Is Toyota Guilty of “Dumping?”

http://www.reuters.com/article/ousiv/idUSTRE4BC0FS20081213

The linked article reports that Toyota is likely to report a loss in their 2nd half (the October 2008 – March 2009 time frame).  This begs the question:  if Toyota is selling cars at a loss, isn’t it guilty of “dumping,” the practice defined by the World Trade Organization as selling products below cost?  Shouldn’t the U.S. immediately file a complaint with the WTO?  Shouldn’t the WTO immediately either force Toyota to raise their prices or authorize the U.S. to impose tariffs on Toyota vehicles? 

Some may protest that the domestic automakers are also operating at a loss.  True, but that doesn’t violate any international trade agreements.  No other nation can take a case against the Big Three to the WTO because no one imports American-made cars, for all intents and purposes. 

But none of this will happen.  WTO rules are for the U.S. to follow and no one else.  We’ll simply give Japan time to dump yen and buy dollars, manipulating the dollar-yen exchange rate back to where they can easily make a profit.

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7 Responses to Is Toyota Guilty of “Dumping?”

  1. Randy says:

    Pete, GM is a derivatives monster…a bastion of financialization…ts hardly run by industrialists who love to waste time with engineers. Read this from a commenter on the “green” car of the year:

    “Well, you might not be able to feel that you are driving a diesel, but the people around you will feel it. Now that our german streets are full of diesel cars and the air quality in the streets of the cities has become worse than ever, they are going for the us markets. Burning diesel at high presures produces finest particles that cant be filtered and pass the body’s blood to brain barrier while causing asthma in a majority of breathing organizms. Side effects are already measured and e.g. in Japan people have won first cases against the automobile industrie because of it. So please think twice before buying. I asure you, we already suffer a lot. Help to keep americas air clean.”

    Unless the US auto industry can make huge breakthroughs in battery technology it isn’t worth saving.

  2. Randy says:

    Pete, further information…this is worth saving?

    Toyota: Auto Industry Race to the Bottom
    by Barbara Briggs *)
    Special to CorpWatch
    September 16th, 2008

    Beneath Toyota’s buffed shine lies a dark undercoat. The Toyota Corporation enjoys a fine reputation for well-built cars, environmental innovation, flexible production lines and effective management practices. But in its quest for ever-increasing efficiency, profitability and growth, the world’s largest auto manufacturer has sparked a race to the bottom that, like its car sales, is global in scope.

    …..Toyota’s supplier plants also make extensive use of guest or “trainee” workers – under conditions that in some respects qualify as human trafficking: The workers, most of whom come from China and Vietnam, pay manpower agencies in their home countries as much as $8,000 to $10,000 for a two- or three-year contract.

    …..On arrival the guest workers’ passports are confiscated. During the first year as trainees, as they are not covered by Japan’s labor or minimum wage laws. They work alongside Japanese workers, putting in the same long hours, but often earning less than half the minimum wage – as little as $2.76 an hour, or $479 a month.

    GENERAL MOTORS CORPORATION
    Gross Notional CDS (Credit Default Swaps) 43,997,691,726
    Net Notional CDS 3,420,240,161

    General Motors
    Debt Outstanding 290,000,000

  3. Pete,

    The article says that company wide, Toyota lost $1 Billion. The losses could have come from their U.S. based plants could they not? If so, is that also dumping? I really don’t know.

    The issue that all auto companies will face for the foreseeable future is simply the inability to sell cars…period. No amount of government intervention will change that.

    If in fact, I saw a chance for a dramatic turnaround in our economy, I would be in favor of a temporary loan to the domestic automakers, but I don’t. All of my research shows the situation worsening over the next couple of years.

    • Pete Murphy says:

      Mike, you can bet that a huge piece of those losses (if not all) have come from the U.S. as the yen has fallen dramatically against the dollar. While the overall economy may not be improving, it would certainly help the domestic automakers by imposing an immediate tariff on imported Toyotas (and imported Toyota parts) and shifting market share back to GM, Ford and Chrysler. The U.S. should immediately impose tariffs on any foreign automaker that loses money in the U.S. It’s the very definition of “dumping.” Every other industrial nation takes full advantage of every WTO rule to their advantage. We should do no less.

  4. dan of steele says:

    WTO rules are for the U.S. to follow and no one else.

    that is a rather odd charge to make. the US’s premier rightwing think tank says just the opposite.
    link

    oh and diesel cars fitted with particulate filters are clean. your German poster doesn’t get out much.

    I have mixed feelings about GM. they have been arrogant and irresponsible for a long time. they are responsible for such things as planned obsolence and fighting change from modifying the motor mounts on the Corvair (to keep the motor from accidently falling out), installing seat belts, removing the sharp edges from dashboards to heavily pushing overweight gas guzzling SUVs onto the public. While I do think it is unfair to the workers who had no choice in this matter and have already taken pay and benefit cuts so that the industry could move forward, the executives who made these stupid decisions will emerge unscathed no matter what the outcome. If they could be punished or at least have their pay reduced to no more than say 30 times that of the lowest paid worker, I would be all for helping them anyway I could.

    • Pete Murphy says:

      Thanks for stopping by, Dan. By the way, I actually worked on development of a new generation of diesel particulate filters before retiring.

      I agree with you about the executives but, not only the automotive industry chief executives, but the chief executives of all of industry.

      Regarding the “pushing overweight gas-guzzling SUVs onto the public,” I think the domestic automakers are getting a bum rap there. They retreated into the truck/SUV segment of the market as the result of the small car market being over-saturated with two dozen foreign brands, while getting no access to equivalent markets in those countries. It became impossible to make a profit there. They saw a demand for trucks and SUVs and pounced on it, like any good profit-motivated company would. They couldn’t have sold a single one unless there was a willing buyer – a buyer who preferred those products over smaller cars. It’s not the role of automakers to set public policy regarding fuel efficiency, carbon emissions or any other environmental issue. It’s the role of our national leaders – elected officials. They are the ones who should take the blame for caving in to automakers’ resistance to higher CAFE standards and for doing absolutely nothing about our dependence on foreign oil or our carbon emissions.

      By the way, no one criticizes the foreign automakers for jumping on the gas-guzzling bandwagon. They have all produced their own lines of SUVs and cross-overs, and have also steadily increased the size and horsepower of their smaller cars.

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