Commentary 1

The title of the article: Anti-obesity drive: Junk food TV adverts to be banned before 9 pm

Source of the article: BBC

https://www.google.com/amp/s/www.bbc.com/news/uk-politics-57593599.amp

The date article was published: 24th June 2021

The date commentary was written: 5th January 2022

Word count of the commentary: 800

The section of the syllabus covered: Microeconomics

The key concept used in the article: Economic well-being

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Anti-obesity drive: Junk food TV adverts to
be banned before 9pm
By Justin Parkinson

Political reporter, BBC News

Published
24 June 2021
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Media caption,
The costs of the NHS dealing with obesity in the UK are "vast" and it was time to "get a
grip on it", says the PM.
The government is to impose a UK-wide pre-9pm ban on TV adverts for food high
in sugar, salt and fat.
Products affected include chocolate, burgers, soft drinks, cakes, sweets, ice cream,
biscuits, sweetened juices, crisps, chips and pizzas.
There will also be new rules on online promotion, but firms selling junk food will still be
able to run websites.
A total ban on online adverts was proposed last year, but this has been scaled back
after consultation.
The TV restrictions come after Boris Johnson made tackling obesity, which affects more
than a quarter of UK adults, a priority for the government.
Food companies have said outlawing any form of junk food advertising - worth hundreds
of millions of pounds a year - is disproportionate.
● Industry anger at plan to ban junk food ads online
● Ministers 'should urge public to eat less meat'
● Coronavirus prompts PM into obesity crackdown
● How bad is our obesity problem?
From the end of next year, TV adverts for junk food - also including breakfast cereals,
yoghurts, ready meals, chicken nuggets and battered fish - will be allowed only between
9pm and 5.30am.
Commercials for "less healthy" meals out will also not be shown outside this period.
The rules will apply during live and on-demand programmes and will not affect
companies with fewer than 250 employees, such as local curry houses, pizzerias and
sweet-makers.

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An around-the-clock ban on online junk food advertising will be limited to paid-for
content, meaning companies can continue to promote goods using their own blogs,
websites, apps or social media pages.

IMAGE SOURCE,
PA MEDIA
Image caption,
Gary Lineker can still advertise snacks, provided they are deemed healthy
A senior advertising industry source told the BBC the TV and online bans would apply to
products, rather than wider brands.
So, for instance, Gary Lineker could still appear in adverts for Walker Crisps if they
featured items which were deemed to be healthy, they added.
The Department of Health said the restrictions would not affect some foods high in
sugar, salt or fat - such as honey, olive oil, avocados and Marmite - as these were not
seen as contributing significantly to childhood obesity.
Speaking on a visit to a military base in Aldershot, the prime minister said: "I'm afraid we
do have a national struggle with obesity, and we need to deal with it...
"Let's get a grip on it. Sending out a signal in the way we treat advertising is entirely
right."
The UK population's weight has risen since the early 1990s, with more than 60% of the
adult population now overweight or obese, according to NHS Digital.
Problems often begin in childhood and those from the most disadvantaged backgrounds
are most likely to suffer, research suggests.

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The government says it is keen to prevent young people consuming too many unhealthy
products and since 2018 manufacturers have had to pay extra tax on high-sugar
drinks.
In 2006, Mr Johnson defended mothers who - in spite of efforts by TV chef Jamie Oliver
to improve school meals - were reportedly pushing fatty foods through school railings to
their children,
"I say let people eat what they like," he said. "Why shouldn't they push pies through the
railings?"
But his views have changed, particularly since he was hospitalised with Covid-19 last
year.
Mr Johnson said obesity was one of the "real co-morbidity factors" associated with the
disease, adding: "Losing weight, frankly, is one of the ways you can reduce your own
risk from coronavirus."

Image caption,
The government wants children to be less exposed to commercials for sweets
But the Institute of Practitioners in Advertising - which represents the large ad agencies
- has said the government's own impact assessment shows a watershed ban on
high-fat, sugar and salt food and drinks would only remove around 1.7 calories per day
from a child's diet - the equivalent of half a Smartie.
Sue Eustace, public affairs director of the Advertising Association, said her industry was
"dismayed" and that jobs would be lost in broadcasting and online publishers.

