DUMPING EFFECTS

Hokitika Guardian, 19 June 1933, Page 8

DUMPING EFFECTS

JAPANESE YEN’S DEPRECIATION INADEQUACY OF DUTIES SIMLA, Juno 10. . “Japanese dumping is directly caused by the depreciated currency of that country. It is a, new evil and as none of. the old methods can deal with it effectively a new scheme will have to be devised,” said Mr J. Ramsay Scotv, M.L.A., in the course of a statement to the Associated Press on political methods of dealing with the problem. Continuing, he said: “The Government has tried the old method of a straight duty, but this is no use in an Emergency such as this, for any further fall in the value of the yen immediately nullifies the protection given as it did last year.

■ “Last year the par value of the yen stood a>t 137 rupees for 100 yen and the duty .on cotton p.iecegoods was 31 per cent. When Japan went off the gold standard the yen dropped t<> 106 rupees per cent. The Tariff Board has examined the position, and suggested increasing the duty by 18-J per cent, to 50 pf r cent on the supposition that the yen would standardise itself at 106 rupees per pent: The Government d*ela(yed acting on tile. Tariff Board’s recommendation and when they finally took action in August last the yen Mid' idropped ‘ 80 rupees for 100 $1 if. 4 ’ :, The posit lo'iV'iVas then that the r di'it> i ’ , ''went 1 1 hji'' by IP'!?'', per cent* while the yenhad dropped 57 points and nothing has booh done since by the Government to restore the status quo. r - . .

PLIGHT OF INDIAN MILLS “The manufacturer was feeling the Japanese competition when, the Japanese landed cost w.as 180 rupees. He cut his prices down, with , tile result that profits dropped to vqnisli ing point. • Supposing the Indian manufacturer’s cost was 170 rupees when he was selling 1.80 rupees. Ttuyt 'mount lie was making a mare 6 per cent.,. ■ although 1 do not believe the majority of mills, if an average had been taken, were making over this modest return. Today, the Indian manufacturer is faced with Japanese goods coming in at l‘2(f : 'rupees, whereas his cost, is 170 rupees. • “It hais' been said Tut your house in order,’ ‘Get your overheads down’ or ‘Your costs are too high,’ but cnii !i manufacturer be expected to bring his ( costs down by as much as 35 per cbiit? If it had been a question -of-a—s per cent.- reduction-in cost it might be possible by working overtime, night shifts and reduction in' Wages. Wages are high in India compared with Japan, where an operative gets about 5-8 rupees for a week of 61 hours. Suppose the manufacturer docs get his costs down by' three per cent., that would mean that his cost would come down to 131,8 rupees.

DUTIES INADEQUATE

“The question is, what the Government can do to help him? A 75 per cent. duty would bring Japanese figures up to 140 rupees, which would still he inadequate and .the only duty which' would restore the balance would ho 100 per cent., which would mean that the Japanese landed cost would then be 160 rupees.

“Now look at the consumer’s point of view. Goods which last August cost 180 rupees, now cost 1.60 rupees, so that he is,, much „ better off than when the duty was 31 per cent., and ns the consumer must expect to pay •ah economic rate for his purchases, ith'6 f 'maftiifacttffer ’is surely entitled Ito ! kbme‘ small' for his outlay. This ldoks quft'o > ' ! ,simple but suppose’ the yen drops still lower, as it easily might, and suppose it dropped to 60 rupees for. 100 yen, .then the duty of 100 per cent, would be useless and a duty of IGG’J per cent, would he required.”

Mr, Scott finally suggested that the duty should be imposed with the yen par rate fixed at 80 rupees, rising as the yen exchange declined.