Wednesday 17 February 2016
A friend of mine has a little round dish which looks like an ashtray but is in fact, as it says round the edge, "a round tuit." I believe it was given to him by his wife on the assumption that now he had got around to it, he had no further excuses for not doing all those little jobs that she felt needed attention.
I have been intending to write a post on dumping in relation to Britain's steel industry for some months, but somehow never got around to it. To prevent dumping is about the only reason or excuse for interfering with international trade by tariffs or other devices which is undisputedly regarded as legitimate even by the most neo-liberal of economics text books.
Dumping is the selling in a foreign markets of a product at below its cost of production in order to get rid of a surplus of domestic supplies, or, more sinisterly, to put the producers of that product in the foreign market out of business, and then, once the competition is eliminated, hike up the prices. Dumping is not to be confused with selling a product at a lower price than the foreign market can manage because the exporter is more efficient or, in the jargon, has a "comparative advantage." That's the basis of all legitimate international trade and from which we all benefit considerably. (Just think how much bananas would cost if we had to grow them here in greenhouses.)
So if, as seems certain, China is dumping steel at below cost on the world market, we have every justification of putting up a higher tariff, or other restriction, in order to stop them and preserve our own steel industry, and I have wondered for months why on earth we didn't do it.
The answer is revealed in last Sunday's Observer. Other steel producing countries in the EU wish to impose a punitive tariff against Chinese steel similar to the 256% duty the US charges but this is being blocked by - guess who - the UK. Rather than respond with a punitive tariff, the EU is limited to a puny increase from 9.2% to 13%. The reason appears to be that the UK is anxious not to upset China or other arrangements may be derailed.
As a result, Tata, the Indian company now responsible for the production of what remains of British steel production, may be forced to further closures. Tata's domestic government, India, is not so timid, and has slapped significant tariffs on steel imports from both China and Korea.
In Britain it seems that, whereas there is no limit to the measures and finance necessary to rescue and preserve banking and finance, the steel industry, and the workers in it, are dispensable.
So much, yet again, for all being in it together.