The Concept of ‘dumping’ cheap Goods onto World Markets
Some companies (or even countries) may wish to get rid of products that were meant to go to a particular country but were rejected because of quality or for other reasons. To sell the rejected product, a company (or country) may sell it elsewhere at a far cheaper price. This has the effect of lowering the price of that product in the receiving country – to the detriment of that country’s own producers.
Example 1
A steel producer exports steel to a buyer in country A where the steel is found to be inferior to the required standards. The steel is then moved to a buyer in country B at a lower price, and steel producers in country B lose out on possible orders for steel from that buyer.
Example 2
If Company X has a surplus of steel, it may approach a possible buyer in country Y and arrange to sell the consignment at a price that is lower than the steel price in country Y. This means that the buyer – who normally may have bought steel from a steel mill in his own country – buys it from a foreign source at a lower price. The local steel mill missed out on a sale of steel.
State subsidies that prevent fair trade
For very good reasons (e.g. to create jobs or to ensure the continuation of an industry that is vital to an industry) a country may subsidise a particular industry (e.g. a vehicle manufacturing industry, or shipbuilding industry or an electronics industry). This may be done by reducing taxes, or by subsidising salaries for unskilled workers, or other measures that make it attractive to a company to set up a factory or to keep an existing factory operating. This affects shipping in several ways :
- If state subsidies have been provided to support a struggling industry (e.g. a vehicle manufacturing industry), the usual imports (e.g. vehicle parts) and exports (e.g. finished vehicles) associated with that industry will continue. That means that shipping service related to the industry will continue, e.g. containerships will continue to bring car parts from overseas suppliers, while vehicle carriers will continue to call to load export vehicles.
- Where a new industry has been established with state subsidies, new cargoes might become available, e.g. if a steel mill has been established, minerals for steel manufacturing may have to be imported, while steel products may be exported, providing new cargoes for ships.
In each of these cases, the continuation of existing shipping services (e.g. to import raw materials or to move export steel) will have a positive effect on employment in all the associated infrastructure, including at the port(s) involved. The number of employees (e.g. stevedores, shiploader operators, customs officials, ships’ agents, tug crews, pilots, etc) will remain the same (i.e. jobs will be saved indirectly by the subsidies) or be increased if new services are introduced.
Customs duties to protect local industries
To protect its industries from competition from cheaper imported products, a country may impose import duties (special fees) on imported products. This often happens when a country wishes to ensure that a local industry continues operating because of the number of people employed by the industry and/or because of the importance of that industry to the local economy and/or because it is an industry that is strategically important to the country.
Examples of this are :
- A clothing industry that employs hundreds of people;
- A steel industry that supplies steel for a variety of other local industries;
- An oil refinery that produces fuels, chemicals and other products that are essential to transport and other industries in that country.
In many of the cases where a state resorts to protecting an industry, it does so not only to protect a particular industry, but also to protect associated industries. For example, customs duties may be imposed on imports of oil products and liquid chemicals to protect an oil refinery. Apart from the essential fuel that it will supply for local needs, that refinery will supply chemicals that form the raw materials for a number of other industries (e.g. paint and detergent manufacturing industries). Those industries that depend on the refinery (and indeed the refinery itself) will employ thousands of people. If there had been no protection on the oil refinery, many of those other industries (the employers of thousands of people) may not have been able to operate.
The Effect of International Trade on local Employment Opportunities
Trade is important to the economy of any country. Industries need raw materials, ranging from minerals to electronic parts, and, to make money, many industries need to export products. Without trade between countries, industries that depend on imported materials will not survive, and neither will industries that depend on export markets to earn money. As long as industries remain operational, they can employ people directly.
Via trade, indirect jobs are also created in the maritime sector. The more trade passing through the ports, the busier the harbours will be; the busier the harbours are, the more people can be employed in all parts of the maritime industry. Ship’s crews, harbour personnel, stevedores, ships’ agents, clearing & forwarding agencies, ships’ chandlers, ship repair teams, bunker suppliers, truck drivers, and other maritime-related workers will find employment during times when large numbers of ships call at a country’s harbour to meet the demands of trade. In times when trade declines, fewer people can be employed in the local maritime sector and also in related activities such as trucking companies, railways and general commerce.