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I suppose that’s one way to look at it

The JoongAng Ilbo is bitching—again—about foreign protectionism:

Last week, the U.S. International Trade Commission (ITC) approved antidumping duties and countervailing duties on three Korean washing machine makers, accusing them of denting the profitability of American companies.

The ITC’s decision epitomizes the growing trend of protectionism in international trade amid the drawn-out global economic slowdown.

Korea, as suggested by the latest U.S. case, has become a bigger target for countries afraid of growing trade competition since it emerged as the world’s seventh-largest exporter.

Actually, what the commission accused them of was selling large washing machines at “less than the cost of producing them or for less than the price of the washers in the foreign manufacturers’ home markets.”

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  • http://twitter.com/holterbarbour Andrew Barbour

    I think the real crybabies are those in the US industries that filed the petition in the first place. As much as I love customs and trade law, I think dumping actions are boneheaded. The US Government is forcing a supplier to charge US customers higher prices because local manufacturers cannot compete.

  • SalarymaninSeoul

    Gee, less than the cost of producing them? Oh those poor American consumers getting quality products for super low prices! THE HORROR!!!!!!!!!!!!!!!!!!!!!!!!!!!! Fuck all protectionists.

  • Jang

    Huh? You love customs/trade law, think dumping actions are boneheaded, but think U.S. industries are crybabies because their competition is dumping. Okay, I see now.

  • KWillets

    That’s silly because we bought an LG Tromm for my mother-in-law in Seoul for almost the same price as in the US.

    They don’t sell dryers in Korea though — Obama should tell them to sell dryers.

  • gumiho

    So we should let these Korean companies get away with their corrupt, underhanded practices just to get a cheap washing machine? Our country has been hollowed out by thinking like that.

  • SalarymaninSeoul

    You get a cheap product of better quality. Whats not to like about that? You are being subsidized by a foreign entity, whats not to like about that? This sort of thinking leads to the conclusion that it would be better to make everything at home, no matter if it was wasteful and more expensive. Maximized labor for minimized wealth. But I guess you are either stupid, and love overpaying and getting essentially ripped off, or you’re part of the problem and are seeking protectionism to help your failing industry.

  • Scott N

    “sold for less than the cost of producing them”
    Interesting, is that actually possible. I mean, could that happen and still work out as a profit for everyone in the end.

  • Scott N

    exchange rates?

  • aligner

    Korean conglomerates under price for two reasons. 1 – to drive out the competition, 2 – to continue selling product to keep the factories running and not lose more money than they already are losing. Such practices do put American companies out of business and should be curtailed.

  • aligner

    Samsung, also has can’t (but should) drop its white goods business completely because that would mean shutting downs its factories in Kwangju and causing a horrible public relations fiasco in Korea. Samsung has been losing money on this business for most of the last decade. But the they keep on going, hoping that once the competition in America is stifled, the prices will go up and they can at least continue with white goods a bit longer.

    The area of contention we are talking about is of course the top-end washers, not the cheap stuff. Korean companies already dominate in America in this area.

  • RElgin

    This is wholly sensible. I believe that Samsung Semiconductor killed their competition by doing the same; flooding the market with RAM, that is.

  • http://profiles.google.com/dcmusicfreak DC Musicfreak

    Subsidized production within the chaebol, supporting unprofitable product lines with profitable ones.

  • cm

    I think you’re wrong there. Their white goods buinsess has been profitable, doing well in emerging markets in countries like India and China. As well, have you even looked at the Consumer Reports lately, on the quality ratings of the makes and the real reason why American makers are falling behind?

  • cm

    Is there really price dumping going on here, or is this ITC using anti dumping measures as trade protectionism?
    No one is asking this question, I would like an answer from someone.

  • dlbarch

    In typical Joongang fashion, that news stellar report failed to mention that the ITC decision was against both Korea and Mexico, or that it effects imports of European brands such as Electrolux. The Samsux-owned Joongang also failed to note that one of the ITC targets was Samsux.