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However, Charmaine Griffiths, chief executive of the British Heart Foundation, called the
advertising ban "a bold and very positive step", adding that it was "one important part in
building a more healthy environment where the healthy option is the easy option".
For Labour, shadow health minister Alex Norris said: "This ban alone will not be enough.
We need a radical obesity strategy in this country that goes further, ensuring families
are able to access healthy food, supporting local leisure facilities and tackling child
poverty."
The NHS says most adults with a body mass index (BMI) of 25 to 29.9 are overweight,
while those with a BMI of 30 to 39.9 are classed as obese.
View comments

5
Commentary 1-Microeconomics

The Article reflects the proposed legislation, the UK government’s pre-9 pm ban on TV
advertisements of junk food to fight the problem of obesity, particularly targeting young people
and children. The number of obese people in the UK at present is more than 60% and is
increasing the health problem related to obesity and affecting the well-being of the people.
Banning TV advertisements may decrease the negative consumption externalities associated with
food with high sugar and fat content
The key concept of Economic Well-being is linked with this article because of the level of
prosperity and quality of living standard of the young people in the country due to
overconsumption of junk food. The UK government with help of its regulation by banning TV
advertisement is trying to reduce the external costs and improve the overall economic well being
of the country. Consumers enjoy the private benefits of more junk food in terms of satisfaction
(utility). However, it leads to obesity in the long term, negatively affecting the well-being and
productivity of consumers
Figure 1 - Negative consumption externality of consuming junk food

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The socially desirable or allocative efficient level of consumption of food junk foods is
determined at Qopt when the MSB (D1) and MSC (S1) meet with each other at price level Popt.
This output can be considered when the people in UK consume a limited quantity of junk food
which is not affecting the well-being of the people related to obesity. However, at present,
market equilibrium quantity is Q2 which is determined when MPB(D2) and MSC (MPC) meet
with each other at the equilibrium price of P2. Overconsumption of Junk food at Q2 is creating a
gap between MSB and MPB by the amount “AB”, which is the amount of external costs created
to society. Since the market is unable to allocate resources at Qopt, overconsumption at Q2 has
caused a loss in social surplus as the market fails to allocate resources efficiently and creates the
welfare loss by the amount “ABC”.
The problem of obesity is mostly impacting the well-being of people with “disadvantaged
backgrounds” by increasing additional costs on healthcare expenditures which involve
opportunity costs. This may be worsening the domestic income distribution in the country by
increasing healthcare expenditure of low-income groups, which may be forcing them to reduce
spending on other things.

Figure 2 - Effect of ban on TV advertisements on junk food

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Banning advertisements for a specific time period may shift the demand for junk food leftward
from D2 to D3. A decrease in demand can lower the quantity of junk food consumption from Q2
to Q3 and the price may fall from P2 to P3. This will reduce the gap between MSB and MPB and
lower the external costs from “AB” and “DE”. The amount of welfare loss should be reduced
from “ABC” to “DEC”.
The ban, in the long run, may have a positive effect on the economic well-being of the people in
the UK by reducing the popularity of Junk food. Tackling obesity is the main priority of the
government as more than a quarter of UK adults are obese, so government expenditure on
healthcare to treat obese people may reduce. However, the government impact assessment
reflects that this ban will reduce only “1.7” calories per day and pose a question on the
effectiveness of this ban to improve the well-being of the people. Banning advertisements during
specific time periods will only affect a small group of children and the large companies that are
able to advertise on TV. Moreover, the ban will not be applied to businesses employing fewer
than 250 employees. This will increase the demand for junk food from local shops that are using
other promotional strategies to promote their products. Ultimately the ban may impact the
revenue of large companies who are already paying higher taxes on sugary drinks since 2018.
This will have a “disproportionate” effect on economic well-being by affecting a few large
companies in terms of job loss and fall in income. However, these companies are allowed to run
their websites and are able to “promote goods” which reflects there will be very less impact on
the reduction in external costs because of this legislation. There may be some job losses in
broadcasting and online publishers which impact the well-being of the people working in this
sector. However, the ban is on products not on the company and the people can still be employed
for promoting other products from the same companies.
Overall the ban may have some positive impact in the long run on improving Economic
well-being by reducing the exposure of children to unhealthy products. However, only banning
TV advertisements for a certain time period may not be effective in reducing the problem.
Legislation like a complete ban on any form of promotional activities for all companies may
reduce the consumption of junk food and improve the economic well-being of the people by
making them more healthy.

