MGT321 SEU Protecting U.S. Magnesium Reading Questions Help Reread the management Focus Protecting U.S. Magnesium (see the attachment ) and answer the following questions from 1to 3? Who gains the most and from antidumping duties levied by the USA on imports of magnesium from China and Russia? How? Who are the losers? Please explain the reason for your assertions. Are these duties in the best national interest of the USA? Give proper logic in support of your answer.There is no wrong or right answer here, but you must use at least three references to support your arguments (references can be scientific journals, industry reports, industry-related magazines, leading newspaper articles, etc ).After completion of Assignment-2 students will able to
Discuss the reasons for and methods of governments intervention in
and evaluate the significant trade agreements affecting global commerce
use their own word.
must apply Times New Roman Style with 1.5 space within their reports.
mark of zero will be given for any submission that includes copying from
other resource without referencing it.
the assignment shows more than 25% plagiarism, the students would be
must include reference page at the end of the assignment and properly reference
any sources used in your answer using APA-style references
in the separate page answer this question: (What are the implications of all this for business practice? Why should the international manager care about the political economy of free trade or about the relative merits of arguments for free trade and protectionism? There are two answers to this question. The first concerns the impact of trade barriers on a firm’s strategy. The second concerns the role that business firms can play in promoting free trade or trade barriers. MANAGEMENT FOCUS
Protecting U.S. Magnesium
In February 2004, U.S. Magnesium, the sole surviving U.S. producer of
magnesium, a metal that is primarily used in the manufacture of certain
automobile parts and aluminium can, filed a petition with U.S. International Trade
Commission contending that a surge in imports had caused material damage to
the U.S. industrys employment sales, market share, and profitability. According
to U.S. Magnesium, Russian and Chinese producers had been selling the metal at
prices significantly below market value. During 2002 and 2003, imports of
magnesium into the United States rose 70 percent, while prices fell by 40 percent,
and the market share accounted for by imports jumped to 50 percent from 25
The United States used to be the largest producer of magnesium in the world a
U.S. Magnesium spokesperson said at the time of the filing. Whats really sad is
that you can be state of the art and have modern technology, and if the Chinse,
who pay people less than 90 cents an hour, want to run you out of business, they
can do it. And thats why we are seeking relief.
During a yearlong investigation, the ITC solicited input from various sides in the
dispute. Foreign produces and consumers of magnesium in the United States
argued that falling prices for magnesium during 2002 and 2003 simply reflected
an imbalance between supply and demand due to additional capacity coming on
stream not from Russia or China but from a new Canadian plant that opened in
2001 and from a planned Australian plant. The Canadian plant shut down in 2003,
the Australian plant never came on stream, and prices for magnesium rose again
Magnesium consumers in the United States also argued to the ITC that imposing
antidumping duties on foreign imports of magnesium would raise prices in the
United States significantly above world levels. A spokesperson for Alcoa, which
mixes magnesium with aluminium to make alloys for can, predicted that if
antidumping duties were imposed, high magnesium prices in the United Stated
would force Alcoa to move some production out of the United States. Alcoa also
noted that in 2003, U.S. Magnesium was unable to supply all of Alcoas needs,
forcing the company to turn to imports. Consumers of magnesium in the
automobile industry asserted that high prices in the United States would drive
engineers to design magnesium out of automobiles or force manufacturing
elsewhere, which would ultimately hurt everyone.
The six members of the ITC were not convinced by these arguments. In March
2005, the ITC ruled that both China and Russia had been dumping magnesium in
the United States. The government decided to impose duties ranging from 50
percent to more than 140 percent on imports of magnesium from China. Russian
producers faced duties ranging from 19 percent to 22 percent. The duties were to
be levied for five years, after which the ITC would revisit the situation. The ITC
revoked the antidumping order on Russia in February 2011 but decided to
continue placing them on Chinese produces. They were finally removed by the ITC
According to U.S. Magnesium, the initial favourable ruling allowed the company
to reap the benefits of nearly $50 million in investments made in its
manufacturing plant and enabled the company to boost its capacity by 28 percent
by the end of 2005. Commenting on the favourable ruling, a U.S. Magnesium
spokesperson noted, Once unfair trade is removed from the marketplace well
be able to compete with anyone.
U.S. Magnesiums customers and competitors, however, did not view the
situation as one of unfair trade. While the imposition of antidumping duties no
doubt helped to protect U.S. Magnesium and the 400 people it employed from
foreign competition, magnesium consumers in the United States felt they were
the ultimate losers, a view that seemed to be confirmed by price data. In early
2010 the price for magnesium alloy in the United States was $2.30 per pound,
compared to $1.54 in Mexico, $1.49 in Europe, and $1.36 in China.
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