    The full report is not available yet, but the ITC decision is available on-line, and it was unanimous:

    http://www.usitc.gov/press_room/news_release/2013/er0123ll1.htm

    For those wondering about the alleged bias of the ITC, just note that Whirlpool brought a similar complaint against various manufacturers of refrigerators last year…and lost.

    As for the idea that American manufacturers are falling behind, Whirlpool dominates that segment of the market with 56 percent market share.

    Finally, every international trade body, including the WTO, recognizes the economic harm caused by dumping, and countervailing anti-dumping duties are widely recognized as the appropriate countermeasure. Andrew Barbour, et al., do not have any clue what they’re talking about.

    DLB

  • cm

    Not exactly. ITC ruled Samsung and LG in violation of anti dumping of washers and refrigerators in favor of Whirlpool and fined the two 1.2 percent and 0.2 percent respectively. This was back in May of 2012. The Daewoo electronics was fined a whopping 70%. Daewoo didn’t even bother defending themselves because they hardly sell any units in the US market, so they were wondering how in the world they were hurting Whirlpool’s sales.

  • dlbarch

    And just so everyone’s on the same page, Korea’s own KTC recognizes the use of anti-dumping duties, and regularly imposes them on foreign importers.

    All. The. Time.

    DLB

  • KWillets

    It’s kind of a myth. If it were real the correct response would not be to reduce sales of the product, since that reduces the manufacturer’s supposed money loss.

  • SalarymaninSeoul

    Looks like we have a neo-mercantilist in our midst. The dangers of dumping “recognized” by people with a vested interest in mercantilistic protectionism. This is a good one.

  • wangkon936

    I dunno. Korean washing machines in the U.S. are not cheap. $1,000 for an LG “Tromm” side loading washer? Eh…. I dunno man. I’d rather buy a top loading Whirlpool for $400.

  • Gaeranee

    They lower the price and then jack them up after their competition bankrupts. That is horrible, if you ask me.

  • Gaeranee

    It is profitable long term bc even though it is a temporary loss, they drive out the competition and then can charge monopoly prices later on.

  • wangkon936

    It doesn’t happen so much anymore. It was more of a 90′s thing and that’s why the chaebols got in so much trouble in 1998.

    That model is unsustainable, which is why it can’t happen nowadays.

  • unplanned_life

    For those saying you get a better price for a better product when a company dumps its products. You get a better price in the short-term only. In the long-term you pay oligopolist or even monopolist prices.

    That’s one reason why the supposed “freest marketplace in the world”, Hong Kong, has some relatively high prices in a lot of categories–too few laws to ensure that there is adequate long-run competition.

  • cm

    It’s questionable if there really is dumping going on. Koreans are saying not. Their position is that ITC’s method of calculating costs goes against WTO rules. Koreans have vowed to take it to the world courts. Several years back, Canada also had similar complaints against the United States regarding Canadian timber and US anti dumping rule. They also took the case to the WTO and actually won. But the US refused to honor the ruling, and Canadian timber was blocked out – unfairly, say Canadians. I think I’ll wait until how the WTO ruling goes to make up my mind before deciding if there really was dumping going on.

  • cm

    But nobody even comes close to United States when it comes to number of anti-dumping claims.

  • http://twitter.com/holterbarbour Andrew Barbour

    Not sure how those are in conflict with each other. I think dumping actions are boneheaded because they punish the domestic consumer by forcing them to pay higher prices than necessary, and they reward the “injured” domestic manufacturer that raised the claim in the first place. And by “reward”, I mean that literally- not only do they benefit from reduced competition as a result of these duties on foreign goods, the extra revenues collected by Customs are distributed to the “injured” domestic manufacturer under the CDSOA (http://www.usitc.gov/trade_remedy/byrd_amendment.htm)

    Boneheaded: forcing consumers to pay more for goods and redirecting that surcharge to the very manufacturers who complained because they couldn’t compete with the foreign manufacturer. That is not a recipe for stimulating competition or efficiency.

