May 31, 2013

In order to offset government subsidies, the US Commerce Department has set preliminary duties of up to nearly 63% on shrimp from Malaysia, but much lower duties on shrimp from China, India, Thailand, Vietnam, Indonesia and Ecuador.

The duties, which could be revised in August when the department completes an investigation, were welcomed by shrimp fisherman and processors in Texas, Louisiana, Mississippi, Alabama, Georgia, Florida and South Carolina who filed a petition last year seeking US protection against foreign subsidised competition.

"The long-term survival of the entire Gulf shrimp economy from harvesters to processors depends on the outcome of this case, David Veal, executive director of the Coalition of Gulf Shrimp Industries, said in a statement. The industry group was formed in December to support the petition urging the federal government to impose countervailing duties on the imports.

The US imported more than US$3 billion worth of shrimp in 2012 from the seven countries named in the case, making it one of the biggest in the department's history. That included US$1.1 billion from Thailand, US$634 million from Indonesia, US$551 million from India, US$500 million from Ecuador, US$426 million from Vietnam, US$142 million from Malaysia and US$102 million from China.

The Commerce Department imposed preliminary duties on Malaysia of 10.8% to 62.74%. But other suppliers were subject to much lower duties of 2.09% to 11.32%.

For two countries - Ecuador and Indonesia - the amount of subsidies found by the Commerce Department was so low that no duties will be imposed, although that decision could be reversed in the department's final determination in August.

Still, the duties on the five other countries averaged nearly 9% on a trade-weighted basis, said Elizabeth Drake, a partner at the law firm Stewart & Stewart, who was the lead counsel for the Gulf Shrimp coalition.

If the final levels are similar, "countervailing duties of more than US$200 million would be assessed against importers. We believe these results would be dramatic in the market and would be very positive for domestic producers whose operating margins are often razor thin," Drake said.