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One Man's Opinion: Christmas cheer on the bayou

Property of SeaFood Business magazine
By Peter Redmayne
January 01, 2007

There was plenty of cheer among seafood companies in the southeastern United States this holiday season. The first round of antidumping monies began flowing into the pockets of the companies that had claimed injury from the flood of imported shrimp (see Newsline this issue, p. 10).

Under the Byrd Amendment, which was passed in 2000, tariffs from antidumping petitions go to the U.S. producers that supported the original trade action. Prior to the Byrd Amendment, the money went to Uncle Sam. In the case of shrimp tariffs, there's a lot of money to spread around, since the dumping duties haven't curbed the flood of imported shrimp, which is closing in on $4 billion a year.

The government was expected to distribute about $100 million in duties to the southern shrimp industry in 2006. It's no surprise that there has been controversy.

The first issue is the legitimacy of the claims. Keep in mind the Byrd money is being distributed by the same federal government accused of squandering more than $1 billion on fraudulent claims associated with Hurricane Katrina.

The Southern Shrimp Alliance, which filed the antidumping petition on behalf of the domestic shrimp industry, has complained to customs that it suspects a lot of fishy claims. Since customs admittedly hasn't verified the claims, this is hardly surprising, human nature being what it is.

The second issue is over who's getting the money. According to one analysis, 57 percent of the monies being distributed are going to just 20 companies, mostly shrimp packers.

Most of these disbursements range from $1 million to $3 million, not a bad payday in the fish business, especially when you consider there's more money coming. While there's little doubt that shrimpers have been hurt by falling shrimp prices, some people question whether processors are in the same boat.

Processors work on margins and volume. Despite the rise in imports, U.S. shrimp catches have been relatively stable. Typically, processors react to market prices by lowering (or raising) the price they pay for raw material. As a result, they can preserve their margin and - if they have enough volume running through their plant - make a decent profit. In addition, some Gulf shrimp processors have relied on cheap imported shrimp to boost sales.

Although the SSA maintains the Byrd monies "are vital to the recovery of the U.S. shrimp industry," it's hard to see how the millions going to processors will help shrimp fishermen deal with the reality that shrimp prices are unlikely to ever recover in an age of cheap farmed shrimp.

Also, the shrimp industry can't count on the Byrd money much longer. The World Trade Organization ruled the amendment was not consistent with U.S. trade obligations as a WTO member. After a number of WTO nations took retaliatory trade ac t ions because of Byrd, President Bush signed legislation repealing it. Still, duties collected through September 2007 will be distributed.

So for some fortunate few in the Gulf seafood industry, Christmas came early and the party will last for most of next year.

 

Contributing Editor Peter Redmayne lives in Seattle

 

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