May 25, 2004



US Commerce Department May Trouble Chinese, Vietnamese Shrimp Exporters

The fact that the US Department of Commerce (DOC) is handling two groups of countries involved in the shrimp anti-dumping case separately may indicate trouble for Chinese and Vietnamese shrimp exporters, said John Sackton in on May 20.


He wrote that the DOC has not said when it will implement this new rule, but the deadline for comments is June 1st. If it then applies this rule to all companies in China and Viet Nam, it will be able to impose tariffs based on a fictitious cost structure, derived not from actual company data, but from DOC assumptions, even when these assumptions contradict actual company financial data.


On May 19, the DOC said it would extend its decision on China and Viet Nam  "due to the extraordinarily complicated nature of the cases, as reflected in the number of firms involved in the investigations and the complexity of the transactions at issue."


However, when asked why they had indicated that the two non-market economies, China and Viet Nam, would be decided earlier, they said "The difference in the deadlines for the determinations involving market and non-market economy countries is due to the Department's need to complete cost investigations and identify appropriate comparison markets in the investigations involving market economy countries."


At issue are the responses of individual companies who can prove to the DOC the actual levels at which they sold shrimp in the US, and the actual levels they sold in third country markets, or in their domestic markets. The DOC will then use this information to calculate duty rates on a company-by-company basis.


However, under a proposed change in the rules, the DOC may no longer offer companies in non-market economies, called 'Section A respondents," the chance to prove their independence and receive the lower separate rate. They would instead be subject to the high country-wide rate.


This has infuriated the Consumer Industries Trade Action Council, which is opposed to unfair tariffs. Last week, Jon Jenson, Consuming Industries Trade Action Coalition (CITAC) President, said "We are displeased that the DOC is considering an abdication of its responsibility to judge fairly the independence of producers and exporters in non-market economy countries. The DOC appears to be sending a message that it prefers higher dumping margins over fairness and objectivity."


In many ways the DOC's distinction between market and non-market economies is totally outdated, commented Sackton in an editorial. He said it is because of some of the most dynamic, aggressive and competitive capitalist companies in the world are located in countries such as China and Viet Nam. Instead of accepting the ability of these companies to compete, the DOC is opening itself up to charges that it is erecting unfair trade barriers, by continuing to use these outdated rules. It is hard to see how a country that welcomes foreign investment, and has numerous subsidiaries of major international companies, cannot be called a market economy. Clearly, investors treat these countries as markets for growth and investment, but apparently that is not good enough for the DOC.