Mijo Juri Case study:

US Anti-Dumping Duties on Shrimp Imports Irrational Protectionism?

1. Governments interventions in business can be like in this case to protect the domestic industry and companies. It allows permission and is forcing companies to register businesses, also resolve complex contracts like business to business contracts, and act as a judge with its law system if one party does not obey the contract rules or the legal system at all. 2. Dumping is to produce a good and place it on the market under the world and the domestic market price. This can happen if one industry is more efficient then another or by manipulations as favoring a domestic industry by (over) subsiding. So importing goods from third-country at lower prices then the domestic industry can efficiently produce would be dumping. Consequences are that it can push the dumping victim domestic industry out of business, that people will lose jobs by this, the domestic industry lose competitiveness and it affects negative on the overall domestic production and economy. 3. First parameters are that the dumping price is under a normal or fair price, what is hard to distinguish from maybe technical advancement or other causes that can afford low prices. Then second, the domestic industry has to be injured under the dumping prices, after what the government can set up anti dumping duties. There is a ratio of dumped product sales over the overall sales of that product in the industry, to capture the percentage of dumped products in that market. 4. It imposes anti dumping as protection on the domestic industry form foreign produces by introducing duties to foreign producers, and subsidizing the domestic industry with that invited duties. 5. There is valorem and specific tariffs. Ad valorem is calculated as a fixed percentage on the value of the imported good, the tariff will fluctuate as the world prices of that goods. Specific tariffs are set up on a good as a specific amount.
6. In the competitive market inviting antidumping duties would have three effects. One is that firms would exit the market, and only the firms that trough-lobbing catches the subsidies from the duties would have something like a monopoly. The consumers would face bigger prices, and would start to substitute shrimps with other food. On the long term it would be bad for the industry and for the consumers.

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The antidumping duties on the exporting countries would affect their market share, production and maybe also jobs in negative ways. It would stagnate the industry at some percentage and they would be forced to sell it to some other countries for even less money because of reached supply or if reached supply. Losing profit is a main side effect. 8. Consumers would face higher prices. They could afford lower quantity of that good and would start to substitute the good with some other. 9. In the short run some domestic producers would try to catch up the benefits of duties in terms of subsidies. But in the long term sales would fall because of the bigger prices and so would producers start to exit the industry while the remaining would gain more power with a rising demand while some are exiting but an the end with a low increasing demand even falling demand because of high shrimp prices and consumer limits of affording and the effect of substituting. 10. It will affect the trade, but it will not stand still. Exporters will try to catch up the duties and try to sell to remain on the market because its even more expensive to exit the industry or leave the market in short term. In long term they can try to technologically develop to cut the production prices in order to remain on the US market, or they can try to find other markets as solution and plan an exit strategy, even they can to try to lobby the government that it cuts the duties. They can also try to survive this period in order to stay on the market while trying to strengthen and cut production prices. The trade will never standstill, only in case of to enormous high duties. 11. Because the consumers are aware of their businesses and less about their choices on the market and the industry they are not professionally involved in. But they will become aware of it when the prices go up as a consequence of the AD, and the most affected will be service sector like restaurant owners and others.