  • http://twitter.com/holterbarbour Andrew Barbour

    If the consumer wants it, why shouldn’t the consumer be able to get the goods he wants at a price acceptable to the seller? What is it about dumping that is so fundamentally different from any other seller choosing to sell at a loss?

  • http://twitter.com/holterbarbour Andrew Barbour

    Unless you have some kind of Minority Report “precrime” bureau at your service, then justifying dumping actions on the basis of what a manufacturer *might* do in the future is a little premature.

  • yangachibastardo

    You’re trying to stick some facts in the head of the “Samsung is a bankrupted company and Korea the next Greece” crowd…good luck :)

  • Gaeranee

    In that case, they should just get rid of all unfair competition regulations and antitrust laws since monopoly in and of itself is not bad, according to your argument. Driving out competition is a bad thing and undercutting the competitor’s price to a point of the dumping company losing money is a sure sign of Its intent to drive out competition. Honestly, what purpose do you think these companes have in selling products below the cost of production? Altruism? Haha….

  • Jang

    If as many countries tried dumping their Ddong into S. Korea as done with the U.S., – Koreans would run into the sea from all directions similar to how so many Koreans and soldiers would run south to Busan if N. Korea attacked. But there are many a reason many don’t even try to do business fairly in S. Korea.

  • http://twitter.com/holterbarbour Andrew Barbour

    To the extent that it benefits the consumer, I say go for it. That’s the difference. Once you start colluding with competitors to fix prices or abusing your monopoly position, then I’m not opposed to regulation. But dumping isn’t that. It’s the *intervention* that punishes the consumer, not the dumping itself. The dumping *may* injure a domestic producer, but it may also spur them into more competitive practices. Two big problems off the top of my head:

    1. We’re not only protecting, but *actively subsidizing US manufacturers with the dumping revenues that are collected*– the US manufacturers that proved themselves unable to compete with the low prices of foreign made goods. The cost of the additional duties collected by Customs is passed on to the consumer. Which means that the consumer who didn’t want the product offered by the domestic manufacturer in the first place is paying that domestic manufacturer anyway(!). Giving money to non-competitive companies to stimulate their ability to compete is like giving cake to a fat person because they need the calories for all that exercise they need to do.

    2. If the problem is not that US businesses may be harmed, but rather that the consumer *potentially* faces harm later, then it is premature to punish foreign manufacturers for offenses they have not yet committed– they’re being punished for actions which actually benefit consumers. If there’s a case to be made that they i) sold below the cost of production and then ii) raised prices unreasonably (say, by an amount equal or greater to the dumping margin) during some fixed period of time thereafter, then let’em have it. But not before then.

    Imagine if a foreign manufacturer *does* eliminate competition in the US market (which is itself highly unlikely if that company is competing against other manufacturers worldwide). It may be able to raise prices a little, but it is limited in how much it can increase prices after achieving monopoly, because if someone can do it cheaper, they will enter the market.

  • aligner

    CM – you are wrong here. Maybe on paper it appears to be profitable, but you have to remember that Samsung is not an independent white goods manufacturer like Whirlpool, it is a massive interrelated network of companies and suppliers, with their white goods business amounting to just several percentage points of total Samsung Electronics revenue. Even the highly suspect operating profits that Samsung reports in Korea are hardly encouraging, and examined as its own business it is certainly losing money. What possible sense could it make for Samsung to still be involved in washing machines and microwaves, considering its supposed high-tech international profile?

    And Yang Bastard – at least 150 foreigners go in and out Samsung’s doors a year in Korea on short-term 1-2 year contracts. Do you know any of these people? Again, your empty-headed support of Samsung and all aspects of Korean society (assuredly they compare well to your supposed bleak and sordid past) holds little sway here. I am glad to hear that someone you are somehow eking a living off Korea’s rise.