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Commentary 2-Macroeconomics

The title of the article: Petrol and tax cuts: budget showers voters with $8.6bn in one-off
payments and sweeteners

Source of the article : The Guardian

https://www.theguardian.com/australia-news/2022/mar/29/australia-federal-budget-2022-cost-of-
living-petrol-fuel-excise-income-tax-parental-leave-one-off-payments-temporary-cuts

The date article was published : 29th March, 2022

The date commentary was written : 15th Sept, 2022

Word count of the commentary : 800

The section of the syllabus covered : Macroeconomics

The key concept used in the article : Intervention

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Petrol and tax cuts: budget showers voters
with $8.6bn in one-off payments and
sweeteners
This article is more than 1 year old
Welfare recipients and pensioners will receive a one-time $250 payment,
the low and middle income offset will be boosted by $420, while the fuel
excise will be halved for six months

​ Australia budget 2022 LIVE updates: federal treasurer Josh

Frydenberg’s announcement and speech – latest news
​ Explore all of our 2022 Australia federal budget coverage
​ Get our free news app; get our morning email briefing

Australians will be showered with $8.6bn in one-off cash payments and temporary cuts to petrol
and income taxes designed to lower the cost of living.

In Tuesday’s budget the treasurer, Josh Frydenberg, revealed the low and middle income tax
offset would be boosted this year by $420 to a maximum tax refund of $1,500 for individuals.

Frydenberg confirmed that petrol excise would be halved for six months and welfare recipients
and seniors would receive one-off payments of $250, which would be delivered in April.

The measures are designed to offset rising costs of living, with inflation running at 3.5% in the
December quarter and petrol prices rising to as much as $2.20 a litre due to the Russian invasion
of Ukraine.

At this gravest of times the Coalition has served up an election budget designed simply to keep
itself in power
Ahead of the budget, Labor signalled it intended to support cost-of-living measures but criticised
the timing of the giveaways before the May election, which economists have warned will add to
inflationary pressure and increase the likelihood of interest rate rises.

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At a cost of $4.1bn, the budget boosts the low and middle income tax offset, adding up to $420
to current recipients’ tax deduction for 2021-22.

The measure benefits 10 million people earning up to $126,000, all of who get the $420 boost
except those earning less than $25,000 who don’t require the full offset to reduce their tax
liability to zero.

Some 4.8 million people earning between $48,000 and $90,000 will receive the maximum tax
refund of $1,500. The tax refund tapers down to $420 for those earning up to $126,000.

From midnight on Tuesday the petrol excise will halve from 44.2 cents a litre of petrol or diesel
to 22.1 cents, at a net cost of $3bn to the budget.

In his speech, Frydenberg said the measure would “flow through to the bowser over the next two
weeks” and the Australian Competition and Consumer Commission “will monitor retailers to
make sure these savings are passed on in full”.

The petrol excise cut would save a family with two cars who fill up once a week “around $30 a
week” or $700 across six months, he said.

The fuel tax relief expires automatically after six months, on 28 September.

At a cost of $1.5bn the government will provide one-off $250 economic support payments to six
million people including pensioners, disability support recipients, parenting payment recipients,
carers, jobseekers, veterans, eligible self-funded retirees and concession card holders including
seniors card holders.

In his speech, Frydenberg said the Coalition would repair the budget by “ending economy-wide
emergency support” while Labor’s policies would “result in higher taxes and higher interest
rates”.

But Frydenberg said the Morrison government was prepared to tackle “​​higher fuel, food and
shipping costs” with a “temporary, targeted and responsible cost of living package”.

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In a budget with many front-loaded and temporary payments, paid parental leave will receive a
permanent boost.

Parents will be able to claim a total of 20 weeks leave, to be shared between them as they see fit,
instead of 18 weeks for the primary carer and two for the other parent. Single parents will be
eligible for the full 20 weeks for the first time. The measure will cost $346m over five years,
including to raise the household income threshold to $350,000 per year.

“Families, not government, are best placed to decide what works for them,” Frydenberg said.
“We will expand eligibility and provide working families with full flexibility and greater
choice.”

