Business Law: U.S. Magnesium Seeks Protection Report (Assessment)

Introduction

The US magnesium company has exclusive rights to producing magnesium in America. The firm in the year two thousand and four alleged that the Chinese and Russian firms sold magnesium in the US market at significantly low prices than the market value. Further, the company claimed that the dumping of magnesium in the American market caused an escalation of magnesium imports and a diminishing trend in the prices between the years two thousand and two and two thousand and three.

According to the US magnesium company, the Chinese and Russian producers of magnesium traded the product below fair market value in order to drive the corporation out the business. As such, the firm brought a complaint dossier before the International Trade Commission (ITC) to rule on the matter.

The ruling by the ITC had far-reaching implications on the US magnesium, the Russian and Chinese producers as well as the consumers of magnesium in the United States of America. In the determination of the petition, the commission considered the volumes of imported magnesium, their effect on the prices and producers of magnesium in the United States and came up with their judgment.

The commission found China and Russia guilty of dumping and thus imposed levies of between 50 to150 percent on imports from Chinese firms. On the same note, Russian companies were imposed with a levy of between 20 to 25percent on their magnesium exports to the US market.

The gainers from the anti-dumping duties levied on magnesium imports

The US magnesium corporation was the major gainers in the petition since they were provided with the prospect of amassing a large number of customers consuming its product. In other words, the anti-dumping rule through the codification of the Russian and Chinese magnesium imports enabled the US producers to disconnect a number of its customers from accessing optional magnesium products from foreign firms.

The losers in the petition

The losers in the complaint were the Russian and Chinese companies since the anti dumping law discouraged the magnesium imports through the increased import tariffs thereby increasing the price of magnesium in the market. In principle, the anti dumping law led to the economic decline of the Chinese and Russian firms dealing in magnesium import in the US because they were unable to secure magnesium at the competitive prices.

Impact of levies on national interests of the United States

The commission examined the impact of the magnesium imports on the American market and made the ruling. In fact, the commission considered the economic factors that have demeanor on the magnesium industry’s state of affairs. Output, sales, market share, capacity utilization, and return on investment were considered.

The commission found out that the Chinese and Russian companies posed threats to the domestic industry in terms of fair trade and competition. However, the ruling made the consumers of the magnesium worse off since the price of the product was higher in the American market compared to the world markets.

Actually, the determination of the petition by the ITC in 2004 led to the rise in prices of magnesium in the US market to over $1.40 per pound. Magnesium prices continued to show an increasing trend until 2010 when the US prices reached an optimum $2.15 per pound.

On the contrary, global prices hovered at $1.35 per pound. Generally, the levies imposed by the ITC ensured fair-trade as well as a level playing ground for the domestic producers of magnesium in the industry.

The ruling by the ITC was not made in the best national interest of the US since there have been increased costs of magnesium alloys used in the mainstream industries. In addition, the domestic industries are unable to get alternatives for magnesium thereby making them uncompetitive in the world markets. Generally, the ruling by the ITC reflects desolate unpredictability of the US national trade policy.

This assessment on Business Law: U.S. Magnesium Seeks Protection was written and submitted by user Ayaan R. to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly.

You can donate your paper here.

More Business & Corporate Law Paper Examples