August 14, 2013

US shrimp producers seek import levy to hinder foreign trade

American shrimp producers from the Gulf of Mexico are calling for the US government to impose duties on US$3.4 billion worth of annual imports from seven developing countries including Thailand, Indonesia and India.

Various branches of the US government are set to issue key rulings in the coming days, prompting an aggressive round of lobbying by Gulf shrimp producers and the intervention of six supportive senators from southern states.

The petition by the Gulf shrimp industry - battered in the aftermath of the 2010 BP oil spill and accounting for only 10% of domestic US shrimp consumption - was launched late last year, and has already advanced through various stages of review. On August 6, there will be a critical hearing before the International Trade Commission (ITC), an independent government agency, to examine whether damages did in fact occur to the domestic industry in the case. A decision will follow in September.

The US shrimp industry's case rests on the charge that the seven countries have used government grants, low-cost loans and tax breaks to subsidise their shrimp exports, undercutting US domestic prices and causing them harm. They also allege that countries sought to exploit the weakness of US shrimp producers in the wake of the BP oil spill to further bolster their market share.

The US shrimp industry has been given a reprieve in recent months, since prices have risen in response to a disease which ravaged shrimp stock in a number of Asian countries, including Thailand. US producers say this has improved the outlook although they expect the impact to be temporary.

If the ITC rules in favour of domestic shrimp producers, it would pave the way for the imposition of countervailing duties worth as much as 64% on "certain frozen warm water shrimp". In 2012, Thailand was the biggest exporter of these products to the US, with US$1.1 billion in sales. Indonesia and India were the next-largest shrimp exporters to the US. Also included in the case are Ecuador, Vietnam, Malaysia and China.

The commerce department of the US government will issue its own final ruling on the exact rate of duties for each country if the ITC agrees to its imposition. A spokeswoman for the Office of the US Trade Representative declined to comment.

Five Republican and one Democratic senator from the Gulf States - including Alabama, Mississippi and Louisiana - have pressurised the ITC to rule in their favour, arguing that the low-cost loans, grants and tax breaks are used to "aggressively undercut domestic prices".

"Imposition of these duties will restore a level playing field for the US shrimp industry and give it a chance to survive for the long term," the senators said in a letter to the ITC last week.