Protectionism in the Shrimp Industry

Protectionism in the Shrimp Industry

The Shrimp Industry Tariffs against Imports - Fair, or Foul Play?

shrimp industry - specifically, The Southern Shrimp Alliance (SSA) - has won a series of major victories in their battle to receive special tariff protection against shrimp brought into the American market from Vietnam, China, Thailand, Ecuador, Brazil, and India.

In February, 2004, the United States' International Trade Commission ruled that the six countries mentioned in the first paragraph had "injured the domestic shrimp industry" by "dumping" their produce on the American market, according to an article in the Economist (July, 2004).

Meanwhile, on July 6, 2004, United States Department of Commerce (DoC) backed up the February trade commission action; the DoC determined that China and Vietnam were to be punished for the "dumping" actions, and therefore imposed "anti-dumping" duties (tariffs) of 93.13% on Vietnamese shrimp and 122.81% on shrimp from China. Subsequent to those penalties, tariffs were levied against Brazil (9.69 to 67.80%), Ecuador (2.35 to 4.48%), India (5.02 to 13.42%) and Thailand (5.79 to 6.82%).

We thank the Department of Commerce for enforcing the rules of free and fair trade offsetting this illegal practice," said Eddie Gordon, president of the SSA (a group of shrimp farmers and fishermen from North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana and Texas). The SSA has alleged for several years that the exporting nations mentioned above had "dumped cheaper, farm-raised shrimp on the U.S. market, slowly driving them out of business" (Magers, 2004), according to a story in UPI Perspectives.

The final federal action authorizing the tariffs to go into effect was brought forward on January 31, as the U.S. International Trade Commission officially agreed that shrimp were sold (by the six foreign nations) "at less than fair value." In doing so, the DoC and International Trade Commission have effectively helped raise the cost of shrimp to the average American consumer - both in supermarkets and restaurants - according to Wally Stevens, president of the American Seafood Distributors Association.

Quoted in the UPI Perspectives article, Stevens said "There is absolutely no question at all, that to the extent that there are tariffs, they will be passed onto the American consumer. There is no room in the supply chain," Stevens continued, "to absorb 9 or 10% tariffs on a product coming from India or Brazil, or 50-percent tariffs on product coming from China."

For their part, the SSA claims that "the value of the U.S. shrimp harvest has plummeted by $4.4 billion in the past four years," and moreover, "thousands of jobs have been lost in coastal towns that depend on shrimp," Magers writes in the UPI piece.

Louisiana fisherman, Kim Chauvin, said that because of the much cheaper farm-raised shrimp brought into the U.S. By the foreign countries "some of the world's most technologically advanced boats have been repossessed by banks, and families have been forced to abandon their way of life." It is very hard to watch "entire communities in Louisiana become ghost towns due to unfair trade," he added.

As for Ecuador, their National Chamber of Aquaculture asserted that the new tariffs on their shrimp going into the U.S. was "illegal" by World Trade Organization guidelines. "The antidumping order has no merit and was issued only because the Commerce Department used faulty calculation methodologies..." said Ecuadorian spokesperson Sandro Coglitore, contending that the policy was brought about though a questionable bookkeeping strategy known as "zeroing."

Zeroing," the UPI story explains, is something the DoC allegedly does to "zero out" negative margins in order to make a case against imports and in support of American industry. As for how this hurts Ecuador: shrimp is Ecuador's third-largest export, and many thousands of Ecuadorians are employed in the shrimp farming industry, Coglitore added.

Stevens - the American Seafood Distributors Association president - said the "zeroing" strategy guarantees that dumping margins can be used against foreign shipments. "The whole process just defies logic," he said.

This is "absolutely the worst time to be placing more taxes on the shrimp industry," said Brian Wynn, who is CEO of Rubicon Resources in Los Angeles, a major Thai shrimp importer, according to an article in the Asia Africa Intelligence Wire (January, 2005). "Together with the tsunami, there are real questions about the viability of the Thai shrimp industry."

Meanwhile, on the subject of the tsunami: "Officials within both sectors say that the World Trade Organization, international aid groups, and some of the stricken countries want the U.S. To drop tariffs or forgive trade violations" (Patterson, 2005) from nations hit by the big wave, according to the Greensboro News & Record. But "if providing aid means losing jobs," the article continues, the North Carolina Fisheries Association says "no" to lifting tariffs on the nations punished by the DoC.

An article in Business Week Online (Magnusson, 2004), takes a rather harsh and cynical look at the tariffs being imposed on foreign shrimp suppliers. "What do you do when your industry is hit by imports?" Magnusson asks. He then answers his own question: "Flout international law, undercut a free-trade deal, then sock it to consumers."

Magnusson runs through the scenario that has unfolded: "U.S. shrimp fishermen file a complaint" with the federal government in an effort to raise "import duties - and prices - on imported shrimp"; then "friendly state officeholders lend a hand with subsidies for the industry." Following those moves, the shrimp fishermen lobby the federal government to "shift the resulting millions of dollars in import duties from the U.S. Treasury back into their own pockets."