Brad DeLong's Semi-Daily Journal (2004)

Uhm... link?... I'll go find it...

Got it:

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=5150078

The Bush administration proposed a 78.45 percent anti-dumping duty on nearly $300 million worth of televisions from China.

The vote was the final bolt in the process of imposing the levy which will go into effect by early June until its review in five years, said John Greer, an ITC spokesman.

"Because of various factors, they can have low prices and low prices can bring injury to the United States," Greer said.

Uhm, aren't these guys s'posed to be free traders?

If anybody cares to do some digging, it shouldn't be that hard to figure out why - a TV factory in a swing state.

Just as long as it's only color tvs. Thank god they spared the black and white ones...

I was under the impression that Zenith was the last domestic maker of TVs and that they shuttered their last US plant several years ago. Could it be that we're now protecting the profits of some Bush supporter who builds TVs in Taiwan, Indonesia or Mexico?

But not blocking Chinese TVs made in Mexico, I presume. Take a look at how the Chinese are responding:
(http://www.asianlabour.org/archives/001683.html).

What jhe said; there are no more tv factories in the US, let alone in a swing state.

So we have the ITC costing consumers more for their televisions without a discernible benefit to U.S. companies or workers.

So how did the ITC determine that importing something we don't make "materially damaged, or threatened to damage, the domestic industry"?

The US may not make TV's, but they may make TV components (say computer chips). If China buys mainly from other sources, we may see why this happening.

What do we make of Reuters blithely "reporting" that:

>>>The U.S. International Trade Commission voted 5-0 that low-priced imports of 21-inch (52-cm) and larger color televisions from China threatened to harm U.S. producers.<<<

without mentioning that there are no US producers? And what do we make of the USITC _claiming_ harm to non-existent US producers? (Or is Reuters just doing sloppy reporting, and does the USITC in fact claim that China's manufacturers are dumping TV components in a way harmful to US producers. (Sounds like that would be a VERY difficult case to make, since the cost of components is aggregated in the whole TV...and also, it would hardly justify a 78% duty, since it's hard to believe that the TVs would have 78% US content if it weren't for the evil Chinese dumping strategies.

In fact, the whole thing makes no sense (at least to a non-economist):

1. It's to protect non-existent US manufacturers

2. Anti-dumping laws are intended, one would think, to prevent a powerful outside producer from temporarily dumping a product to drive a domestic producer out of business, so as to enjoy a subsequent monopoly. (It can't be just to disfavor countries with lower costs of production, which is the key justification for free trade in the first place, right?). But there's no domestic producer to protect.

3. This measure just favors Mexican or Rumanian-made TVs, right (or wherever)...and they're no more or less likely to us US components, which are attractive depending on their cost and quality compared to others. Moreover, these TVs will now go UP in price, because they will have less competition from lower-cost Chinese sets. So the price of TVs will likely increase.

4. Brad keeps talking about "clowns", and one can only concur. Could an economist (or a political economist) please explain?

FOLLOW UP:

Here's what's on the ITC website, which is sort of interesting to the uninitiated (From the "Factual Highlights" section of the ITC press release):

1. Type of investigation: Final antidumping.
2. Petitioners: Five Rivers Electronic Innovations, LLC; International Brotherhood of Electrical Workers (IBEW); Industrial Division of the Communications Workers of America (IUE-CWA).

Five Rivers (http://www.taylorwhite.com/5r/technology.htm) appears to be a rather small assembly plant. Yahoo describes it as follows: ""Five Rivers Electronic Innovations is a closely-held appliance and consumer electronics manufacturer. A subsidiary of Taylor-White, the company makes products such as TVs for Samsung and Philips Electronics, among others.""

The other two petitioners are unions. Makes sense, I suppose...but given the Bush Administration's high regard for and respectful treatment of labor in general, it's hard not to wonder about the politics of this....

If the Bush administration believes that TN is in play, there is hope.

Hmmm. Okay, per http://www.usitc.gov/er/nl2004/er0514bb1.htm

The US-built Korean and Dutch-branded units have an average value of $500.

The Chinese units have an average value of $177.17.

So the levy (IF I understand properly--and I probably don't, so this is Worst Case) will raise the, er, value of the Chinese units to $316.15. (177.17*1.845)

Now, I'm speaking as a dumb consumer, but if you offer me a choice between a $500 TV and a $300 TV, I'm going to assume there is a difference in the quality of the sets; these are NOT fungible assets.

My answer:"If America's highly trained engineers and computer specialists are unable to withstand the onslaught of outsourcing, what about those who are even less trained? Yes, America may be able to maintain a competitive advantage at the very top, the breakthrough research, the invention of the next laser. But a majority of even highly training engineers and scientists are involved in what is called 'ordinary science,'(TV's?) the important, day-to-day improvements in technology that are the basis of long-term increases in productivity - and it is not clear that America has a long-term competitive advantage here."

