The Influence Of Export Cartels On Developing Country's Welfare

Export cartel is a joint of exporters who want to restrict competition in an export industry. Specifically, it refers to such behavior that export enterprises discuss the export price, export volume or divide the scope of market together in order to promote a country's exports. In 1918, the U.S. promulgated the Webb-Pomerene Export Trade, which created the export cartel exemption system. Since then, Japan, the United Kingdom, Germany, Australia and the developing countries follow suit one after another. Although many countries have implemented or are implementing through the export cartel exemption system, this system both in theory and reality has been plagued by controversy. Supporters argue that it is "a weapon of the weak", and the domestic small and medium enterprises should unite against the strong foreign competitors and safeguard their own interests reasonably. While opponents argue that the export cartel is a "beggar thy neighbor policy", and the final result is lose—lose.Currently developed countries such as EU and Japan have gradually banned the export cartel exemptions. Although the creator, United States, has not forbidden it, the approval and supervision of export cartel are increasingly stringent. On the contrary, the majority of developing countries states explicit exemption for export cartels in the legislation. For example, Chinese Anti-monopoly Law sets out in paragraph six of Article XV:To protect the foreign trade and the proper interests in foreign economic cooperation, it does not apply Article 13, Article 14 of the agreement on the prohibition of monopoly provision. Because of different understandings of export cartel between developed and developing countries, the conflicts are increasingly arising. The conflicts appear not only in the World Trade Organization meeting, but also in the growing antitrust litigation more practically. So how should developing countries deal with export cartel system correctly? Specifically, export cartel can both promote the economy of developing countries and have negative spillover effects on the economy. On the one hand, it can effectively promote a country's exports and bring a lot of foreign exchange earnings. Export enterprises in cartels can save costs, share the export risk and occupy a favorable position in the international competition. On the other hand, the export cartel is bound to harm the interests of foreign competitors, and make them in an unfair competitive environment. Meanwhile, foreign scholars researched that the conspiracy of export cartels is likely to extend to the domestic market, thus damages the interests of domestic competitors and consumers. This is the "spillover effect" of export cartels on domestic market. The existence of this effect makes the idea that foreign markets and the domestic market can be completely isolated be broken, which is an important theoretical basis of export cartel. Since the export cartel may also have restrictions on the competition of domestic markets, and then we will need to weigh the pros and cons of export cartel to make the right choice and implement the necessary supervision.In this paper, the welfare impact of export cartel on developing countries is its theme, and the basic framework is as follows:Chapter I is an introduction, includes formulation of the problem, research ideas and methods, and research significance.The second chapter is a literature review about the implementation effect of the export cartel and the first anti-monopoly lawsuit that Chinese enterprises suffered in foreign countries—Vitamin C export cartel case.Chapters III and IV is the focus of this article, specifically address the positive impact and spillover effects of the export cartel on developing countries from the theoretical point of view of economics.Chapter V provides a vitamin C export cartel case for example, combined with the preceding theoretical analysis, and expounds the welfare effects of export cartel on China from two sides of the active role and spillover effects. The research indicates that export cartel really makes a greater contribution to Chinese exports in the short term, but from the situation of the domestic and international markets latterly, its negative effects are also increasingly appearing.Finally, the conclusions of this study and policy recommendations are put forward. Export cartel is a "double-edged sword", developing countries should weigh the pros and cons rationally, play its role to maximize and avoid its spillover effects reasonably. To this end, government departments of developing countries should further improve the legislation, and refine the methods of supervision of export cartels. Export enterprises, as the main part of export cartel, should strengthen the antitrust awareness, and rationally treat the system of export cartel.