Earlier on Tuesday the Labor leader, Anthony Albanese, said “there’s a need for cost-of-living
relief” – but on a “permanent basis”.

Albanese told ABC Radio National that Labor had been “constructive” in opposition and “never
let the perfect be the enemy of the good” – signalling it was likely to support all cost-of-living
measures in the budget.

“So if there are measures which give people money, for example, one-off payments, now, we’re
unlikely to say, ‘No, don’t give people a one-off payment’.

“But I’ll tell you what. We’ll point out that it’s probably timed for the election. What we need is
a plan for the economy, not a plan to get the Coalition a fourth term in office.”

The low and middle income tax offset has been criticised as a form of middle class welfare
which benefits people earning in excess of the median employee income in Australia of $62,400.

The $420 LMITO boost means a worker earning the median income will receive a 0.7% tax cut
this year, but if the offset is not extended beyond 2021-22, will receive a 2.5% tax increase next
year.

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In March the Deloitte Access budget monitor noted the LMITO flowed “disproportionally to
higher-income households” because it flowed to “low- to middle-income taxpayers”, when in
fact almost half of adult Australians don’t pay income tax.

“Australia’s economy is well past the point at which additional stimulus is needed,” it said,
warning that further income tax cuts could prompt the Reserve Bank of Australia to lift rates
sooner.

Deloitte also argued against petrol excise cuts, which it said was “not good policy” because
excise “only accounts for one-fifth of the price at the pump”.

“That’s just not a big enough lever: you can’t fix the impact of a war in Europe by using a
band-aid on a tax in Australia.”

The budget estimates that inflation will ease from 4.25% in 2021-22 to 3% in 2022-23, which
Frydenberg told reporters factored in a 0.25% cut in inflation from the petrol excise measure.

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Commentary 2-Macroeconomics
The Australian Government is planning to intervene in the country to reduce the effect of the
high rate of inflation. Increasing the tax offset and cutting tax on income and a few commodities
can be considered as the Australian government's plan to implement expansionary fiscal policy.
The main aim of the Australian government to implement expansionary fiscal policy is to
support consumption and investment activities in the economy, which has been impacted due to
the rising cost of living because of the rate of inflation. Additionally, helping the vulnerable
group through one-time cash benefits is considered a transfer payment that can also support
economic activities.
This key concept of intervention is linked with the article because the main aim of government
intervention in the economy is to improve the well-being of the people affected due to the high
rate of inflation. However, interventions like expansionary fiscal policy may not be successful
in its aim and can further increase the rate of inflation in the economy.

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The rate of inflation has increased in Australia due to an increase in fuel prices because of
“Russian invasion of Ukraine”. This implies that inflation is cost-push in nature as the increased
petrol price has lowered the aggregate supply from SRAS1 to SRAS2 in the economy by
increasing the cost of production. This has increased the price level from P1 to P2 with the rate
of inflation at present at 3.5%. Theoretically, a fall in AS can lower economic activities and real
output can decrease from Y1 to Y2. This particular situation is termed stagflation as the economy
faces inflation and a low level of growth at the same time.

Interventions like cuts in taxes on Petrol and income may increase the consumption and
investment activities in the Australian economy, and AD may shift rightward from AD1 to AD2.
The deflationary gap can reduce from Yp-Y2 to Yp-Y3 and increase economic activity.
The price level in the Australian economy may further increase to P3 and create inflationary
pressure in the economy. The economists had already warned the policymakers “add to
inflationary pressure”. Instead of easing the effect of higher costs of living this intervention may
further worsen the situation. In the long run, to control the inflationary pressure, the central bank
of Australia may intervene with contractionary monetary policy by increasing the rate of interest