Two of the Chinese manufacturers included in this (Konka and TCL) have plants in - among other places - Mexico. In fact, Konka have built a plant there expressly to get around the duties imposed. You'll still be buying Chinese CTVs in the US cheaply for a while yet; it's just that they'll come from Mexico...

The whole story is here: http://www.asianlabour.org/archives/001683.html

"Two of the Chinese manufacturers included in this (Konka and TCL) have plants in - among other places - Mexico. In fact, Konka have built a plant there expressly to get around the duties imposed. You'll still be buying Chinese CTVs in the US cheaply for a while yet; it's just that they'll come from Mexico..."

But what can they buy with these "cheaper " $...?

The Dude: what do you mean by "what can they buy"? Chinese CTV manufacturers will make TVs in Mexico and export them to the US. People in the US will buy Mexican-made Chinese TVs. I don't understand your point.

"Chinese CTV manufacturers will make TVs in Mexico and export them to the US. People in the US will buy Mexican-made Chinese TVs."
So they get money, right?What currency?$, right?And what can they buy with $?Petrol? (=> Trade Deficit...compensation?)

To Stephen Frost:

Joe Stiglitz, Economics p.543: The Trade Deficit

I know too many Americans who will never have even the skills to make color TVs

Why do politicans of all parties have such difficulty in understanding the case for free trade?

Aren't we trying to push the market towards digital TV? A glut of standard analog sets would counter that, right?

I'm no economist, but can't the dumping of cheap foreign TVs impact domestic industries other than TV manufacturing?

(I, too, would like to see an honest reconcilliation of free-market rhetoric and protectionist behavior, but I'm not holding my breath.)

Oh, it's an act of idiocy all right, but it's bi-partisan idiocy. And it is virtually guaranteed by the systemic logic of the commission.

Which, in no way, can be blamed on George W. Bush.

One Case History

Color Televisions

The case of color television production in the US provides a useful illustration of the forces underlying FDI.In many respects this industry is both an early and an extreme example of the role of foreign firms in the US (and Mexico?Transport Costs: Rethinking Int. Trade, by Paul Krugman, p. 27).Although the US imports many color TV's, there's still a significant amount of domestic production:more than half of the color sets sold in the US are at least assembled in the US.The domestic industry is, however, for the most part foreign controlled.Large-scale acquisition and establishment of US subsidiaries by foreign firms began in the late 1970's ;since the sale of General Electric's television production operations to Thompson, a French (French?) group, in 1987(ok, that was in 1987), only one major US-based firm, Zenith Electronics
Corp., remains in the domestic industry....etc. etc. etc.

FDI in the US by Edward Graham and Paul Krugman,p.51-53 January 1995)

1995... Thomson (French?)

"Chinese company TCL teamed with French company Thomson Tuesday in ... Guangdong Province to form the world largest television production joint venture. The TCL-Thomson company will produce 18 million television sets annually, replacing Sony as the leading global television maker..."

November 2003.

I think - and maybe one of you with more time can confirm - that Zenith is now a brand of a Korean company (LG (Lucky Goldstar) I think )

Online Casino Directory

Here are some real facts.

There are only a few plants making color Tv's in the U S. The Taylor-White company was formerly owned By Phillips ( the major brands made at the Greeneville facilty inlcuded. Magnavox, Sylvania and phillps.

The Phillips company decided to move out and build overseas due to obvious cost. The local management of the plant decided to put up their own money to buy the plant.

Not sure on this but the RCA plant in Indiana (location?) is also one of the few still making TVs but they are foreign owned.

The decision to fight obvious trade dumping was not a political issue it was a issue of people wanting to have a job with fair competition. Yes I am sure the plant will eventually be taken out by dumping from Mexico ( phillips moved most of their production from Greeneville to their plant in Juarez city.) but unless you want to keep up about 1000 people on unemployment you will support these action. It doesnt take much to see that free trade will end up in each of us fighting teenagers for the only jobs that will left and that is in fast food.

http://www.tdctrade.com/alert/us0410.htm

Five Rivers employs approximately 700 workers in the production of television sets, a number that has dropped significantly over the last three years. Moreover, Five Rivers is the only American-owned television assembly plant in the US. The other five plants in the US are owned by Japanese manufacturers such as Sanyo, Sharp and Toshiba, none of which participated in the proceedings before the USITC. In addition to Five River in Greeneville, Tennessee, factories are located in Arkansas, Indiana, Pennsylvania and Washington state.

Just more info

The entire US industry employs some 3,200 workers and shipped 3.8 million units last year, valued at US$1.9 billion. Yet total US output declined 27% between 2001 and 2003, while American imports of colour television sets have ballooned from 56,000 units in 2001 to 1.8 million units worth US$318.9 million last year. This translates into an import growth rate of 3,050%.

These are real dollars that will not being going back into the US economy .