To the Point!

It can create a 70 mile long line, write an average of 45,000 words, erase errors and beat out an infinite number of drum solos…it is called the “pencil”.

Most of us have picked up, used and lost a pencil (more than a few times) without even a second thought. Pencils are simply…common. Can you believe the “modern” pencil was once a controversial addition to the classroom? Some American school teachers believed that the 1858 invention of pencils with attached erasers would encourage student carelessness. The pencil clearly prevailed and is now among the world’s most popular tools for writing and drawing!

Today, the demand and market for pencils is much more lucrative than one would think; about $3.6 billion worth of pencils are sold just within the U.S. each year. Despite the common misconception that pencils are a dying business, pencil consumption generally grows globally at or around the rate of population growth.

The problem began in the early 1990s when Chinese manufacturers entered the market with low-priced pencils. The pencil industry fought back, arguing that the Chinese were dumping pencils on the U.S. market at below cost and lobbying Washington for protection.  When merchandise is sold at a price below that for which it sells in its own country, the merchandise is dumped in a foreign market. The lower priced imports, more competitive than their domestic counterparts, result in dilapidated domestic industries. Due to its detrimental effects on domestic business and production, dumping is a major aspect of unfair trading practice in trade relations.

During late 1994 the Department of Commerce imposed anti-dumping duties on imports of pencils from China; the rate varied over the years but has remained at 114.9% since 2003. These anti-dumping duties have assisted the U.S. pencil manufacturers from being totally devastated by Chinese imports, even though many U.S. pencil producers have had to become involved in Chinese production or import pencil supplies themselves to remain competitive within the market. Some Chinese companies attempt to avoid these dumping duties through trans-shipment via a third country (Taiwan, Indonesia and Vietnam) not subject to the duties and/or by purposely mislabeling the country of origin for the pencils.

Both are illegal practices under international trade rules and can be difficult to detect. A Federal District Court in Washington, DC unsealed a False Claims Act case against major retailers accused of transshipping Chinese made pencils to avoid antidumping duties, according to a May 2012 press release.

PIERS offers instant access to details on U.S. import shipments. Our international trade data combined with market specific intelligence can help provide a global picture of a commodity, the companies trading it and possibly dumping activities.  Register online for a demo.

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