Wednesday, July 07, 2004

Fighting back over shrimp: The Mississippi Press writes, "The Bush administration, specifically the Commerce Department, did right by Gulf Coast shrimpers Tuesday when it approved tariffs against China and Vietnam. These nations clearly violate international trade law by dumping their shrimp in the United States at rock-bottom prices, lower even than what they charge in their own countries. "

What a load of hooey.

The textbook definition of "dumping" is selling goods below cost. It's generally thought of as an unfair way for big companies to force smaller companies out of the market, selling goods at a loss in order to prevent new competition. The big companies will absorb the loss in the short term and then raise the price once it's driven all the competitors out of business.

Yet when I began covering foreign trade for the late Prague Business Journal several years back, I learned that in international trade lingo, "dumping" means something completely different: Selling goods at "rock-bottom" prices, or below the price charged in the producers' home market. The is a sketchy definition and it usually refers to foreigners (Chinese and Vietnamese shrimp producers, in this case) selling goods for prices that domestic producers (the readers of The Mississippi Press) don't like very much. By this definition, McDonalds should be taken to court for unfairly "dumping" hamburgers in most the world.

Truth is, due to an old-fashioned concept called supply and demand, different markets demand different prices. Even assuming the beef, pickles, onions, lettuce, special sauce and sesame seed bun were all imported from Iowa, a Big Mac would probably have to cost less in Prague than in New York, because the Czechs have less purchasing power and are less likely to buy expensive hamburgers.

And by the way, the U.S. is the number-one culprit in leveling bullshit "dumping charges" at foreign companies. It's a cheap shot and the worst form of protectionism, because it masquarades as the opposite: promoting free and fair competition.

Then again, I never buy Big Macs, so I could be way off on my Czech Big Mac example. Insert Beijing for Prague and Chinese for Czechs. For all I know, Big Macs could actually cost 70 crowns in Prague-- in fact, they probably do -- or about the same price as in New York. I do recall being shocked at the price of a fried cheese sandwich as McDonalds recently: sixty-something crowns.

Yes, did I mention McDonalds finally sells a McSmazak? After this long wait, I must say it's overpriced and thoroughly disappointing. Probably the best fried cheese sandwich in Prague can be found across from the new Palac Flora shopping mall, at a little shack on the corner of Vinohradsk√°. Crispy deep fried cheesy goodness with a glob of tartar sauce. Last I checked the price was 18 crowns.


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