Dumping Files vs. Globalisation

Transcription

1 Dumping Files vs. Globalisation March, 2015 By Cemil Bülent Demircioğlu

2 There isn t a universally agreed academic definition of Globalisation. Usually it s known to define the gradual increase of the interaction and communication in between the nations, populations and people from different areas of the World, under the interdependency notion. The positive aspects of Globalisation Dumping Files vs. Globalisation 2

3 In other terms; International integration between the people and the countries in terms of the economy (production, trade, services), technique, sociology, culture, politics and ecology, means an increase of interdependence and solidarity. Dumping Files vs. Globalisation 3

4 Here, we will mostly mention the economical aspect, it s impacts and reactions, one being the dumping files. The social and cultural impacts are not our subject in this paper. Dumping Files vs. Globalisation 4

5 The notion of Globalisation was brought forward first in Europe, after the World War II, in order to prevent new potential wars, by increasing trading interdependence, solidarity and rapprochement between the countries. It s first visible outcome was the EU s nucleus Club of Rome, (early 50 s) followed by the signed European Coal And Steel Community Agreement. Following this, the economical, cultural, social and semipolitical European Union s first phase has been established in 1968 and was called Common Market, starting with 6 European countries. With the telecommunication and transportation getting cheaper and faster, this notion has expanded throughout the World. Dumping Files vs. Globalisation 5

6 The economical globalisation (trade and production) rapidly found a supporter base and developed much quicker than fellow service, social and cultural globalisation. Therefore the public understanding of globalisation is primarely a free trade. Dumping Files vs. Globalisation 6

7 Big companies and developed Western countries that have noticed the profitability of this trend, by nature of the economy, threw their fishing nets to where there are the most fish, meaning they have started trading with and/or invested in the countries that the products and/or services were the cheapest at. They made considerable profit between 60 s and 80 s. Dumping Files vs. Globalisation 7

8 Consequently, the trade barriers and protection measures were decreased with the expanding trade volume. Same companies in the mean time, started to export the technolocigal products of the West, to these countries that they do trade and production at. Dumping Files vs. Globalisation 8

9 At first, western politicians did not oppose to the production shifting places, because it was in their own countrie s interest. But they thought that local people may loose their jobs with the international movement of service, therefore employees. And the displacement of services (people) has been banned. Dumping Files vs. Globalisation 9

10 With communication and transportation becoming fast and economic, some of these services anyway shifted towards the East where they were cheaper, such as; IT Programming Architecture and engineering project works Call center services Home Office audit and consultancy reporting Accounting / invoicing Some health services. (Not the service, but the client is shifting place.)..etc. (i.e. British Health Insurance Companies have special deals with Turkish Eye Hospitals, for their patiences who need eye surgeries. Etc.) Dumping Files vs. Globalisation 10

11 The world s biggest problem that the UN has on it s program, is the increasing deterioration of the income distribution between countries. The average cost of an employee to a company is 22$/hour in the USA, 20 /hour in EU. The developed 30 countries average is 16$/hour. In China, it s less than 1$/hour, in India 2$/hour. The underdeveloped and developing countries, the average comes down to 5$/hour. Dumping Files vs. Globalisation 11

12 Though slowly, the globalisation has started to correct these imbalances. Within the principle of computational fluid, in time, the parties that do the same jobs with the same quality will have to earn the same or near income, due to globalisation. This is both the outcome of the economical and sociological interaction. At this point, a phenomena which is within the nature of globalisation, has emmerged that no politician of developed world had predicted before. Dumping Files vs. Globalisation 12

13 While globalisation is decreasing these wage differences, not only the salaries at the developing regions of the World will increase but also the wages in the West will have to decrease as well, at the same time. This situation will leave the politicians of the democratic western countries, in a very tight spot and this process has already started for a while. While the developed countries were after the bigger profit margins, their production base has shifted towards the developing and poor countries. Now, they will have to pay a big cost to at least slow down this process. (the decrease of the salaries and national income.) Dumping Files vs. Globalisation 13

14 First of all, social pressures have already started in order to slow down, to stop and even reverse the globalisation, in order to prevent or at least delay the decrease of the wages. Underpressure, the politicians drew the gun of non tarrif barrier, the most effective ammunitions of this weapon being the dumping investigations. The most important guidance at the Dumping Regulations that the rule makers give to the the decision makers, is to consider the case within the country s general interests. However unfortunately this is not applied neither in the EU nor in the USA, only the shallow interests of the sectors are taken into consideration. Regardless the accuracy of the justifications and calculations, there has been many dumping cases filed in both the EU and the US, during the past 25 years. Dumping Files vs. Globalisation 14

15 Below I present you a resumé of the US iron-steel dumping files: Between , the US Department of Commerce has opened 110 new files in iron/steel sector and/or has made reviews upon the request of the petitionners. 26 exporting countries were affected. Only between , about these files, the Department of Commerce has done 448 field verifications and declared between 0% to 230% dumping and/or CVD. Dumping Files vs. Globalisation 15

16 The situation is similar in EU. Distribution of AD margins is as below: Ratio Margin 15% 0 x < 10% 5% 10% < x < 20% 75% 20% < x < 80% 5% 80% < x Dumping Files vs. Globalisation 16