15
“increase the likelihood of interest rate rises”. A higher percentage of the consumer’s income
will be used to pay the interest on the borrowed amount and lower the expenditure on other
things. In the long run the economic activity may negatively impacted.
Additionally, the intervention in the form of tax offset may benefit the middle to high-income
people in the country as it “benefits people earning in excess of the median employee income”.
This reflects that the tax offset is higher for people earning more than the median income. This
may have a worsening effect on the income distribution in Australia due to an increase in the
income gap. The tax offset is temporary and discontinuation in next budget increases the chance
of “2.5% tax increase next year.” Moreover half of the Australian do not pay income tax, which
makes the purpose of this intervention questionable.
Intervention with Transfer benefits like “one-off payments of $250” to vulnerable groups like
“pensioners, jobseekers, seniors…” can help these people to continue with essential consumption
and can lower the effect of increased costs of living in the short run. Transfer benefits act as an
automatic stabilizer which can help the Australian economy to lower the cyclical fluctuation in
the economy. However, temporary payment for one time can not increase economic activity
rather long-term transfer benefits may create inefficiency in the economy by making people more
dependent on them. Additionally, the government expenditure in Australia will increase by 1.5
bn $ to pay for the temporary relief fund which can not contribute to increasing the GDP of the
country as the spending is not increasing any economic activity. In the long run, the Australian
government’s budget deficit may increase which can increase the chances of an increased debt
burden and chances of hike in rate of interest.
However, the expenditure on paid parental leave may have a long-term impact on the well-being
of the people by improving child health and reducing the financial stress of the people. Although
this intervention will cost $346m for the government, policies like paid parental leave, in the
long run, can increase the birth rate by improving the social and financial stability of the people.
Overall, the interventions planned by the Australian government to lower the effect of inflation
are temporary and may be politically driven, which can further increase the rate of inflation.
Government intervention should aim at a permanent solution for controlling the increasing rate
of inflation by looking at the long-term impact on the economy.

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Commentary 3- The Global Economy

The title of the article: US raises anti-dumping duty on shrimp exports by India

Source of the article : Financial Express

https://www.financialexpress.com/economy/us-raises-anti-dumping-duty-on-shrimp-exports-by-i
ndia/2376315/

The date article was published : 26th Nov 2021

The date commentary was written: 13th Nov 2023

Word count of the commentary: 798

The section of the syllabus covered : The Global economics

The key concept used in the article : Efficiency

17
US raises anti-dumping duty on
shrimp exports by India
USDOC on Wednesday issued the final results of the fifteenth
administrative review of the anti-dumping duty order on frozen
warm-water shrimp from India by fixing an anti-dumping duty rate of
7.15%. It was 3.06% after the final results of the 14th administrative review.
Written by Rajesh Ravi
November 26, 2021 03:15 IST

Under the US Tariff Act of 1930, all tariffs come automatically under review every five years and the anti-dumping duty on
shrimp imports from India, China, Brazil, Thailand and Vietnam imposed from 2005 would be revoked or continued on the
basis of a fresh evaluation.

India’s seafood sector is likely to take a hit with US department of commerce (USDOC)
hiking the anti-dumping duty on shrimp exports from India by more than 100%.

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USDOC on Wednesday issued the final results of the fifteenth administrative review of
the anti-dumping duty order on frozen warm-water shrimp from India by fixing an
anti-dumping duty rate of 7.15%. It was 3.06% after the final results of the 14th
administrative review.

These determinations mean that US importers of Indian shrimp from companies subject
to the administrative review will be asked to pay additional anti-dumping duties on
merchandise imported between February 1, 2019, and January 31, 2020, and that,
going forward, the companies will be subject to anti-dumping duty cash deposits rates at
these levels for future shrimp imports

Frozen shrimp exports constitute almost 74.31 % of the value of India’s total seafood
exports and the US actions could have a deleterious effect on the numerous
aquaculture farms spread all over coastal India. Bulk of India’s frozen shrimps is
exported to the US.

Under the US Tariff Act of 1930, all tariffs come automatically under review every five
years and the anti-dumping duty on shrimp imports from India, China, Brazil, Thailand
and Vietnam imposed from 2005 would be revoked or continued on the basis of a fresh
evaluation.

US-based Southern Shrimp Alliance (SSA) is the original petitioners against India and
several other nations in the shrimp import issue. They allege that lower-priced,
pond-raised shrimps from Brazil, China, Ecuador, India, Thailand and Vietnam were
hurting the US industry. The US mostly harvests shrimp from the sea.

SSA maintains that the dumping margins in administrative reviews were determined
after USDOC repeatedly selected a tiny subset of Indian exporters for individual
examination and has allowed hundreds of other Indian shrimp exporters to ship to US
with confidence that their own pricing practices will not be evaluated. This, in turn, has
encouraged many Indian shrimp companies to increase their presence in the US market
with aggressive pricing strategies ,SSA reports.

