Analysis: Shrimp tariffs spark new charges

By PHIL MAGERS  |  Dec. 21, 2004 at 3:36 PM
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DALLAS, Dec. 21 (UPI) -- A U.S. Commerce Department order finalizing penalty tariffs against shrimp imports from four nations is bringing praise from U.S. shrimp fishermen and criticism from distributors who say it means higher prices for U.S. consumers.

Higher duties were upheld Monday against Brazil, Ecuador, India and Thailand in the anti-dumping investigation sparked a year ago by a group of U.S. shrimp fishermen. New duties were announced last month against China and Vietnam in the same case.

"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 Southern Shrimp Alliance, the group that filed the original complaint last December.

Fishermen and shrimp farmers in North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana and Texas alleged the exporting nations dumped cheaper, farm-raised shrimp on the U.S. market, slowly driving them out of business.

The U.S. International Trade Commission will determine in late January if there was actual damage to the U.S. industry. In the meantime, the tariffs are being collected on imports and held until there is a final ruling from the commission.

In the new decision, U.S. officials ruled that shrimp were sold in the U.S. market "at less than fair value," setting tariff margins ranging from 9.69 to 67.80 percent for Brazil, 2.35 to 4.48 percent for Ecuador, 5.02 to 13.42 percent for India and 5.79 to 6.82 percent for Thailand.

The U.S. shrimp fishermen want higher tariffs imposed on the imported, farm-raised shrimp that compete with the wild shrimp they harvest from U.S. waters. About 70 percent of the shrimp consumed in the United States come from the six nations.

The U.S. industry contends there is an overcapacity of shrimp in the exporting nations, spurred on by government subsidies. The United States is a dumping target because it has had no tariffs and lax enforcement of safety standards, they say.

Shrimp has become more affordable and more widely available in U.S. restaurants in recent years because of the cheaper imported shrimp, according to distributors. About 80 percent of U.S. shrimp is consumed in restaurants and they say the tariffs on imports will drive up shrimp prices for consumers.

"There is absolutely no question at all, that to the extent that there are tariffs, they will be passed onto the American consumer," said Wally Stevens, president of the American Seafood Distributors Association. "There is no room in the supply chain to absorb 9- or 10-percent tariffs on a product coming from India or Brazil, or 50-percent tariffs on product coming from China."

The Southern Shrimp Alliance disputes the claim that the imports have led to lower prices for consumers. They cite a study by Food Beat Inc. that showed prices at restaurants increased five times more often than they decreased from 2000 to 2003.

In 2002 middlemen pocketed $4.2 billion above their standard markup by charging consumers up to 28 percent more for shrimp entrees, even though wholesale prices fell 32 percent, according to the alliance.

The value of the U.S. shrimp harvest has plummeted by $4.4 billion in the past four years and thousands of jobs have been lost in coastal towns that depend on shrimp, the alliance contends.

"It is hard to watch entire communities in Louisiana become ghost towns due to unfair trade," said Kim Chauvin, a Louisiana fisherman. "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."

Stevens, with the seafood distributors, argues the tariffs will not help the shrimp fishermen survive. He and officials with the exporting nations also criticize the methods of the Commerce Department in determining the duties.

Ecuador was one of the nations that attacked the practice called "zeroing" in which Commerce officials average import prices they find below U.S. prices but exclude those above U.S. prices.

Ecuador's National Chamber of Aquaculture said it was disappointed in the order but pleased U.S. officials did not accept higher dumping margins requested by the U.S. industry.

"Nevertheless, we are concerned that Ecuadorian exporters must contend with an antidumping order that has no merit and was issued only because the Commerce Department used faulty calculation methodologies and applied its policy of 'zeroing' out negative margins, even though the World Trade Organization has declared this policy illegal," said Sandro Coglitore, NCA president, in a statement.

Shrimp is Ecuador's third-largest export after oil and bananas and thousands are employed in the industry. The South American nation has supplied shrimp to the United States for 30 years.

The WTO recently ruled against the United States in a case dealing with Canadian lumber because of the "zeroing" practice. Thailand had also complained about the same practice in determining tariffs on shrimp imports.

Stevens was also critical of the "zeroing" method, which he said guarantees dumping margins.

"The whole process just defies logic," he said.

Although Stevens doesn't believe tariffs will help the domestic shrimp industry recover, Gordon disagrees. He said U.S. fishermen are the most productive in the world and a level playing field under tariffs will prove that.

"U.S. shrimpers successfully competed against imports prior to 2000 and when the dumping is fully offset, we will be competitive again," said Gordon.


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