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More Misguided Industry Policy

The Gillard Government has announced another plan that, in their oodles of wisdom, they believe will perform some truly heroic feats in terms of saving the ailing Australian manufacturing sector.

Prime Minister Julia Gillard, on a visit to OneSteel yesterday, announced that her government would set up an anti-dumping commission to police the dumping of imported goods in Australia which are sold at below cost price. The Prime Minister also announced a doubling of the Customs’ Anti-Dumping squad as part of the plan.

To fund the plan, Australian Customs will receive extra funding of about $24.4 million over four years which will be directed towards furthering the aims of the commission and its investigators.

This plan comes after the Coalition’s announcement in November last year that they would establish a body to investigate anti-dumping if they were occupying the government benches.

According to the Australian Customs and Border Protection Service’ Anti-Dumping website dumping “occurs when goods are exported to Australia at a price that is below the ‘normal value’ of the goods. The website defines the ‘normal value’ of goods as “the domestic price of the goods in the country of export.”

The Customs website acknowledges that dumping is not illegal under international trade agreements, but that “remedial action may be taken where dumping causes (or threatens to cause) material injury to an Australian industry.”

There are a few observations to be made about both the announcement by Prime Minister Gillard and dumping itself.

The first is about the increased bureaucracy as a result of the plan. How a larger public service will substantially resolve what is termed as a problem for Australian industry is uncertain. By virtue of the fact that dumping is not illegal under international trade agreements, surely resolving the vast majority of cases in a positive way for Australian businesses will be a near impossible outcome.

What’s even more sad is that both sides of politics agree that a response needs to be initiated. Both sides of politics want the same kind of action in this area. They both think the same action will provide some significant relief to industry. Of course, industry groups think this will happen too.

Both sides of politics are living in a policy fantasy land akin to being on some kind of LSD trip.

Australian manufacturing, even if regularly successful in prosecuting anti-dumping cases, will still be at a distinct disadvantage compared with Asian companies when it comes to producing and selling cheap goods on a large-scale. Our inputs costs will always be higher than in Asian countries and therefore, so will the costs of our manufactured goods.

Next, why doesn’t someone in government think of the consumers?

Would it not be absolutely fantastic if we could receive even cheaper goods, especially when cost-of-living pressures are impacting on consumers in our domestic marketplace?

Many people have already shifted to online shopping through overseas businesses because of their ability to offer cheaper products than we could ever hope to have offered to us domestically and good on them for doing so. If ever there was an example of consumers being rational, then the decision to shirk Australian businesses is a positive example thereof.

Of course, the response, endorsed by both sides of politics is designed to appear as if they are doing something to support industry. And industry groups actually think the move will help them survive

The reality however, is that there is little that they can, or would be prepared to do in order to really protect what are largely uncompetitive industries in global terms.

Whatever happened to focusing on the things that we are good at as a nation? The areas of the economy where we can actually compete with the world and where we have a competitive advantage.

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