Five leading Israeli companies have complained to the Ministry of Industry and Trade that a number of European and Asian companies are trying to elbow into the Israeli market through dumping surplus products, in a violation of internationally accepted standards of fair play.
Demand has plunged worldwide as the economic crisis intensifies and spreads. The result is surplus production capacity, which in turn means manufacturers are contending with mounting inventories of goods. Many manufacturers are cutting back production, for instance by moving to four-day weeks or shutting down production lines, but the piles of goods continue to grow.
One solution is to find new markets, and one way to conquer the heart of a new market is to sell at a low price, to the horror of local companies. The question is how low.
Undercutting local prices is one thing, but selling at less than the cost of production - "dumping" - is another. The question at hand is whether certain companies are "aggressively" trying to win Israeli hearts by dumping goods on Israel at below-cost prices.
Avigdor Dorot, a lawyer who's represented both sides of dumping, says that recessions are characterized by a jump in complaints. "Local companies tend to run to the government seeking protection from the competition," he says. "I expect the government mechanism that checks the complaints will examine them objectively and not only consider how to help."
Among the companies claiming they feel unfair competition from abroad are Carmiel Pipe Fittings Israel, cast-iron manufacturer Modgal and American-Israeli Paper Mills, locally known as Niyar Hadera.
If it's true, the offending manufacturers are violating the rules of the World Trade Organization. On the other hand, it could be that the local companies are failing to streamline their operations and cut costs and are indirectly seeking government aid by pointing fingers and charging the competition with dumping.
If a local company is a "victim" of foreign dumping it can ask protection from the state in the form of an "anti-dumping duty." - effectively a special tax on the Israeli importer. The duty is slapped on suspiciously cheap imports in order to jack up their local price and protect the local supplier from illicit competition.
Are foreign companies dumping their surplus on other countries, or are the locals crying wolf? What's for sure is that in the last half year, the number of dumping allegations has increased by 50% and that in Israel the situation is extreme.
In the past three months five companies have complained to the Ministry of Industry and Trade, asking to look into suspicions of foreign dumping. That is a dramatic increase, given that dumping allegations had previously averaged about one a year.
The companies have asked Reuven Pesach, the ministry official responsible for dumping policy, to impose anti-dumping duties on the offending products.
The importers affected by the complaints - some of which remain unofficial at this stage - include packaging company Cargal, Scope Metal Trading & Technical Services, Xerox Israel, Office Depot and Gevaram Envelopes, which import from Europe and China.
American-Israeli Paper Mills complained that Saica of Spain and the German companies Varel and Schoellershammer are exporting brown paper at dumping prices. The importers include Best Carton, Carmel Container Systems and Cargal, which buy the brown paper as a raw material to make cardboard cartons.
Paper Mills also complained that white-paper exporter Arctic Paper of Sweden, M-Real of Finland and Sappi of Belgium are breaking the rules. Their products are imported by Office Depot, Xerox Israel, Gevaram Envelopes and others.
Carmiel Pipe Fittings complained, for the second time, that Chinese manufacturers are dumping metal products, while Modgal alleges that fire-extinguishing equipment from China is being sold locally below cost. Makor Haformaica complained about MDF wood panels (uniform density panel with a fine, smooth surface) made in China being dumped in the local market.
The Israeli manufacturers generally allege that because of the economic crisis, the foreign manufacturers are drowning in goods. But the importers rebut that the goods aren't being dumped: The local companies simply can't cope with foreign competition.
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