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Editor's Note: Tariffs not a long-term market solution

Fiona Robinson, Associate Publisher / Editor
By Fiona Robinson
September 01, 2013

U.S. shrimp importers can’t catch a break. Prices are at an all-time high due to the supply crunch caused by early mortality syndrome hitting Thailand and Mexico. In addition, the countervailing duty (CVD) case against imported farmed shrimp moved forward last month and it looks like more tariffs will be levied against the product (see U.S. News). The International Trade Commission is scheduled to determine financial damages this month. 

There are several problems with the CVD case (and the antidumping case prior to that). First of all, the monies in these trade cases are never used to alleviate the original problem alleged when the case is filed. Did any of the hundreds of millions in tariff money from the shrimp antidumping case filed in 2006 change the price difference between imported farmed and domestic wild shrimp? It may have helped some Gulf of Mexico processors stay afloat, especially once the BP oil spill devastated their market in the middle of when the tariff monies were being distributed. The market has not changed — and it won’t with the CVD case either.

Many SeaFood Business readers have been in the industry for a long time and will recall other antidumping cases such as the ones involving Norwegian salmon, Chinese crawfish and Vietnamese pangasius. I have yet to see proof that any of these antidumping cases changed the market so that the price disparity went away. The competitive market factors including year-round demand, pressure to keep margins low, cheaper overseas labor and nonstop regulatory hurdles that face domestic processors (see Processing Survey results) all have increased the demand for imported farmed product.

Another problem specific to this shrimp CVD case is the product comparison. The domestic industry alleges that imported farmed shrimp has an unfair advantage because foreign government subsidies allow prices to be lower, therefore forcing domestic prices lower. Fresh domestic wild shrimp and frozen imported farmed shrimp are very different products in the minds of U.S. shrimp buyers, yet the suit alleges they are the same. A national restaurant chain is not buying fresh domestic U-12s to put in a shrimp stir-fry that’s on the menu year-round. The market for that product is an independent restaurant that can charge a lot more money for the limited in-season availability. The products clearly go to two different markets and have different price points that reflect that.

The only winners in these trade cases are the attorneys, who get paid whether the client wins or loses. They continue to rake in money, while the domestic shrimp sellers continue to complain about prices (although imported farmed prices are at a record high) and will undoubtedly be back where they started in a year or two. I’d like to see the domestic shrimp industry, and other products that certainly have trade cases waiting in the wings, find a long-term solution to its problem that doesn’t hang its future on the tariff hook. 

 

  September 2013 - SeaFood Business 

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