17 Companies that managed to raise their profitability and efficiency by 1 or 2 points in a very competitive and mature industry such as iron and steel, are considered as Golden Boys of the sector. In such market, it is impossible to mention 20%-70% dumping and/or CVD. Economically there isn t a company nor a governement that can stand to such rates. Therefore these rates that DOC has announced are widely open to debate. When dumping findings of such high rates are announced, supply decreases and the domestic producers immediately increase their prices therefore the exporters that have around 10% dumping margin, still find a chance to survive. As a result of these protective measures, domestic producers were able to increase their prices and profitabilities. Dumping Files vs. Globalisation 17

18 The chart below shows the hot rolled coil prices in the EU and in the US for years 2013 and Flat Products / HRC / N.Europe domestic EXW Ruhr $/t Flat Products / HRC / Turkey and South Europe domestic Exworks $/t Flat Products / HRC / US domestic EXW Indiana $/t 2013 Q Q Q Q Q Q Q Q Dumping Files vs. Globalisation 18

19 850 SBB HRC Prices Q Q Q Q Q Q Q Q4 Flat Products / HRC / US domestic EXW Indiana $/t Flat Products / HRC / N.Europe domestic EXW Ruhr $/t Flat Products / HRC / Turkey domestic Ex-works $/t Dumping Files vs. Globalisation 19

20 Even though the hot rolled coil market is protected and profitable in EU, still there was 100$ difference between the EU and the US market. The simplest meaning of this is that the US steel producers annual hidden cost to US tax payers is approximately 8 to 10 billion$. Dumping Files vs. Globalisation 20

21 The dumping investigations started 25/30 years ago to establish and to protect fair trade. However in time, lost this essential objective and became a mechanism to protect domestic industries by any means and at any cost. Because during these years, exporting countries have developed both their technology and efficiency and became competitive without needing any support. Then, since no dumping was detected, this mechanism became useless as a non-tarrif barrier. The politicians started to try to create extraordinary, unrealistic, strictly political justifications. Dumping Files vs. Globalisation 21

22 I will give you two precedents about the Steel Tube Industry: One from the EU and other from the US. EU US Dumping Files vs. Globalisation 22

23 EU, following ESTA s initiation (European Steel Tube Association), between , has started two dumping investigations regarding the square and rectangular hollow sections, exported from Turkey. Both investigations were withdrawn after the questionnaires and field verifications before the final decision. Because they realized that they would not get a result and that there was no dumping to find out. If the case had resulted pro-turkish producers, they were going to loose their application for new investigation rights for 5 years. Of course, this is a very unethical behavior. These are time and money consuming processes for the producers. Therefore as Turkish Steel Export Association, we have sent letters through lawyers to the EU Trade Commissioner and ESTA, stating that, we will ask indemnities for all material and market losses if this process repeats. We will see what will happen. Dumping Files vs. Globalisation 23

24 The second example is the recent investigation that the US Department of Commerce has filed against Turkish Tube Producers (and some other countries) concerning their OCTG products, in A complete black humor! Consequently (after the questionnaires and field verification), the results were 0% CVD and 0% dumping. This was offically reported. Following heavy lobby pressures, DOC burocrats wrote a new La Fontaine; The Lamb and The Wolf story overnight and pretended that; Dumping Files vs. Globalisation 24

25 Erdemir s managing share holder is Army Pension Fund. (Erdemir s 49% share float in Istanbul stock Exchange and almost 15% are held by American Pension Funds.!) Therefore Erdemir is under government control. (Army Pension Fund is a private financial institution operating under the the banking laws. ) As a government policy, Erdemir is selling products with dumping prices to the domestic market. (which is a crime for the management of a stock company) Consequently the other countries that sells coil to Turkey (Europe, Russia, Ukrain, India, China etc.) are obligated to lower their prices accordingly. Therefore there isn t a free market economy in Turkey and the raw material prices in this market are not free market prices and cannot be taken for cost calculation. No verification has been made. (despite the dumping regulation which asks for a verification) Dumping Files vs. Globalisation 25

26 Then, they have calculated a constructive cost. Bought the coil from Chile. ( the highest coil price at the time must have been there) Transported the materials to Turkey with container cargo. (I believe it has not occured to use Aircargo). They unloaded the container in Turkey, on to a port 500km away from the mill. (Borusan Tube Mill is by the sea and has it s own port!!!) Added ground transport cost. Added 9% customs fee and 18% V.A.T (which are irrelevant for exportation) And finally found 16% CVD. (Greatfully they have made an arithmetical error, otherwise it would be more than 100%.) Dumping Files vs. Globalisation 26

27 Obviously this case ended up in Court. Though this being an extreme case, it s a sign that the situation has come this far. From now on, it is becoming more and more difficult to talk about free trade, competition and globalisation. It looks like a process started to reverse globalisation, consciously or unconsciously. Unfortunately, the global economical crises appear to support these efforts to reverse globalisation. This way, the exporting countries that were exposed to such unfair dumping investigations, are reacting similarily and a viscious circle occurs. Dumping Files vs. Globalisation 27

28 Dumping files are a social reaction to globalisation. Will the politicians sacrify the country efficiency and innovation competencies that were the core of their development and prosperity till this day, to populism, which may increase the foreign hostility and discrimination. Or, will the politicians convince their people without populism, to become mostly investing, producing an efficient and hard working communities rather than exessively consuming communities, in order to protect their life standards. Or in years, again will we be talking about high custom s protections, trade with barter, export off-set agreements e.t.c. Dumping Files vs. Globalisation 28

29 We shall see. Thank You Dumping Files vs. Globalisation 29