Bridges Trade BioRes • Volume 5 • Number 20 • 11th November 2005

US UPHOLDS ANTI-DUMPING DUTIES AGAINST THAI AND INDIAN SHRIMP

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US UPHOLDS ANTI-DUMPING DUTIES AGAINST THAI AND INDIAN SHRIMP

The US-based International Trade Commission (ITC) on 4 November decided not to revoke its anti-dumping duty on shrimp imports from India and Thailand. The Commission decided in April 2005 to review the 10 percent duty imposed in January of this year to light of the impacts of the December 2004 tsunami on the shrimp industries of the two countries (see Bridges Trade BioRes, 21 January 2005). In its final ruling, however, the ITC found that revoking the antidumping duty on shrimp imports from India and Thailand would likely injure the US shrimp industry. This decision will be reviewed in February 2006.

The January 2005 anti-dumping duties were imposed after the US shrimp industry, represented by the Ad Hoc Shrimp Trade Action Committee, complained in December 2003 that the US industry was being materially injured by frozen or canned warmwater shrimp from Brazil, China, Ecuador, India, Thailand, and Vietnam that was being sold below fair value. Such duties are regulated by the WTO Agreement on Anti-Dumping, which allows Members to impose taxes on imports if an investigation shows that the imports are being sold in the importing country at a price below the cost of production in the exporting country. However, at the same time as it imposed the duties, the Commission noted concerns regarding the impact of the December 2004 tsunami on the shrimp industries in Thailand and India, and in April launched a review to determine whether revoking the antidumping duties on Indian and Thailand shrimp would be likely to lead to continuation or recurrence of injury to the US industry given the amount of injury suffered by the industries in the December tsunami. Following an August visit to India and Thailand to see whether their industries could still threaten the US, the ITC ruled that revoking the duties currently in place was expected to lead to continuation or recurrence of material injury within a reasonably foreseeable time.

Hard feelings against US decision

Both India and Thailand have vehemently accused the levy on the grounds that it was simply a protectionist measure calculated to shield US shrimp farmers from cheaper, more competitive imports. India and Thailand argue that they are not engaging in ‘dumping’, and that their shrimp are legitimately cheaper than those in the US. Critics of the duty claim that a relatively small number of well-organised US farmers are being protected at the expense of Thai and Indian shrimp farmers that are by far poorer than their US counterparts as well as of US consumers. They also argue that since 90 percent of shrimp consumed in the US are being imported, US consumers could also be hurt by the higher prices induced by the antidumping duty. Indian and Thai stakeholders also expressed indignation at the alleged contradiction between the free trade rhetoric of the US and its own protectionist measures. Several WTO Members have been advocating for tighter rules on national antidumping investigations at the WTO Negotiating Group on Rules, saying that such rules could reduce the burden on exporters who have to supply a large amount of data for technical examinations (see Bridges Weekly, 2 November 2005). However, the US has remained a supporter of the current broad antidumping rules.

Indian shrimp industry expected to suffer huge losses

In addition to the 10 percent antidumping duty and regular tariffs on shrimp, exporters to the US also have to give the US government a deposit or "bond" of 10 percent of the value of the year’s export which the US government would hold for three years. The bond requirement, which has been imposed by the US Department of Commerce, has nonetheless been appealed by Indian seafood exporters who expect a positive result. Sources suggested that these three measures together could be devastating to an industry already hard-hit by the tsunami. Statistics indicate that shrimp exports from India to the US were 30 percent lower in September 2005 compared to the year before, and that the number of Indian shrimp exporters have been cut in half. The Seafood Exporters Association of India (SEAI) has noted that the US market amounts to roughly 25 percent of the countries’ total shrimp exports.

Exporters explore new options

To adjust to the loss in market access in the US, some of the producers in countries affected by the antidumping duties are considering striking a bilateral deal with the US, known as a "voluntary export restraint", in which the exporting countries would voluntarily reduce their exports to the US. Such a measure could address US concerns without the uncertainty or unilateralism of anti-dumping or bond measures. At present some of the countries are diverting their products through third countries in order to circumvent anti-dumping levies, offering a possible reason why US import volumes have thus far remained unaffected by the duty. The US recently made a proposal in the WTO Negotiating Group on Rules to toughen rules on such circumvention practices (see Bridges Weekly, 2 November 2005).

Another way of circumventing the duty would be to move into value-added finished products like ready-to cook, eat and fry material, which would allow domestic producers to capture larger shares of the gains from trade along the production chain. To do so successfully, however, exporters would have to incur substantial marketing expenses by developing the necessary brand name involved in value-added products. Less than five percent of India’s current shrimp exports to the US are value-added. Indian shrimp producers have said that once the marketing infrastructure is in place, the development of the necessary technology would not be an issue, given that the industry underwent a similar process in 1997 when the EU demanded higher health standards on many types of Indian Seafood.

US dumps Indian shrimp with anti-dumping duty," FINANCIAL EXPRESS INDIA, 4 November 2005; "US panel votes to keep shrimp antidumping duty orders for India and Thailand," FISHUPDATE, 3 November 2005; "Seafood exports may dip 10 pc", HINDU BUSINESS LINE, 10 February 2005; "Market Access and Liberalisation in Fish Trade," by Mahfuz Ahmed, WORLDFISH CENTER, Draft August 2005; "ITC Votes To Keep Shrimp Antidumping Duty Orders For India And Thailand In Place," ITC PRESS RELEASE, 2 November 2005; "Shrimp exporters may have to fish in markets other than US," FINANCIAL EXPRESS INDIA, 7 November 2005; " US dumping duty on Indian shrimps to stay," HINDU BUSINESS LINE, 3 November 2005.