|
A HOMETOWN LESSON IN INTERNATIONAL TRADE
Dr. Don Mathews
Brunswick News
We here in Glynn County may soon be eyewitnesses to a valuable lesson
in
international trade.
The lesson is: when the federal government attempts to protect a
domestic industry
by imposing tariffs on imported goods, the consequences are substantial
and extend far
beyond the domestic industry and its foreign competition.
In our case, the domestic industry is shrimping. The foreign competition
is foreign
shrimp farms. And the consequences of protecting the domestic shrimping
industry
extend to some of the most important employers in Glynn County.
Local shrimpers, as well as most other shrimpers in the southern
U.S., have found
themselves all but unable to compete against foreign shrimp farms.
The farms have
become the shrimp industry.s most efficient producers, and in recent
years have
expanded in number, size and production. Consequently, shrimp prices
have been driven
down to levels that threaten the market survival of southern shrimpers.
The shrimpers contend that the shrimp farms are 'dumping' shrimp
on the U.S.
market -- that is, selling shrimp here at prices below the cost
of production. So the
shrimpers have formed the Southern Shrimp Alliance to lobby the
government for
protection. In December, the Alliance filed an anti-dumping petition
with the U.S.
Department of Commerce against shrimp farms in Brazil, China, Ecuador,
India,
Thailand and Vietnam. If the petition is successful, the government
will impose tariffs on
the shrimp imported from these countries.
To the shrimpers' and to most observers, the issue ends there. The
issue is
considered an .us versus them. issue, a .domestic producers versus
foreign competitors.
issue, as if the only parties involved are the domestic producers
and the foreign
competitors.
But the issue does not end there. Also involved are the buyers of
the product.
When the government imposes a tariff on an imported good, the price
of the
imported good rises. To mitigate the harm of the higher import prices,
buyers buy less of
the imported good and more of the domestically produced good. That
pushes up the price
of the domestically produced good.
In short, a tariff helps the domestic producers of the good and
harms the foreign
producers of the good. But that.s not the end of it. A tariff also
harms domestic buyers
by forcing them to pay higher prices for the good, whether imported
or domestically
produced.
Here.s what makes our case, shrimp, unique. If the government imposes
a tariff on
imported shrimp, local shrimpers will benefit. Foreign shrimp farms
will be harmed.
Domestic buyers . seafood processors, distributors, retailers, restaurants
and consumers
. will also be harmed. Among these domestic buyers are Rich-Sea
Pak and King &
Prince Seafood, two of Glynn County's largest employers. Also included
are the many
restaurants here that serve seafood. These restaurants are part
of the county's biggest
industry, tourism.
Most people assume that when the government protects a domestic
industry from
foreign competition, the economy as a whole benefits. It doesn't.
Tariffs on imported sugar help domestic sugar producers but hurt
domestic candy
producers. Tariffs on imported steel help domestic steel producers
but hurt domestic auto
producers, domestic machine tool producers, domestic appliance producers
and every
other domestic firm that produces goods from steel.
Tariffs on imported shrimp will have comparable effects. We'll see
the effects in
our own hometown. Some will benefit, but at the expense of many.
But what about the claim that foreign shrimp farms are dumping their
shrimp?
We'll examine the validity of the dumping claim in next week's column.
|
