The twelfth in an occasional series that shines a bit of light on the regulatory state.
Today’s Regulation of the Day comes to us from the International Trade Administration ($420 million 2009 budget, 1,433 employees).
The ITA has been upset for some time that a Thai shrimp exporter is selling shrimp cheaply; hungry consumers have had no complaints.
Using sophisticated formulae, the Department of Commerce has determined that the minimum allowable profit margin for shrimp exporters is 1.88 percent. Anything less than that constitutes “dumping,” which is selling goods on the cheap in order to harm your competitors. Anti-dumping regulations are in place to make sure that companies don’t save their customers too much money.
This kerfuffle is a perfect example of how regulators view prices and profits. If you charge more than your competitors, then you are abusing your market power. If you charge the same as everyone else, that is evidence of collusion. If, like our Thai friends, you charge low prices, then you are unfairly undercutting the competition.
Whatever you charge, and whatever your profit margin, there is a rationale for regulating you.
Read more on pages 31,911-31-912 of the 2009 Federal Register.