Seafood exports from India declined in both volume and value terms during the last
fiscal mostly on account of sluggish demand due to Covid to $5.96 billion.

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Commentary 3- The Global Economy

The US government has increased the anti-dumping tariff on imported shrimp from India by
more than 100%. Tariff is a tax on imported goods and is used as a protectionist measure to
discourage import. Dumping occurs when a country exports its product to another country below
the market price of that country. Lower-priced shrimp from India and other countries like Brazil,
and China is increasing competition for US shrimp harvesters.
The key concept efficiency is linked with the article as the increase in tariff can impact the
economic efficiency in the allocation of resources by increasing the price for the product in the
market. However, dumping can also impacts the efficiency in the market by limiting the
competition with unfair practices.

Figure-The effect of increase in anti-dumping tariff

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Under free trade, the US can import Q1 to Q2 amounts of shrimp from India at price P(I). At this
price, the supply of shrimp from India is S(I) which can meet the domestic demand for the US
market. The initial tariff of 3.06% had increased the price of imported shrimp in the US market
from P(I) to P(I)+T1 and the supply curve shifted upward to S(I)+T1. This had lowered the
demand for imports from India to Q3 to Q4. Further, increase in tariff to 7.15% will increase the
price of imported shrimp in the US to P(I)+T2 and supply can further decrease to S(I)+T2. The
import will decrease to Q5 to Q6 in the US market.
The price of shrimp in the US market will increase for the consumers to P(I) +T2, which can
lower their consumption from Q6 to Q4. The overall impact on the expenditure of US consumers
on shrimp depends on the price elasticity of demand for imported shrimp in US. It seems that
“lower priced, pond-raised shrimps'' are popular for US consumers compared to US shrimp from
the sea. This may increase consumer expenditure due to inelastic demand for pond-raised
shrimps from india. Consumer surplus will fall from the area “ABCDEF” to “AB'' due to an
increase in price and a fall in quantity. However, if the tariff is not uniformly applied to all the
other countries who are accused of dumping, the import will be diverted to other countries and
consumers can buy shrimp at a lower price from other countries.
Increase in tariff will impact the export revenue of the Indian shrimp harvesters as it accounts for
74.31% of overall India’s export. Larger number of shrimp firms from India are dependent on the
US market for their export and an increase in tariff will have a severe impact in terms of revenue
of these firms. There may be job losses and a complete shutdown of some firms in the long run.
The industry has already suffered due to “sluggish demand due to Covid” which has impacted
their export revenue by $5.96 billion. This will lead to inefficient allocation of resources as
efficient Indian producers will be replaced with high priced US producers. If India is dumping
shrimp in the US market with help of subsidy then this type of tariff is justified but in this case
the price for Indian shrimps have declined because of market efficiency. US trade policy had
encouraged many Indian shrimp firms to enter in exporting shrimps with “aggressive pricing
strategies”. This may be due to an increase in the efficiency of the Indian Shrimp firms. If Indian
shrimp exporters could not divert their export to other countries there will be a severe impact on
the standard of living of the people associated with the industry.
Increase in tariff may encourage domestic shrimp producers in the US to enter into the industry
as they will receive higher price P(I)+T2 be and be able to sell larger quantities from Q3 to Q5.

21
One of the main reason for this tariff is to protect the domestic shrimp industry which was
affected due to lower-priced shrimp from other countries. This will increase the producers'
surplus from the area “MG” to “MGC” However, US producers may not be efficient as Indian
Shrimp produces and may take a long time to increase the quantity supply. The US government
revenue from tariffs will change from the area “IJK” to “E”. Overall the welfare loss which is the
loss in social surplus will increase from the area “H+L” to “DHI+FKL” due to the tariff hike.
In order to achieve an efficient allocation of resources, countries all over the world should
specialize and trade the product without any trade restrictions. If India is dumping its product,
the increase in tariff is justified but it seems the tariff is mainly increased to protect domestic
producers in the US. Additionally, tariff is a regressive tax and may have serious consequences
of worsening domestic income distribution in the US. US-based Southern Shrimp Alliance
(SSA) should properly investigate the matter of dumping before a further increase in tariff to
improve efficiency in allocating resources.

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