by Ed Lallo/Louisiana Seafood News
According to a recent petition filed by the Coalition of Gulf Shrimp Industries with the U.S. government, duties should be put in place to offset unfair trade of subsidized shrimp imports by seven countries. The petitions seek the imposition of countervailing duties on shrimp from China, Ecuador, India, Indonesia, Malaysia, Thailand, and Vietnam.
“U.S. shrimp boats and processors, including those in Louisiana, operate on a razor thin profit margin,” explained Eddy Hayes of Leake and Andersson, legal counsel for the coalition. “The purpose of this petition is to give the American shrimp industry a level playing field with international imports. We are not seeking monetary damages. We want effective orders that provide the U.S. shrimp industry a real chance for survival.”
U.S. shrimp producers struggle to compete with artificially low-priced imported shrimp that is heavily subsidized by foreign governments. The Coalition of Gulf Shrimp Industries was formed to support these petitions and work for the long-term survival of the Gulf shrimp industry.
The domestic producers supporting the petitions account for a majority of domestic U.S. production, and represent the industry in the coastal states of Alabama, North Carolina, Florida, Georgia, Louisiana, Mississippi and Texas.
Imports Gain Market Share
Since 2009, shrimp producers in seven countries have gained U.S. market share by aggressively undercutting domestic prices through the use of billions of dollars in assistance from their respective governments. Subsidized imports have suppressed and depressed domestic prices, eroding domestic sales, destroying U.S. jobs, and eliminating the operating margins of domestic producers.
According to Hayes, the seven countries named in the petition are using their shrimp industry as an economic development tool.
“These countries are not subsidizing their shrimp industry with the express purpose of trying to harm the U.S. industry,” he explained. “They are using the industry as an economic development driver, but the indirect effect is causing and will cause substantial damage to our shrimp industry.”
Shrimp is a major export commodity in each of these seven countries. Governments have set specific growth and export targets for domestic shrimp industries as part of their national economic development plans.
To meet these targets they are spending billions of dollars on subsidies for their shrimp industries; including grants, investments, low interest loans, tax breaks, the provision of land, shrimp feed, and other key inputs, and export credits and guarantees.
“These subsidies violate World Trade Organization commitments, as well as U.S. laws,” said the New Orleans lawyer. “Our petition asks both the Department of Commerce’s International Trade Administration and the U.S. International Trade Commission to apply U.S. laws to countervail these subsidies.”
Filing About Survival of Shrimp Industry
“The filing is about the survival of the entire U.S. shrimp industry,” said C. David Veal, executive director of the Coalition of Gulf Shrimp Industries. “Our harvesters, docks, and processors have all played a vital role in the economy and culture of the Gulf region throughout its history. This case will help determine whether together we can continue to create jobs, contribute to economic growth, and sustain communities across the Gulf States for years to come.”
The incriminating evidence obtained by the coalition on the seven countries was available from public documents, a number used by the seven countries as marketing material for their industry.
“The Louisiana and Gulf shrimp community can compete with shrimp industries located anywhere in the world, but we can no longer compete with the deep pockets of foreign governments,” said Hayes. “Imports dominate the market, and their unfair pricing is making it harder and harder for U.S. producers to cover their costs of production, much less make a reasonable return.”
Criticism has arisen over the petition. John Sackton of SeafoodNews.com has called the petition “a travesty”, saying the industry has already “squandered” more than $100 million dollars on duties from imported shrimp they received from the Byrd Amendment.
Tariff Paid to U.S. Government, Industry to Benefit
“We realize the import community has expressed concerns about the petition,” Hayes explained. “The fact remains that certain subsidies are prohibited or are actionable under the law, and we feel compelled to fight for this industry and culture. Any funds generated from the countervailing duties will flow directly to the federal government, not to any industry participants.
The Gulf Coast shrimp industry has aligned behind the petition, including Louisiana processors Lafitte Frozen Foods, Gulf Crown Seafood, Bayou Shrimp Processors and Gulf Island Shrimp and Seafood.
The Ad Hoc Shrimp Industry Committee, a legal group formed by the Southern Shrimp Alliance, has filed a request to participate in the US International Trade Commission’s investigation into alleged subsidies of foreign shrimp imports. The organization represents 180 fishing groups, including processors and wholesalers across the country.
Although the alliance has not taken a position on the issue, participation in the proceedings facilitates the domestic industry’s capacity to monitor developments.
“We are working hard to ensure the long term prosperity of the U.S. shrimp industry,” added Dr. Veal added. “Success in these cases is critical to leveling the playing field by eliminating unfair foreign trade practices and restoring hope to our Gulf shrimp community. The countries covered by the petitions exported $4.3 billion worth of shrimp to the U.S. in 2011, accounting for 85% of imports and over three quarters of the domestic market.”
“If this industry is to survive, we have to put our money where our mouth is,” Hayes reiterated. “The companies that are underwriting the legal costs of this effort are making a significant commitment to the entire industry that will benefit from tariffs imposed on imported shrimp – from the boats, to the docks to the processors.”