To the long list of products found to be "dumped" in the U.S. market, which include steel, catfish and bedroom furniture, the latest addition is shrimp -- so a good portion of the shrimp that America imports is facing stiff duties.
The Commerce Department ruled yesterday that shrimp from a number of Chinese and Vietnamese companies is being sold in the United States at unfairly low prices, and it imposed preliminary duties ranging as high as 113 percent. Although the penalties on most Vietnamese shrimp imports were relatively modest, and one Chinese firm escaped duties altogether, the outcome was a clear victory for the U.S. shrimp industry, which has been seeking to limit competition from abroad.
"These rulings confirm what the industry is painfully aware of," Eddie Gordon, president of the Southern Shrimp Alliance, said in a prepared statement. He called the department's decision "a critical step on the road to recovery for tens of thousands of fishermen, farmers and processors devastated by the massive volume of dumped Chinese and Vietnamese shrimp."
But the decision drew fire from a coalition of seafood importers and restaurants that complained the duties would force higher shrimp prices. The duties are a "food tax on America's No. 1 seafood," said Wally Stevens, president of the American Seafood Distributors Association, in a prepared statement. The precise impact on prices is impossible to estimate, industry sources said, because the department must still rule by the end of this month on allegations that several other major shrimp-exporting countries, notably Thailand, have also violated the dumping laws.
The outcome was in keeping with a long tradition in dumping cases, which often please the domestic industry and leave importers fuming. Many economists view the dumping laws, and Commerce's enforcement of them, as a thinly disguised form of protectionism that is antithetical to America's professed support of free trade. But the laws are hugely popular with Congress, where they are widely regarded as an essential bulwark against unfair trade practices by foreigners.
Imports account for nearly 90 percent of the shrimp consumed in the United States, and the domestic shrimp industry blames a 32 percent drop in the price of imported shrimp over the past three years for wrecking profit and causing a drastic decline in the U.S. harvest of shrimp. Importers contend that the U.S. industry, which relies on catching shrimp in the wild, simply can't compete with the low-cost, farm-raised shrimp shipped from the countries targeted in the dumping case.
Commerce's pattern of ruling in favor of the domestic industry was broken a couple of weeks ago when the department imposed relatively modest duties on Chinese bedroom furniture that were much lower than the U.S. furniture industry had sought. That ruling came as a pleasant surprise to free-traders, because China -- as a non-market economy -- is particularly vulnerable to anti-dumping duties. Commerce officials have considerable leeway in assessing the cost of production for non-market economies, which also include Vietnam.
But yesterday's ruling appeared to mark a return to the very high duties that are typical of such cases. Because the ruling was preliminary, the duties may be adjusted after the Commerce Department conducts a more in-depth investigation of the pricing practices of the foreign firms involved.
Of the four largest Chinese exporters, one was found not to be dumping, and one was hit with a 7.67 percent duty. But duties on shrimp from China's Allied Pacific Group were set at 90 percent, and for Yelin Enterprise Co. of Hong Kong, 98 percent. Another group of Chinese firms, accounting for about one-third of imports from that country, was socked 49 percent duties, and a smaller group of firms will be subject to 113 percent duties.
James Jochum, the assistant secretary of commerce for import administration, said the reason for the disparity in the duties on Chinese companies was that, in contrast with Allied Pacific and Yelin Enterprise, "the two companies where we [assessed low duties] are vertically integrated," taking shrimp through the production process all the way from the larval stage. Those firms thus have "a much lower cost of production," and are evidently not guilty of selling much below that, he said.
Vietnamese shrimp producers fared better than the Chinese. The majority of Vietnamese shrimp imports face preliminary duties averaging 16 percent, but a group of firms accounting for a little over one-fifth of Vietnamese imports were hit with duties of 93 percent.
Although representatives of the seafood distributors and restaurant coalition said such duties are sure to be passed on to consumers in the form of higher prices, the U.S. shrimp industry disputed that assertion.
"Consumers have not benefited from dumped shrimp prices," said Gordon, whose organization says middlemen have profited from the lower cost of imported shrimp without lowering their own selling prices. So even if substantially higher duties are imposed on most imported shrimp, "the middle could absorb that without putting a penny into [the cost of] a consumer's meal," said Deborah Regan, a spokeswoman for the group.