Academic journal article Competition Forum

So the Safeguard Provision for Dumping Actually Came in Handy after All

Academic journal article Competition Forum

So the Safeguard Provision for Dumping Actually Came in Handy after All

Article excerpt

EXECUTIVE SUMMARY

Over the past two decades firms from developing countries have made enormous strides toward becoming competitive in the new global market. The pressure from their imports has caused a new type of market disturbance. Although developed countries have benefited from the imports from developing countries, the impact on their markets is raising concern. This paper examines the struggle that developed countries face in trying to balance the imports against the competitive affects of the penetration on local markets. Ultimately, what level of regulation should be used to bring balance back to the developed countries markets.

Keywords: Globalization, Dumping, Safeguard, Trade liberalization, Free Trade agreements, Tariffs, Non-tariff barriers, Market distortion

INTRODUCTION

A driving factor behind the explosion of global commerce today has been the rise to prominence of the underdeveloped nation. The once non-competitive archaic economic system has turned into a highly competitive marketplace that competes with pre-eminent developed nations such as the United States, Canada, Australia, and the European Union. The role of the underdeveloped country has changed the competitive landscape for firms attempting to compete in the global marketplace. The main reason for this new form of competition has been globalization and the adoption of freemarket economic principles. Together these two factors have stimulated enormous growth and opened new opportunities for international trade and foreign direct investment in new markets across the globe (Hufbauer & Grieco, 2005). In fact, the activity has spread even among the smallest and least technologically advanced underdeveloped nations such as Indonesia, North Korea, The Philippians, and Malaysia (Hufbauer & Grieco, 2005).

As a result, trade liberalization has taken on a new aura in allowing firms to compete on a global stage both at home and in once verboten foreign markets. The only difference today with using free-market principles, is that the wealth generated from trade activity is being spread among many new players in the market (Bauman, 2000). The rise of underdeveloped nations in this new world order has created enormous friction in other markets that once dominated other nations markets. The barriers that once existed in the global market have substantially been changed by the shift in resource allocation around the world. In other words, firms are able to move much closer to the materials needed to efficiently produce products for consumers. Likewise, global consumers are now able to obtain products from all over the world at competitive prices without sacrificing quality or performance. These new market principles have established a different criterion for firms and consumers to follow in the process of satisfying each of their needs (Ocampo & Taylor, 1988).

Today most firms find that they are competing against local firms that manufacture from other parts of the world and bring the finished product back into the domestic market as an import (Greenway, Morgan, & Wright, 1988). Furthermore, firms compete today by manufacturing in other countries to achieve a higher level of efficiency, thereby driving down cost of production allowing for products to be sold at much lower prices in the foreign markets. It is not an easy task trying to keep track of all the competitors in today's market. Maintaining a competitive watch on the global market requires a different level of strategic analysis from the firm.

In order to conduct an adequate analysis of the market, today firms must first identify who its competitors are in the local market. Firms should separate competitors into several distinct categories. One group should be made up of only local firms that are in the host country. Another grouping should be composed of firms that are wholly owned subsidiaries of a larger global multinational operation. …

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