Exportation Of Low-Cost Goods - PART 3 ISOEconomics / Isokratic Econommics
In Europe we are witnessing the beginning of the car market collapsing to cheaper car imports, both new and used cars, from markets as far as Japan. The Japanese economic crisis pushed their used car prices to crash, millions of cars being sold at a fraction of their market price in auctions around the country.
Being right-hand drive, it triggered a demand from other right hand driving countries such as the UK, New Zealand, Cyprus, Asiatic countries. This economic activity resulted in the used and new car markets in such countries, taking a nose-dive, with new car sales reduced as much as 90% in small economies like Cyprus. Within a year or two years the second-hand market had collapsed too under the influence of cheap Japanese imports.
The used car market has made huge price readjustments. The same followed in the UK market with the so-called grey imports from countries such as Japan, new and used cars; and for Europe for new cars at prices well below the 97/98 market prices. As a result demand for home stock plummeted which sent prices tumbling down and caused factories to close, or be under threat of closure, such as the classic case of Rover. In this case Rover, now BMW owned, had shed thousands of jobs and won temporary reprieve by the UK government injection funds.
The Blair government was quick to respond to lobby pressure from the likes of car giants, who invested heavily in the UK car production such as Toyota and Nissan. By imposing limitations to the numbers of new and used cars, independent importers can import from Japan itself. Government intervention will not last forever Artificial regulations will always be smashed by the economic market force.
False protection is always short-lived. Through EEC moves the UK market will be forced to be open to greater attacks by grey imports, which will result in the lowering of retail prices of cars in the UK. This is happening right now. As a result sectors of the UK economy are being colonised by other economies.
Ironically this is the only sure way for the survival of the UK economy. Allow partial market colonisation, or face wholesale extinction of whole industries. To this effect, the UK was somehow lucky or clever, for if such industries as the giant car industry, were allowed to vanish, the toll for the rest of the economy would have been impossible to bear.
As this changing of prices and shifting of demand and spending continues, it pushes the cost of the advanced economies downwards, whilst simultaneously pushing the cost in low-cost countries upwards. Especially when the costs are calculated in a combined format, which includes, freight, distribution and import duty tariffs. This inevitably results in the closing of the gap between the cost of advanced economic empires, and the low-cost economic colonies.
Recently 18th July 2002, the newspapers publish a decision by EEC to allow free for all import of cars at lower prices but with a delay of three years after pressure from the car manufacturers.