21. Product Pricing Court

National governments should create an import pricing court which would be responsible for overseeing all of the nation’s imports and adjusting upwards, when necessary, the prices of any imported goods or services which it judges to be unfairly low. The goal is to ‘adjust’ the price of such imports up to the minimum point at which their ‘true’ costs of production (including transportation) are reflected in the prices importers are required to pay for them. Such an import pricing court would help insure against domestic producers (as well as other foreign producers) from being unfairly under-priced by foreign producers which may not adhere to similar fundamental principles concerning the internalization of all reasonable and practical costs of production.

Under no circumstances should this court ever even consider the relative prices between domestically produced goods and services and imported goods and services. The only consideration of this court should be whether the imported prices are fair as determined by the producer’s adherence to fundamental principles concerning the internalization of all reasonable and practical costs of production.

At their point of entry into the country, imported goods and services should be assessed rectifying charges and punitive penalties if it has been decided by the court that they are produced using forced or inhumane labor, significant environmental damage, direct or indirect subsidies, exceedingly unsafe working conditions, or if producers have used methods which violate widely accepted moral standards used by the rest of the world, etc. There would be no limit on the amount of punitive penalties which can be levied and governments can use this tool to encourage foreign producers to improve certain elements related to their means of production in order to help improve the social or environmental health or wellbeing within that foreign country. Further punitive penalties could also be imposed due to lack of cooperation from exporting countries during investigations into unfair pricing complaints. Punitive penalties could be enforced even on products already in the transportation pipeline if the exporter made significant changes to the relevant methods of production before the ruling was handed down. Rulings cannot be enforced against newer products produced in a way the court deems acceptable.

After the import pricing court investigates unfair pricing complaints brought to its attention, it would issue a ruling which would take effect immediately. If the exporter is found guilty of unfair pricing, the court may issue a ruling imposing some rectifying charges as well as some additional penalties. These costs would be required to be collected on all imported goods and services which have not yet been processed through its ports of entry at the time of the ruling. (The importer would be required to pay these additional costs if they wish to take delivery of the goods.) At the same time, the import pricing court would notify the exporter with reference to the details of each of the charges and penalties assessed to its products and what they would need to do in order to get each charge and penalty eliminated.

Naturally, the national government of the importing country would collect all of these fees and penalties. However, the exporting country could assess the equivalent amount of fees (in the form of an export tax) to its exports destined for the importing country and affected by the rulings of the importing country’s import pricing court. If the exporting country chooses to do this, the result would naturally be that the prices of the imported goods would be at the point where their ‘true’ costs of production are reflected in the price (although, of course, this approach would not be the ideal solution). Thus, the importing country would not have any right to collect any rectifying charges though they would still have the right to collect any additional punitive penalties. However, the exporting country could also include these punitive penalties as part of their export taxes. The importing country would then have no reason to collect these same fees since the penalties would have been self imposed.

Nevertheless, the importing country will always have the right to be compensated (plus 10%) for all investigative, legal and processing costs, etc., associated with any rulings found against it. This amount could be collected by charging it onto either the future imports of the same or similar goods on which the import pricing court ruled, onto the same category of items imported from that country, or it could be spread out among all imports imported from the same country. For example, if an investigation into a complaint cost a total of $1,000,000, then $1,100,000 should be divided either among all future imports of that product, similar products, or divided equally among all imports from that country. It should be divided such that somewhere between a quarter to a third of these investigative charges are recouped per year, but these repayment formulas could vary greatly based on the qualitative and quantitative aspects of each market.

The following is how an import pricing court could affect the cost of an unfairly priced imported item. Let’s say country A is selling a product for $1, but country B, through its product pricing court, says that the product’s ‘true’ cost should be $1.50. Country B then states that country A is selling its product for 67% (2/3rd) as much as it should cost in a fair market, and imposes a rectifying charge on imports for the remaining 33% in order to bring the product’s price in country B’s domestic market to a level that is considered fair (meaning that it is not unfairly harming other foreign and/or domestic competitors). In addition, let’s say that country A is found to have used bonded labor and that it has also stifled country B’s access to several relevant records in its efforts to determine whether other unfair practices were used in country A during the production of the products in question. Due to these findings, country B could impose an additional punitive penalty of 50% of the product’s ‘true’ cost (75 cents per item), bringing the imported product’s cost to $2.25. This punitive penalty would serve as further punishment and encouragement to the exporter to discontinue these unfair and unjust production practices.

Only very rarely should a product be banned from import. If the rectifying charges and punitive penalties are high enough, the product will be effectively banned from import anyway. If the exporting country imposes export tariffs on the penalized products, and the situation is still not on a sufficient course toward resolution, then either a ban or additional penalties could be imposed.

Such a system as described here would encourage fairer trade around the world. Of course, the threat of retaliation does exist, but these can be minimized by making such an import pricing court a supranational court instead of merely a national court.

In sum, the unfair selling price of the products (original price set by the exporter), plus the rectifying charge, plus the punitive penalty, plus the investigative and court fees would raise the price of the imported product past its fair competitive price, thereby economically encouraging its manufacturer to adopt safer and fairer production practices without completely or entirely closing off our domestic market to the imported products while at the same time protecting domestic manufacturers from losing sales due to unfair pricing practices.

This product pricing court system could also have national branches that could also settle unfair pricing complaints levied against domestic producers of goods and services. A supranational court should not hear cases where both the plaintiff and the defendants are located in the same country.

 


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