Tuesday, 10 November 2009


I'd previously noted my disapproval of anti-dumping tariffs.

BK Drinkwater today points to a wonderful example of how anti-dumping works in practice, even in New Zealand.
Enter Michael McCormack, an Island Bay artist. He designs diaries adorned with Wellington scenes, has them printed in China, and sells them here. Everyone wins, right? He makes a bit of money to finance his passion, some printers in China get paid employment, and consumers get pretty diaries. Right?

Oh no. He gets slapped with an anti-dumping levy, because he doesn't sell the diaries to all those people in China desperate to have scenes of Wellington life in their stationery.
So this story has a hero. Where, you might ask, is the villain? Read on:
The diary duties were imposed after a complaint from the New Zealand industry, of which Croxley Stationery is the largest producer.
Of course. Some dude having two thousand diaries printed in China is obviously a threat to the local printing industry. So the industry calls in its mates at government to punish him.

Well done Croxley: you fail at capitalism. You've just been schooled by a struggling artist.
Don't we have a free trade deal with China?

Whatever blackboard explanations you want to come up with for the optimality of trade restrictions, this is how they play out in the real world.

1 comment:

  1. Arrgghh. Anti-dumping is one of the stupider duties that we have. I mean, really, who sells us product below cost? And, if they are selling us product below cost, is that really all that bad?

    The problem is that the idea sounds good (protect our markets from short-term distortions). The practice is appalling, as the govt official in Wellington has no way of knowing what the real cost of production of those 2000 dairies was, so they make it up. And get it wrong more often than not.

    To be blunt, I find it very unlikely that this artist in NZ somehow magically found the company in China that was prepared to sell to him below cost. I find it much more likely that the NZ-based bureaucrat has miscalculated what the true costs of production are in China.