June 27, 2006

 

CP Foods admits to paying off shrimp alliance

 

 

Thailand's largest shrimp exporter CP Foods confirmed on Friday that it paid an undisclosed sum to the US's Southern Shrimp Alliance as part of a settlement that excused the company from a review of its anti-dumping duties.

 

Punninee Natapanich, a CP Foods spokesperson, said on Friday (Jun 23) that an earlier company statement denying the payment was "inaccurate."

 

The company had told ThaiDay, a major Thai daily in a statement that it did not pay SSA any financial incentives to be excused from the review.

 

The second statement to the same newspaper now states that while the terms of the agreement are confidential, CP Foods can confirm that the agreement contained a financial element.

 

More than twenty exporters currently paying anti-dumping duties to gain access to the US market have sought settlements with the SSA to avoid the costly review process and having millions tied up in bonds to be held by the US government.

 

Last year, shrimp exporters were required to pay an average of 5.95-percent duty on shrimp sales to the US and post bonds amounting to nearly US$60 million, or six percent of all shrimp exports.

 

CP Foods said it was the first Thai exporter to settle with the SSA before many other Thai exporters followed suit. Now, exporters can enjoy a more stable business climate without the fear of the antidumping review, its statement said.

 

Still, another group of companies, led by Pakpanang Coldstorage Plc have labeled the settlements a thinly veiled means of extortion. The companies said they are looking forward to the annual review to be held in September, urging that the 5.95-percent tariff be reduced.

 

SSA has been urging the US Department of Commerce for higher tariffs against foreign shrimp imports as it claims US shrimp companies have been unfairly hit by it.

 

Although the settlements remain undisclosed, industry sources say that companies are settling for between one and two percent of US sales. The SSA wants the negotiations kept secret to avoid setting a fixed price for companies that have yet to settle.

 

Despite the anti-dumping measures, Thai shrimp has retained its 25-percent market share in the US. Shrimp exports to the US rose 44 percent in May.

 

Meanwhile, the US department of commerce (DoC) has decided to rescind administrative review of the anti-dumping duty on over 70 Indian shrimp exporters for reasons such as duplication and non-export to the US during the period.

 

However, the DoC has not officially commented on the issue of settlements made by exporters with the SSA.

 

The DoC had issued notices to 347 exporters for review of the anti-dumping duty imposed on Indian shrimp. However, after an initial screening, the number was brought down to 309. However, the department was forced to bring the number down again to exclude the firms not exporting to US during the review period. 

 

Thirty-five exporting which did not export any merchandise to US during the period of review were dropped from the administrative review.

 

In the case of 29 exporters, the DoC decided to rescind the review as the department failed to locate them. The names of 10 more companies were duplicated.

 

Nine firms which denied shipments had been confirmed by the custom authorities to have exported shrimp to the US during the period and would be considered for review.

 

While the DoC decided that the mandatory respondents for China and Vietnam based on average shipments, the duty for other exporters from there would be fixed, it has yet to take a decision on India, Thailand and Ecuador.