The Case for Antidumping Duties for Cotton Importers India, China, Turkey, Indonesia, Pakistan, Egyp

1
The Case for Anti-dumping Duties for Cotton
Importers (India, China, Turkey, Indonesia,
Pakistan, Egypt)

• Group 1
• Anna Naydenova
• Basak Kutlu
• Olivier Benichou
• Tak Pong Kwok
• Peter Marsland

2
Europes Declining Cotton Industry

• EU cotton industry is an internationally
  competitive industry with production methods
  continuously improving
• 90 of equipment in the last 10 years has been
  replaced
• However unreasonable prices set by exporters have
  lead to a rapid decline in the industry in recent
  years
• Decreasing sales and employment levels for EU
  producers

CAGR -5.8
CAGR -5.9

• Meanwhile dumped imports have increased over
  three years from 128,000 tonnes to 137,000
  tonnes, despite the decreasing consumption in the
  EU

3
Criteria for Anti-dumping Policy

• Antidumping sanctions should be enforced for each
  exporting country that meets the following
  criteria.

4
Criteria 1 Lower Prices than in Domestic Markets

• The six countries are selling their products in
  the EU at significantly lower prices than in
  their domestic markets.
• Revenues from domestic sales cover fixed costs of
  production, exported goods are priced on variable
  costs only
• Exporters have large shares of their protected
  local market, allowing unfair advantages in
  global competition

Average Dumping Margin by Country
They are also significantly undercutting EU
prices and the price difference continues to rise
26
18
18
17
5
Criteria 2 Causing Injury to EU Markets

• The dumping countries have taken a substantial
  share of the market
• Low prices have allowed the importers to increase
  sales volumes despite decreasing European
  consumption
• Dumping countries have pushed quota limits
  wherever possible in order to maintain sales
  volume
• Increasing imports and stagnant demand have
  decreased the market shares of domestic suppliers
• Decreasing sales have forced EU producers to
  close down plants and to shed jobs
• More than 100 plants have closed down since 1993,
  with the loss of 13,000 jobs

CAGR 3.8
CAGR -3.8
6
Criteria 3 It is in the EU countries Interest
Consumers
Integrated Producers
Weavers (Eurocotton)
Converter/ Finisher
Spinners
Makers up
7
Arguments against tariffs ignore market realities
International trade should be encouraged,
allowing countries to concentrate on industries
in which they have a comparative advantage

• Assumes perfect markets where alternative sectors
  are available to re-employ workers
• Assumes that transaction costs are not
  significant does not account for the
  investments that have been made in the industry
• Concentration on high end sectors can lead to an
  increase in inequality
• Ignores social cost of highly localised job losses

8
Recommendation is to introduce duties

• Anti-dumping criteria as set by WTO have all
  been met
• EU resistance to anti-dumping duties is purely
  politically motivated
• Economic arguments against duties ignore market
  realities

Proposed Anti-Dumping Duties by Country