New York Times Misunderstands “Dumping”
Reporting on a new study from Tufts University on the deleterious effects of US farm subsidies on Mexican farming, New York Times reporter Elisabeth Malkin wrote on December 15th:
When American companies cannot compete against imports that they believe are being “dumped” at below-market prices, they are quick to demand remedies from Washington, usually in the form of punitive tariffs. These days, the alleged culprit is often China.
But try looking at things from south of the border and the picture shifts. There, the culprit is just as likely to be the United States, particularly when it comes to agriculture.
While Malkin’s broader point about the unintended consequences of US agricultural subsidies is worthwhile, it is muddled by her basic misunderstanding of “dumping.” First, antidumping tariffs remedial, not “punitive,” as they are intended to offset the level of dumping and nothing more. Second, Malkin confuses a key difference between dumping and subsidization: the former is a corporate practice, while the latter is a government practice. Under domestic laws and WTO rules, “dumping” refers to foreign companies’ “unfair trade” practice of selling in an export market below (a) the price charged for the same product in the home market or (b) the cost of production. By contrast, “subsidization” is a government’s provision of certain “benefits” (grants, tax breaks, etc.) to a specific company, industry or group of companies or industries. Thus, Malkin should have reported on the harms of subsidized US farm exports or of US farmers’ dumping, not “United States dumping.”