Mounting Evidence of Japanese Dumping

May 12, 2009

http://www.reuters.com/article/newsOne/idUSTRE54B20T20090512?sp=true

As reported in the linked article, Nissan today has announced a $2.4 billion loss in their fourth quarter, and they forecast a larger loss for the coming year.  Yesterday it was Toyota announcing an $8.6 billion loss.  In previous weeks it was Sony.  Recently, Toyota announced that, in spite of the fact that they have lost thousands of dollars on every Prius sold in the U.S. to date, they will reduce the price by several thousand dollars more.  

The Japanese strategy for combatting unemployment is becoming quite clear – they are blatantly “dumping” products on the U.S. and European markets in order to sustain market share.  “Dumping” is the practice of selling products in foreign markets at below-cost, a practice expressly forbidden by the World Trade Organization. The reason for the losses in these Japanese companies is irrelevant, whether it’s due to the falling dollar, rising yen, volumes declining in a recession, or whatever.  It’s still dumping and it’s an unfair trade practice.

The time has come for the Obama administration to acknowledge what’s taking place and demand that Japanese companies raise prices.  Failing that, the U.S. should immediately lodge a complaint with the WTO and, if the WTO doesn’t act swiftly, the U.S. should immediately impose stiff tariffs on all Japanese products.


Hitachi Dumping Products on U.S.

January 30, 2009

http://www.reuters.com/article/ousiv/idUSTRE50T2F920090130

Now Hitachi has joined the ranks of Toyota and Sony as Japanese companies who admit to losing money in the U.S. market. 

Hitachi Ltd (6501.T), Japan’s biggest electronics maker, warned of a record $7.8 billion annual loss, hit by slumping sales, a stronger yen and costs to restructure its sprawling operations.

Their citing a “stronger yen” as one of the key factors in their loss is an admission that they’re losing money in foreign markets – the U.S. being the biggest.  Previously, Toyota and Sony announced the same thing. 

Regardless of how you feel about “free” trade, even its  most die-hard supporters agree that “dumping,” the practice of selling products at a loss in a foreign market, is an unfair trade practice that cannot be tolerated.  It’s banned by the WTO (World Trade Organization). 

The time has come for the U.S. to crack down on this situation.  It should immediately lodge a complaint with the WTO, demanding that Japanese companies raise prices significantly.  If they do not, or if the WTO fails to act swiftly, then the U.S. would be entirely within its rights to impose tariffs on Japanese products. 

Some of you, oblivious to the fact that our trade deficit (which now totals $9.2 trillion since 1975, the year of our last trade surplus) is directly responsible for our economic collapse, are probably thinking to yourself, “this guy is nuts.”  “At times like this, we should be encouraging Japan to cut prices, not raise them.”  If so, you’re forgetting that consumers and workers are one and the same, and are only thinking of yourself as a consumer.  That’s the mental trap used so successfully by the purveyors of globalization.  They want you to think only in terms of low prices and forget about the downward pressure on wages caused by the loss of manufacturing jobs. 

If forced to raise their prices, Hitachi, Toyota, Sony and others will be faced with a choice:  surrender U.S. market share or move their manufacturing to the U.S. to avoid tariffs or the currency exchange rate issue.  If they opt for the former, someone else will surely fill the void and swoop in to build factories in the U.S., fueling a demand for labor that will drive wages higher than prices.  You have to understand that it is a strong demand for labor that drives purchasing power higher.  A weak demand for labor will erode purchasing power every time.


Is Sony “Dumping” on the U.S.?

January 13, 2009

http://www.reuters.com/article/ousiv/idUSTRE50B7LN20090113

First it was Toyota announcing a loss.  Today it’s Sony.

Japan’s Sony Corp (6758.T) will likely suffer an annual operating loss of about $1.1 billion, its first such loss in 14 years, due to sluggish sales and a stronger yen, a person with knowledge of the matter said.

The mention of a “stronger yen” is a critical point here.  It’s a clear indication that Sony lost money in the U.S., its biggest market.  “So what?” you may be wondering.  “It’s a tough economy.  Everyone is losing money.”  That’s true, but there’s a huge difference between foreign and domestic companies.  It’s a violation of international trade rules for a company to sell products at a loss in a foreign market.  It’s a practice known as “dumping” and is expressly forbidden.  It does’t matter whether it takes place in a good economy or in a recession.  It’s still dumping. 

The U.S. should immediately insist that Sony raise its prices.  If they don’t, the U.S. should lodge a complaint with the World Trade Organization.  And if the WTO doesn’t take swift action, the U.S. would be entirely within its rights to slap tariffs on Sony products, Toyota products, Toshiba products (also expected to post a loss) and any Japanese company that is selling products at a loss in our market. 

“That wouldn’t be very nice,” you may be thinking.  “We wouldn’t want them to treat us that way.”  Think again.  That’s exactly how the Japanese treat us, and even worse.  Japan sustains a $100 billion per year trade surplus in manufactured goods with the U.S.  by refusing to buy from us as much as we buy from them.  That’s approximately 1.34 million high-paying manufacturing jobs they’ve taken from our economy. 

“But we don’t want prices raised,” you may also be thinking.  “I can’t afford things as they are now.”  You can’t afford things because the downward pressure on wages caused by the trade deficit has driven down incomes more than prices have been held in check.  If the prices of imports were raised, the profit potential needed to justify manufacturing in the U.S. would be restored.  Wages would rise faster than prices.  This would be true even if you work in a field not associated with manufacturing, as job-seekers vying for your job would be pulled out of the pool of available labor and put to work in factories. 

For decades the U.S. has blamed currency valuations for our trade deficit and Japan has been a master of manipulating the yen-dollar exchange rate in its favor.  Now the global economic melt-down has overwhelmed their ability to prop up the exchange rate, and the table has turned in our favor.  It’s time to strike and force actions that will restore a balance of trade.  It’s time to stop being played for a sucker in the global trade game. 

One final comment on a quote from the article:

The company has assumed the yen at 100 yen per dollar and 140 yen per euro, compared with the current dollar/yen level of 89 yen and euro/yen level of 119 yen. A firm yen cuts into the value of its profits and makes its products less competitive in overseas markets.

A strong yen only makes Japanese products less competitive if they adjust the dollar price higher in response to the exchange rate.  Have you seen any evidence of that?  Of course not!  If anything, they’ve been cutting prices to try to prop up sales.  That’s dumping!!