dormers, skylights, inside and outside shutters, curtains, casements, bull’s-eyes, deadlights, and blinds - in short, all openings, holes, chinks, and fissures through which the light of the sun is wont to enter houses to the detriment of the fair industries”.

He also warned the lawmakers of France not to use any argument against his petition which was inconsistent with the stand they have already taken when railing against dumping of foreign goods.

This was Bastiat’s way to show the absurdity of the position taken by those who protest cheap, subsidized imports. Whatever arguments are used against imports can be used against the sun. If you think it beneficial to allow 100% free sunlight on earth, irrespective of loss caused to candle makers and others, you must allow imports which may only be partly subsidized.

Nepal, India and African countries should not care about the world subsidizing wheat, corn, or cotton. It would be great if America and Europe give a 100 per cent subsidy, then we get these items for free. It is for the American and European taxpayers to protest against the insane policy of their governments; for us, it is something to be happy about and we should say a big, “Thank you”, and add, “Why only wheat, corn, and cotton, please dump cars, TV”s, VCR”s, jeans, and whatever else your heart desires on us”.

Irrespective of what free gifts nature or other nations bestow on us, human wants are insatiable. If we do not gum up our production process and trade with controls, red tape, and taxes, there will always be enough for each one of us to do.

(The writer can be contacted at: everest@mos.com.np)