Europe Should Abandon Anti-Dumping.

The protection of the European economy from the injustice of unfair international trade has long been an important part of the EU's external policies.

In the view of some politicians and business leaders, if competition is considered unfair, the European Commission should call for the use of new protective trade measures, which is almost an instinctive reaction.

But what do Europeans defend and what is "unfair" trade behavior?

In the absence of international competition rules to prevent predatory prices and other anti competitive practices, measures to protect trade are second best.

So far, the most widely used tool is the anti-dumping duty.

However, tariff increases and commodity prices will rise, which usually means a loss of overall social welfare.

This fact has long been ignored by companies seeking protectionist measures.

But the new situation is that these companies themselves may not be able to benefit from protectionist measures.

It is the word "defense" that has created such an image for a country: the commercial links between this country and other countries in the world are only carried out through traditional trade.

For such a country, all imports are genuine foreign goods, so its protective trade measures only aim at foreign interests.

But in today's globalized world, this is not true.

Although we still have traditional trade, there are also foreign direct investment, overseas production and business outsourcing.

We have a global supply chain in which products are developed in one country, produced in another country and assembled in third countries.

Capital and technology secrets flow among different countries, so the traditional bilateral trade flows have been replaced by a complex international business relationship network.

This has great impact on trade protection measures.

If your mobile phone is assembled in India, but it is developed and designed in Finland, is it a India product or a Finland product?

Most of the losses caused by anti-dumping measures against an Asian manufacturer will be borne by a European manufacturer.

In 2006, when the EU decided to impose anti-dumping duties on leather shoes produced in China and Vietnam, this happened.

The Swedish National Trade Association conducted a case study on five European shoe manufacturers in different countries and different market segments to determine where the added value was created in their production process.

Although made in China and Vietnam, these shoes are designed, developed and sold in Europe.

Sometimes, a large number of invisible production processes before and after the real manufacturing make up 80% of the added value.

That is to say, 80% of the shoes from China are European!

For shoes that are not so expensive, the figures are not so high, but they still exceed 50%.

Therefore, the EU's anti-dumping measures unintentionally attacked European companies.

Industries with higher labor costs, such as electronic consumer products, have higher R & D costs than shoemaking industry. Therefore, compared with R & D and other intangible costs, the production of these products on assembly lines in a low-cost country may not be very expensive.

For the more advanced products, the added value of the EU (if the invisible part of production is in Europe) is very high.

The implementation of trade protection measures to boycott such products, even lawfully, may bring problems to the European companies of globalization.

Even if these measures are as effective as expected, most trade protection measures may not be used against anti competitive business practices.

More often than not, protectionism is a crucial factor in the protection of trade.

Antidumping measures are often used to target such goods, which are very cheap, and therefore pose a threat to European producers, even if this is just competition.

Many politicians and business leaders pay close attention to the differences they do not like and want to see different "elimination".

In fact, what they don't like is competition itself, and they fight against it by setting up a tool that may cause them greater losses.