Utilitarianism Analysis of Product Dumping in Developing Nations

Introduction

Coined by Mother Jones magazine, the term "dumping" describes the practice of selling products in other countries — typically developing nations — after those products have been banned for sale in the United States. Although still widely practiced, dumping has been criticized as an immoral business practice that inevitably causes harm to others, usually for profit or to avoid the financial losses that would result from being forced to withdraw products from the marketplace. To assess the validity of these criticisms, this paper provides a review of Case 1.1, "Made in the U.S.A. – Dumped in Brazil, Africa, Iraq," from a utilitarian perspective, followed by a summary of key findings in the conclusion.

The history of U.S. companies dumping unsafe or banned products in other countries is lengthy and, at first glance, deeply troubling. Shaw cites numerous examples: infant wear sold abroad that had been shown to be carcinogenic, painkillers that caused fatal blood disorders, and baby pacifiers that caused choking deaths. The motive for these practices is usually profit or the avoidance of financial losses from being forced to withdraw unsafe products from the U.S. market. However, other factors complicate a straightforward ethical analysis.

Historical Examples of Dumping and the Dalkon Shield Case

In a spirit of "if it's not good enough for us, it's still good enough for third worlders," Shaw cites the example of the Dalkon Shield, manufactured by A. H. Robbins, which was shown to cause pelvic inflammation, blood poisoning, tubal pregnancies, and perforated uterine walls in women. After these findings were released to the American public, A. H. Robbins saw its domestic sales suffer. The company then turned to the Office of Population in the U.S. Agency for International Development (USAID), selling thousands of these devices at a discount for distribution in 42 countries with high population growth. The moral argument offered in support of this approach was humanitarian: because death rates during childbirth were relatively high in these countries, almost any birth-control device was claimed to be safer than pregnancy (Shaw, p. 31).

In this context, however, the meaning of "safe" depends entirely on who is being asked. Joachim (2007) points out that in some countries that received the Dalkon Shield, "Women were reported to have suffered from anemia and infections, pelvic inflammatory diseases, unintended sterilization, and tubal pregnancies, and even to have died" (p. 138). While the device may have prevented some deaths during childbearing, there was a corresponding trade-off in safety for women who were misled into using it — all to benefit an American corporation that knew about these risks. As Joachim adds, "Dumping made apparent the double standards of international family planners, who regarded Southern women as objects or targets rather than as individuals with rights and needs" (p. 139).

More damning still, executives at A. H. Robbins not only knew their product was unsafe but colluded with USAID to minimize financial losses. As Joachim (2007) emphasizes, "These contraceptives had not been approved by the Food and Drug Administration for distribution in the United States or had been withdrawn after they had been found to be unsafe. However, they continued to be sold in the developing world" (p. 139). The manner in which the devices were distributed compounded the harm considerably:

While Dalkon Shield IUDs had been sold in the United States in individual, sterilized packages with a disposable inserter for each device, USAID distributed them in developing countries in bulk packages, unsterilized, with only ten inserters per hundred shields, and only one set of instructions for each pack of 1,000 shields. (Joachim, 2007, p. 139)

While it is clear that A. H. Robbins and its stockholders benefited financially from dumping, the harm caused to consumers in developing nations cannot be measured in dollars and cents, given the enormous human toll that resulted.

Conclusion

There are also more pragmatic reasons for dumping that may confer genuine benefits on importing countries. Because the United States has set exceptionally high safety standards for its products, consumers in other countries might view even less-than-optimal alternatives as superior to locally available options. In this regard, Hoffman and Kamm (1999) ask, "Is it ethical for a manufacturer to sell outside their home market when products fail to meet the standards of its sophisticated home market?" (p. 139). Where the products involved differ only in terms of aesthetic tastes or economic ability to pay, dumping cannot be considered unethical. Hoffman and Kamm maintain that companies engaging in this type of dumping are, in fact, providing a benefit to consumers in developing nations:

It is a mark of the successful marketeer to fulfill the needs of his customers. If the target market is too poor to afford color televisions, it is good business, not moral condescension, to offer black and white sets instead . . . even if they wouldn't sell well in the United States. (p. 139)

Furthermore, the same high standards applied in the United States may be viewed as superfluous or even counterproductive for some types of products (Hoffman & Kamm, 1999). Taken together, these considerations indicate that dumping should not be condemned wholesale; rather, analysis requires a thorough examination of all the relevant variables involved in each case.

The research showed that dumping — the sale of products banned in one country to countries with less stringent regulatory regimes — has been the cause of countless injuries and even deaths. When applied to products demonstrated to be harmful, such as the Dalkon Shield, dumping can be viewed categorically as an unethical business practice. When applied to other types of products, however, dumping may be regarded as ethically acceptable if it confers benefits without significant risk on consumers in importing countries. Therefore, like other types of business practices, dumping requires an individualized analysis that takes into account the full range of variables involved in order to determine its ethical character.