Victim of Globalization

The U.S. pencil industry began lobbying the U.S. government to impose antidumping duties on Chinese pencil imports in the early 1990s. At the time, the industry was regarding its market share being eroded by Chinese companies that were exporting low-priced pencils. In order to compete, U.S. producers needed to become more efficient and innovative by low prices strategy. By lobbying the U.S. government enacted heavy antidumping duties on Chinese pencils, effectively raising their price, and imports rating fell dramatically. However, China producers kept making better, cheaper pencils, and after a couple of years imports returned to the levels attained before the imposition of duties. During that time, Chinese importers are leading the market whose import tariffs are rise from 16 percent to over 50 percent of the market. Chinese kept making pencils cheaper and better and also Chinese industry continued to lobby the government. Furthermore, the pencil industry and all workers connected with that industry stand to benefit from antidumping laws. The U.S government was also benefited, but the consumers cannot effort to buy the pencils with higher prices. Thus, the government must be take alternative policy that firms need to set up foreign subsidiaries to take some advantage of some of the low costs. That means a company which wants to reduce their low costs should be corporate with their foreign subsidiaries and to operate with other organization. That’s why some producers suggested that rather than imposing duties, the government might have provided incentives & opportunities for U.S. producers to find better ways to compete.