Time to dump anti-dumping regime

The Commonwealth has recently established a red tape task force to eliminate many of the costly burdens that government regulation brings.

There are legions of candidates for the task force to review.

One of these is Australia's anti-dumping regime.  Anti-dumping actions can be brought about when an overseas supplier provides goods to Australia at lower prices than in its home market.

Such "dumping" is only possible where the supplier's home market is protected by tariffs or other barriers.

In the absence of protection, the supplier's cheap exports will be re-imported.  In fact, in today's internet age, they would probably never leave the home country.

This would undermine the firm's domestic prices and profits, depriving it of a launching pad to export at below-cost prices.

Once dumping is proven, the imported goods attract extra customs duties.  For an anti-dumping action to be taken, there has to be proof that the exports are in fact hurting a domestic firm.  It doesn't make sense to cut off imports simply because they are cheap.

Anti dumping actions cannot be brought willy-nilly.  Many firms will eagerly seek government support when their customers are voting against them in the marketplace.

Hence, there has to be disciplines to prevent a local supplier crying foul every time it loses a contract to a cheaper import.  Without such disciplines we would see severe impediments to trade.  These would raise local prices by reducing the availability of low-priced imported goods and components.

Anti-dumping proposals need to progress through a bureaucratic mill that involves painstaking checks of prices as well as evidence that the imports are actually causing damage to the profits of the local firm.

But this also provides opportunities to have cases reviewed on technical grounds.  In this way a local supplier can raise a competitor's costs of doing business.

The availability of an anti-dumping challenge to imports can play havoc with a business's internet based global sourcing strategy.  Even the threat of action can introduce a risk both to the buyer and the seller.

And, Australia is among the world's most aggressive users of anti-dumping actions.

Recent applications have covered fertilisers and explosives from Russia, mushrooms from China, glass from Indonesia and PVC from just about everywhere.

It is unlikely that these cases involve classic dumping activity.  They entail the exporter selling at a price that meets the competition.  This is just the sort of action we see in petrol stations' price duels or on a slow day at Melbourne Market's vegetable stalls.

It is also the sort of actions that Australia's agricultural exporters constantly engage in.

Our exporters seek to get the best price for their produce across dozens of markets, recognising that the ebb and flow of global competition will move prices up and down.

Successful economies like Japan, Taiwan and Israel take hardly any anti-dumping actions.

In the interests of a more competitive Australia, we should at the very least sharply curtail such actions.

Indeed, to obtain dividends from freer trade, the red tape task force should recommend abolishing Australia's anti-dumping regime.

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