please dont give previous chegg answers : \"“ Poster Child for Reform: The Antid
ID: 1219498 • Letter: P
Question
please dont give previous chegg answers :
"“Poster Child for Reform: The Antidumping Case on Bedroom Furniture from China” found online at http://www.cato.org/pubs/ftb/FTB-012.pdf
Note that this article was published in 2004. For the class discussion, consider the background material given below and think about your answer to the questions that follow:
Recent Background:
By the request of several U.S. furniture makers, the U.S. government in 2005 set anti-dumping duty legislation against Chinese exporters of wooden bedroom furniture. The duty amount is calculated on a case-by-case basis with rates between 0 to 200% (U.S. Department of Commerce, 2004). Since the duty was put into place, as a result, Chinese exporters of these products have moved their operations to lower cost countries such as Vietnam, have improved the quality of their products, or have stopped exporting to the USA (Russell, 2010). In October 2010, the U.S. government held the 5-year review of such policy.
Create a posting on this discussion forum with 5-10 sentences by entering your answer to the following questions:
QUESTIONS:
a) What do you think have been the benefits and losses to consumers in the USA? Why?
b) How do you think the international relations between the USA and China have been affected? Why?
c) Update the case result with new information.
Explanation / Answer
Persistent Dumping occurs when a firm with sufficient market power uses price discrimination as a method of selling its product in two different markets to increase its overall profit. Such a firm usually charges a high price in the domestic market where it has sufficient monopoly power and thus the demand is steeper. These firms charge a low price for their exported products in foreign market where competition is high and thus the demand is flatter.
a) As far as persistent dumping is concerned, the importing country should welcome it. This dumping offers more to consumers, in particular, and to the nation, in general. Compared to the high price in the exporting country, the importing country get gains from additional trade at a low export price. The importing country’s terms of trade are improved.
Consumers are benefitted of a lower price. However, the process of analyzing consumers’ gain is biased towards imposing antidumping duties, even though dumping usually lowers the well-being of the importing country.The same happend with the customers in US. They faced a low price and large variety. The problem however, was the fact that the quality was poor and the rumour that the wood taken for producing furniture in China was illegally acquired so that the price could be kept low.
b) American firms that filed alleged dumping cases often complain that only a meagre number of cases actually resulted in the imposition of antidumping duties on the foreign exporters. This number is relatively low, perhaps due to weak or biased antidumping policy of the U.S. government.
The method of finding the dumping country and the practice of dumping seems a bit biased. The injury test which is used to check the harm (or loss) caused to the domestic producers by dumping, considers only harm done to import-competing producers. This implies that there is no consideration of whether predation or some other source of harm to the country is involved. This also suggests that predatory dumping, cyclic dumping or even seasonal dumping cannot be properly investigated.
c) New information - The U.S. International Trade Commission has authored to conduct a full and comprehensive five-year “sunset” review that is related to the antidumping duty order on wooden bedroom furniture from China in order to determine whether revocation of this order will result in a continuation or recurrence of material injury within a reasonably foreseeable time.
Antidumping duties lower the world welfare in general. Hence the objection by the importing firms seems viable.
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