The Art of Dumping Garlic Bulbs

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The following commentry is from the source listed below:

Neville, Mark K. Jr. “Hope Dims for Honest Trade in Bulbs” International Taxation. April 2013.  p.18-21

According to reliable estimates, China produced 19.2 million tons of garlic in 2011 (1).  That figure dwarfed the U.S. production of 190,000 tons.  Chinese production accounts for nearly 80% of global production, a lot of which is exported, to the dismay of local producers elsewhere (2) ( Neville 19).

(1) U.N. Food and Agriculture Organization, http://faostat.fao.org/site/567/DesktopDefault.aspx?PageID=567#ancor

(2) http://en.wikipedia.org/wiki/Garlic#European_garlic

This article discussed Chinese garlic exports to European and the U.S. markets.  It touches on how the Chinese exporters attempt to evade foreign trade barriers in order to bring their product to these markets.  Neville also discusses how the European and U.S. customs officials try to counteract Chinese circumnavigation of the law.

European and U.S. policies are designed to protect national producers of garlic.  Basically quotas are established (measured in quantity or weight) for specific goods.

For example:

In the EU, the tariff rate quota for garlic is imposed under tariff item 0703.20.00 of the EU Harmonized Tariff System.  For garlic that is imported within the quota allotment, the duty rate is 9.6% ad valorem.  For garlic that is imported after the quota has been used up, however, the duty that is collected is a compound duty of that same 9.6% ad valorem plus an additional 120 per 100 kg.  The EU has divided up the worldwide quota amount of 58,870 tons as follows: Argentina — 19,147; Chine — 33,700; Other — 6,023.

Therefore, when the Chinese quota is quickly utilized, Chinese producers resort to alternative methods of getting their goods into these markets.  Neville sites examples of the methods they use.

  1. Chinese exporters can claim the good as something else when faced with a “decremented quota”.  They can claim that the garlic is actually another commodity, typically “onions” as cited by the situation that occured in the Dutch/Polish or U.S. cases.  In an Irish case, garlic was even claimed to be apples.
  2. The alternative approach is to use another country’s quota.

Generally #2 is the safer alternative.  If Chinese exporters can claim Mexican or Vietnamese origin for their garlic exports they can more easily evade customs.  This is seen as a lower level of risk versus the false product declaration method.  This is especially true when the U.S. has a policy of “anti-dumping” specifically aimed for this commodity (garlic) coming from a specific destination (China).  These trade barriers may not be so high against other countries, the most notable example being Mexico that falls under NAFTA.

Interestingly, the U.S. Customs and Border Protection (CBP) has a Customs Research Laboratory that can try to find trace elements in suspicious produce and then trace them to their country or region of origin (Neville 21).  This can be a long and costly process, that takes years to fine and penalize Chinese exporters for “dumping” their garlic on the U.S. market.

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