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#3137: Smith Responds to Jean-Pierre (fwd)

From: Merrill Smith <advocacy@bellatlantic.net>

US policy has a lot to do with Haitian rice farmers being unable to
compete with "Miami Rice" but the problem is not "dumping" but subsidy.
What follows may seem a bit technical but its important to identify the
problem correctly, especially if we want to change US policy in a way
that is constructive to Haitian rice farmers.

"Dumping" refers to sales in a import country at prices _lower_ than in
the home country, than in a third country or lower than "constructed
value" (i.e., a guess at what the good 'should' cost). Implicit in
"antidumping" theory, though not explicitly required for a finding of
dumping under US law, is that the pricing is "predatory," i.e., designed
to wipe out competitors, even taking temporary losses along with them if
necessary, so that one may freely gouge the market later in order to not
only recoup prior losses but to extract monopoly profits on top.

Jean-Pierre cites an impressively large figure for the price of rice
imported from the US. But unless that figure is diluted by an even
larger quantity of rice to make it cheaper than rice sold _in the US_,
it's not "dumping." The premise of predation is also dubious because
later super-compensatory price gouging would only be possible if US
producers could not only destroy Haiti's rice producers but every other
significant rice producer in the world from which Haiti could import
_and_ every other _potentially_ significant rice producer (including
Haitians) who would be drawn into a market characterized by
supra-competitive prices.

The real problem is not "dumping" but subsidy. Some have estimated the
subsidy to amount to about 43%. US taxpayers are, in effect, covering
whatever losses US producers might otherwise incur selling at the
present price. US producers are not speculating on eventual monopoly
opportunities in the international market, which are illusory, but on
continued US subsidy. The policy will continue until the US government
develops the political will to stop it.

Merrill Smith
Haiti Advocacy, Inc.
1309 Independence Avenue SE
Washington DC 20003-2302
(202) 544-9084
(202) 547-2952 fax