Poland Compelled Launching of the Antidumping Duties on the Frozen Strawberry From China
November 8th, 2006
On the 10th of October the European Commission took a decision to accede to the request of Union of Polish Deep Frozen Products’ Producers and to clap temporary antidumping duties on import of frozen strawberries to EU countries. So, starting from the 18th of October frozen strawberry suppliers from China will pay 34.2% of antidumping duty in addition to the standard duty on import of frozen strawberry. The antidumping duty has been launched for 5 years.
Polish farmers, dealing with commercial cultivation of strawberry, felt serious business competition with China suppliers in 2004 for the first time. At that time, during the strawberry harvesting time in Poland the price on the frozen Chinese strawberry, delivered to EU, was about 0.6 EUR per kilo, when the production cost on strawberry cultivation in Poland at the same time was on about 0.55 EUR per kilo level, as estimated by analysts. Taking into account charges for freezing and delivery to EU, to compete with China, Polish producers had to sell strawberry with great losses for themselves. For example, in 2004 Polish exporters of frozen strawberry could not propose it to customers in the EU countries cheaper, than for 1 EUR per kilo.
The situation went worse in 2005, when Chinese suppliers began to supply frozen strawberry for 0.46 EUR per kilo already, herein that expenses for strawberry production in Poland grew highly. That situation led to substantial reduction of strawberry areas in Poland, which were traditionally the main strawberry supplies to the EU markets. With launching of the antidumping duties Polish producers hope to recapture the production profitability of this traditional for Poland berry and to increase its export to the markets of European Union.
This article shows how countries, in this case Poland, deal with China undercutting farmers. This can possibly lead to countries farmers’ demise. China was delivering frozen strawberries to the EU for a price that Poland could not compete with after taking into account charges for freezing and delivery to EU. Suppliers from China will now pay an antidumping duty in addition to the standard duty on import of frozen strawberry. Poland was the main supplier to the EU and was threatened and now hopes to recapture their profits as they regain their exports to the EU markets. This is happening not only within the strawberry market. China is undercutting many countries in various industries. China also does not allow many imports, except for necessities, and exports a lot.
Here are some questions to reflect on, respond to, or debate my opinons on them.
1. Is it fair to limit the trade of Chinese strawberries if they are the most efficient producer?
a. I feel it is not fair in the slightest bit because they are not creating a fair trade envirionment, as they do not have a “perfect” environment for strawberry growth and are exporting using a different tactic.
2. Who will be hurt by the tariff onf Chinese strawberries?
a. European consumers because of a more expensive product
b. Chinese producers because an increased quantity at a lower price
c. The international strawberry industry because of redirected trade flow from China. As of now they do not allow us to import to China becuase we have “harsh chemicals and pests”, even though they have said “our strawberries are larger and taste better”.
3. Is China fully representing all the costs of production?
a. No, they have communist land practices.
b. It appears China has non transparent agricultural subsidies by the government, allowing them to gain international market share and show that their contry is rising. The speaker today showed us how China used to pull into ports with luxurious ships and trade, even thought they didn’t need the goods, to show they were back and ready to be in charge.
4. Is China practicing a predatory strategy in agricultural commodities?
a. Potentially they are and it is apparent in other commodities they export.
Submitted by: Victoria Whelan
Entry Filed under: Pre-Departure, Beijing, China, Misc.
3 Comments Add your own
1. Chris Carr | November 8th, 2006 at 2:51 pm
Good post. Amazing — once again the Europeans have a hard time stomaching this thing called competition. To be fair to them, though, we have our own skeletons in this closet. Exhibit A – the “The Travels of a T-Shirt in the Global Economy” book that many of you already indicated you plan to read, and what the cottom farmers/industry in the US do to protect their turf and avoid labor markets. This makes the Poles and their protectionism look like small timers! And yes, you are right in that the Chinese play their own protectionism games on certain commodities and consumer goods. Markets and the “invisible hand” that Adam Smith wrote about are interesting – most folks believe in them …. until they apply to them! As an example, most Americans feel that the Chinese should let their yuan/renminbi (RMB) ”float”, but be careful what you wish for – if they do that the cost of any MBA trip to China goes up!
For those of you in Dr. Anderson’s class today (11-9), where Dr. Whitaker spoke on lobbying, what links/connections do you see re: this article Victoria discusses and brought to our attention and what Dr. Whitaker spoke about today?
2. Felipe Hernandez | November 12th, 2006 at 10:59 pm
My (limited) economics training wants me to believe that this is wrong, that markets should be free to operate independent of government manipulation. Also, as Professor Williamson has recently taught us, the taxes will eventually be passed onto consumers in the form of more expensive strawberries. However, you allude to the possibility that it may in fact be the Chinese government that is manipulating the market in an attempt to destroy European competitors. In general, it seems that Chinese government forms a synergy with Chinese industry that is unmatched in other industrialized nations. This will increasingly make it hard for these countries to compete without protections in the form of tariffs. It will be interesting to see how China reacts to this, if they just take it on the chin and try to make it up in another industry or if they take offense and withdraw from the market completely. It will also be interesting to see if this is just the beginning of trend for the EU.
3. James Towers | December 12th, 2006 at 11:12 pm
I would like to point out one of those skeletons that Dr. Carr was alluding to. The North American Free Trade Agreement between Mexico, the US, and Canada has done much to match “willing workers with willing employers.” However, one of the consequences is that because the US heavily subsidizes its crops, Mexican agriculture producers can’t compete with our cheap exports. The result is that, like the Polish farmers, many Mexican farmers have gone out of business because their government doesn’t give them tons of money like communist China or capitalist America. So apparently “communist land practices” are alive and thriving in the US.
The result of governments subsidizing export items can be seen in two different lights. It allows developing countries to be able to afford cheap goods, which in turn promotes their economy. However, it also destroys their own domestic production, making them even more dependent on the imports.
After taking Micro-Econ, it is tough to be on the side of tariffs. Mathematical equations can prove that the greatest overall economic benefit occurs when free world trade is allowed. Tariffs provide a benefit only for domestic producers; whereas, free trade benefits consumers and world producers.
I think it will be interesting to see if the World Trade Organization takes a harder stance on subsidized exports. They seem to be continuously pushing free trade, but without curbing or punishing subsidized exports this will still result in an unfair trading world for third world countries.
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