Trade war traps: Australia has to ban unlicensed export of its formula milk.

Trade war traps: Australia has to ban unlicensed export of its formula milk

by tonytran2015 (Melbourne, Australia).

Click here for a full, up to date ORIGINAL ARTICLE and to help fighting the stealing of readers’ traffic.

(Blog No. 140).

#trade war, #Free Market, #trap, #domestic producer, #export license, #formula milk,

Trade war traps: Australia has to ban unlicensed export of its formula milk.

The Federal Government of Australia, as a sovereign nation, has banned the unlicensed export of its formula milk [1]. This decision has been attacked by biased and short sighted critics in Australia. However the ban should be supported by Australian citizens as unrestricted Free Market may lead to the bankruptcy of domestic producers.

1. Small scale unofficial export of formula milk to China.

There has been unofficial, small scale export of its formula milk to China by Chinese students in Australia. This is understandable as Chinese formula milk has earned the notoriety of having added melanin in the past [1b]. Buying Australian formula milk and sending home make small profits for individual Chinese students [2,3,4]. They are allowed to send small quantities of Australian formula milk to China as gifts. However large scale unlicensed export to China should be banned.

2. Reasons for export control.

Chinese population is 1.500 millions while Australian is 22 millions. If Chinese people all decide to use Australian formula milk there will no more milk left for Australian babies.

3. Criticism by advocates of unconditional free market.

There are critics who advocated unconditional free trade. They said that the formula milk producers should have increased their production and the Federal government should encourage rather than restrict the export of Australian produced formula milk.

4. The fallacies of unconditional free markets.

Should the milk producers in Australia decide to increase their production they will then have to build factories and hire additional workers. What would happen if China then decide to ban its import of Australian produced milk? Australian milk producers would then go bankrupt for borrowing money for unproductive work [5,6].

If Australian milk producers go bankrupt they may have to be sold to Chinese owners. After that a steady sustainable market will be maintained for the new owners!

5. Can China be that nasty?

In 2010, Chinese grain and food traders had bought nearly all coconut fruits from Vietnamese farmers, pushing the price from 6000 VND (0.30 USD) to over 20000 VND (1.00 USD). Vietnamese farmers then abandoned many other crops to plant coconut trees (for example in Ben Tre region of Southern Vietnam). Three years later, when the trees start producing coconut fruits, Chinese grain and food traders disappeared, leaving the farmers with massively unsold stock. Those lucky farmers who could sell their coconut fruits got only 2000 VND (0.10 USD) for each fruit [7,8].

This pattern of tricking producers into producing into a glut market has been repeated many times in Vietnam (with rambutan fruits, lychee fruits, dragon fruits, in various provinces of Vietnam etc…). Greedy Vietnamese farmers in a lawless areas have also been tricked into producing leeches !

5. Conclusions

a. The Australian Federal Government has been absolutely right with its decision to ban the unlicensed export of Australian formula milk.

b. Trade war may be carried out under the name of Free Market: The Vietnamese agriculture events have shown that Free Market is nice in theory but is not so when there is some interference by some states.

References:

[1]. http://www.agriculture.gov.au/about/media-centre/media-releases/exports-infant-formula-china

[1b]. https://en.m.wikipedia.org/wiki/2008_Chinese_milk_scandal

[2]. https://www.adelaidenow.com.au/news/woolworths-slammed-for-banning-dad-who-tried-to-buy-infant-formula-for-his-nineweekold-son/news-story/5002c80d2858a67fff202794b9c49e0f

[3]. https://www.vice.com/en_au/article/evde3p/the-days-of-easy-money-exporting-baby-milk-are-over

[4]. https://www.news.com.au/finance/business/retail/how-grey-market-baby-formula-sellers-are-getting-away-with-exports/news-story/9a1fef585c867d57d36d3f720b0cb418

[5]. http://adf.farmonline.com.au/news/magazine/industry-news/general/australian-infant-formula-maker-banned-in-china/2754171.aspx

[6]. http://www.abc.net.au/news/2013-08-04/an-china-bans-nz-milk/4863858

[7]. http://www.snnptnt.bentre.gov.vn/Pages/TrongTrot.aspx?ID=229&InitialTabId=Ribbon.Read&PageIndex=16

[8]. http://baodatviet.vn/kinh-te/dua-ben-tre-un-un-do-ra-nuoc-ngoai-2260515

[9]. https://baomoi.com/ben-tre-diu-hiu-cho-dua/c/7609198.epi

[10]. https://news.zing.vn/20000-dong-12-trai-dua-xiem-ben-tre-post582651.html

[11]. https://news.zing.vn/manh-khoe-thuong-lai-trung-quoc-thu-mua-nong-san-viet-post548933.html

[12]. http://m.dantri.com.vn/kinh-doanh/nong-dan-van-mac-bay-thuong-lai-trung-quoc-1380891003.htm

[13]. https://www.bbc.com/vietnamese/forum/2014/04/140403_lyphi_agriculture_development

Added after 2018 June 27:

[14]. https://www.whatsonweibo.com/we-want-milk-australian-baby-formula-sold-out-due-to-chinese-demand/

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