ECONOMYNEXT – Sri Lanka will enforce anti-dumping laws from October 10, a state gazette notice said, tightening the grip of businesses over consumers amid protectionism and import controls.
“In terms of powers vested in me under Section 01 of the Anti-Dumping and Countervailing Duties Act, No. 2 of 2018, it is
hereby ordered that the provisions of all Sections of the aforesaid Act shall be enforced with effect from 10 October, 2020,” trade minister Bandula Gunewardane said in the gazette notice.
A safeguard measures law will come into effect from October 19.
“I terms of powers vested in me under Section 01 of the Safeguard Measures Act, No. 3 of 2018, it is hereby ordered that the provisions of all Sections of the aforesaid Act shall be enforced with effect from 19 October, 2020,” the trade minister said.
The anti-dumping laws were brought by the last United National Party led administration which in the late 1970s had a reputation for opening trade and improving consumer sovereignty.
Anti-dumping laws were initiated by business lobbies in the West as the public in those countries increasingly became aware of how businessmen were exploiting then through high prices enforced with import duties, as classical economic ideas gained ground especially in the 1980s.
Protectionists say if a company sells a good in a foreign market lower than at home, it is ‘dumping’.
However in practice most firms will sell good at different prices, brands and qualities, both locally and internationally targeting affordability a practice economist’s call price discrimination.
The practice is prevalent especially in drugs and healthcare where Western drug companies sell at high prices at home, and low prices in developing countries.
When Western drug firms sell at low prices in Asia and Latin America, hardly anyone calls it ‘dumping’ analysts say.
The last administration which followed a series of socialist and anti-consumer policies also set up a price control agency for drugs called the National Medical Regulatory Authority.
Analysts have pointed out that unless Sri Lanka’s Latin America style central bank is reformed import substitution will not end.
Sri Lanka is now left with both protectionism and anti-dumping laws. Sri Lanka has embarked on an extreme import substitution strategy propagated by the likes of Raul Prebish, the founder of Argentina’s central bank which drove the country to sovereign default.
Protectionism and anti-dumping laws are part of an exploitative philosophy called Mercantilism or cronyism on which colonial companies such as the British East India Company operated on, economic analysts say.
US President Donald Trump, a nationalist has also been pushing protectionism.
Adam Smith who’s Wealth of Nations, which was a treatise against cronyism/Mercantilism pointed that the members of the public are easily deceived by businessmen.
Smith said that business men are generally good at promoting their interest because they are used to making strategy.
“Merchants and master manufacturers are, in this order, the two classes of people who commonly employ the largest capitals, and who by their wealth draw to themselves the greatest share of the public consideration,” Smith wrote.
“As during their whole lives they are engaged in plans and projects, they have frequently more acuteness of understanding than the greater part of country gentlemen.
“As their thoughts, however, are commonly exercised rather about the interest of their own particular branch of business, than about that of the society, their judgment, even when given with the greatest candour (which it has not been upon every occasion) is much more to be depended upon with regard to the former of those two objects than with regard to the latter.
“Their superiority over the country gentleman is not so much in their knowledge of the public interest, as in their having a better knowledge of their own interest than he has of his.
“It is by this superior knowledge of their own interest that they have frequently imposed upon his generosity, and persuaded him to give up both his own interest and that of the public, from a very simple but honest conviction that their interest, and not his, was the interest of the public. ”
However Smith warned that controlling markets is never in the interest of the public as businesses should compete to become efficient, innovative and for the public to benefit.
“The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public.
“To widen the market and to narrow the competition, is always the interest of the dealers.
To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens.
“The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention.
“It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”
Other economists have also pointed out that businesses have the money to lobby buy politicians and public opinion as their total gains from protectionism are large.
But the cost of campaigning against high priced import substituted good is much bigger than an individual consumer than the loss made in buying a high priced good. (Colombo/Oct13/2020)