A Modest Member of Parliament [Bert Kelly], “It’s nonsense to snare the dumping hare,” The Australian Financial Review, March 24, 1972, p. 3. Reprinted in Economics Made Easy (Adelaide: Brolga Books, 1982), pp. 75-76, as “Dumping Duties.”

Eccles has given up trying to make me play a prominent part in the tariff band. I find that there is now considerable competition to see who can beat the lower tariff drum.

Eccles says that there was a time when hardly anybody was interested, but not now.

Exporters in general and the rural sector in particular are becoming acutely conscious of the burden they have been bearing for so long, so many more members are now taking a morbid interest in tariffs.

Eccles thinks that it won’t be long before even the Country Party begins to take an interest in the subject.

But if I won’t aspire to be an expert on tariffs, Eccles says I ought to try to become an authority on “dumping.”

I must admit that I don’t like the sound of the word, particularly in election year, but I suppose I had better try.

According to Eccles, dumping duties are imposed if imported goods are sold at unfairly low prices and so cause damage to an Australian industry.

Suppose an Australian firm is producing in competition with an overseas giant — the overseas company could lower its prices to a level underneath what it is charging at home, so that even after paying the ordinary duty it could undersell the Australian company and so put it out of business.

Having done so, it would then have no competition and could charge what it liked.

That is the argument, so Eccles says. If an overseas company is selling a product at a lower price than in the country of origin, it is generally accepted that the product is being “dumped” in Australia.

The case is then heard by the Tariff Board and if this dumped competition is thought to be adversely affecting an Australian manufacturer a dumping duty is imposed.

But in many cases the system encourages our importers to pay unnecessarily high prices for imports.

Let me give an example. The price of paper is fixed in Scandinavia by the big manufacturers; the arrangement is called the “Scanfin Convention” and it is a truly restrictive trade practice arrangement.

There is no doubt that the domestic price in Sweden is held artificially high in this way.

Now if a manufacturer in Sweden quotes paper to us at $90 a ton instead of $100 a ton (the price fixed by the price ring) a dumping duty of $10 a ton would be imposed, because the price was $10 lower than the domestic price in Sweden, ie the restrictive trade practice price.

Suppose a keen Australian merchant goes to Sweden and finds a man who is prepared to sell him paper at $10 a ton cheaper than the current cartel price.

When they start to talk business he realises that he might as well pay $100 a ton — it will cost him the same in the end; the dumping duty would bring it up to $100 anyway.

And after the deal is closed, the Swedish merchant would, I hope, take the Australian to dinner to spend some of this $10 a ton he has unexpectedly received as a gift from Australia.

It would be a pretty lavish meal I guess.

But you can imagine the poor Australian trying to puzzle out why, if restrictive trade practices are bad in Australia, we should deliberately encourage them overseas, and why it is thought good for Australia to have to pay the “fixed” price when it could be obtained for less.

This seems a queer way of helping Australia, although I can easily see how it would help the Swedes.

Export prices that are lower than domestic prices are quite common in Australia and elsewhere. It is known as “marginal pricing” when we do it.

It has some queer side-effects. Polyethylene is heavily protected in Australia.

I understand that a Hong Kong merchant can buy Australian polyethylene powder very much cheaper than can an Australian processor.

I have been told that an Australian manufacturer, say, of plastic buckets, can import buckets made in Hong Kong from the cheap Australian polyethylene powder, pay the duty on them, grind them up against into powder, and the powder would cost him less than if he bought it from the Australian manufacturer who exported the powder to Hong Kong in the first place.

I presume that he would then make the powder up into buckets again. It seems a queer way to behave.

So with these two examples before me, I really don’t feel like chasing after the “dumping” hare. Mavis says that I am in enough trouble already without getting mixed up with this kind of nonsense.