Gulf shrimpers have persuaded the U.S. Department of Commerce to investigate whether foreign countries are subsidizing the dumping of shrimp on the U.S. market at prices that undercut shrimp harvesters based in Mississippi and elsewhere along the Gulf and South Atlantic.
The Coalition of Gulf Shrimp Industries wants Southeast Asian and Central American competitors slapped with tariffs the coalition says will equalize a market in which imported farm-raised shrimp make up 30 percent of the total sold annually in the United States.
The Gulf group said it wants countervailing tariffs placed on $4.3 billion of imported shrimp sold annually in the United States.
Gulf shrimpers called last week’s Commerce Department decision to investigate the dumping charges a significant step in efforts to level a playing field they say has tilted heavily in favor of exporters from Vietnam, Thailand, China, Indonesia, Malaysia, Ecuador and, more recently, India. The Gulf coalition claims financial subsidies their Asian and Central American rivals enjoy from their respective countries make it impossible to compete on an equal footing.
The Coalition provided “information documenting more than 100 government subsidy programs benefitting shrimp producers in these seven nations,” said David Veal, coalition executive director, in a press statement.
“Now the Department will seek information from these governments and foreign producers to determine the full extent of subsidies they are receiving.”
A Commerce Department finding that the subsidies are damaging the domestic industry would set the stage for imposition of tariffs under international treaties enforced by the International Trade Commission. Countervailing duties could be in place by early fall, a circumstance that shrimp consumers could notice right away in prices they pay at the market or local seafood restaurant.
Veal said his trade association is confident Commerce Department investigators will determine subsidies are in play and ask the International Trade Commission to invoke the tariffs.
U.S. investigators have access to the financials of the exporters through provisions of international trade treaties, Veal said in an interview Friday.
“It will be up to the Commerce Department to determine which companies are getting the subsidies and for how much.”
The Coalition of Gulf Shrimp Industries wants tariffs of from 10 percent to 20 percent, according to Veal. “That translates to 50 cents to 60 cents a pound, on average, if you get the 15 percent tariff.”
The tariff level would be based on the amount of subsidy each country provides its shrimp exporters.
Veal claimed Asian imports are undercutting his association members by more than 65 cents a pounds. A new competitor – India – is doing some extreme under-cutting, he charged. “In the last four months, India has been dumping very large shrimp” and under-cutting domestic product by “$2 to $3 a pound.”
Placement of the tariffs would be for five years. The investigative process must be repeated for the tariffs to be renewed, according to Veal. “You don’t go home; you keep the troops there,” he said.
Money collected goes to the U.S. government, though the expected benefit for domestic shrimpers is a forced price increase by exporters to cover their tariff costs, Veal noted.
Now that the Commerce Department has found cause to continue its investigation, its next step is to determine the extent of each country’s shrimp export subsidy and make corresponding tariff recommendations to the International Trade Commission. “We’ll expect the results from Commerce in late March,” Veal said.
The Trade Commission will hold public hearings designed to help determine the amount of damages to assess, if any. Veal said he expects the hearing to be in late summer with a determination of damages in late August or September.
Eddy Hayes, counsel to the coalition, said the ruling is immensely important to the Gulf region’s shrimp industry. “We continue to believe that the long-term survival of the entire Gulf shrimp community is at stake with this case.”
Shrimpers working the South Atlantic and Gulf of Mexico fisheries harvest white, pink and brown shrimp. Nearly 90 percent of the white shrimp harvested in the United States comes from the Gulf, mainly from Louisiana and Texas, according to the National Oceanic and Atmospheric Association, or NOAA.
Shrimp imports, however, account for nearly 30 percent of the value of all seafood shipped into the United States, NOAA says.
Gulf shrimpers harvest the bulk of domestic shrimp consumed in the United States, according to NOAA, which put the total from the Gulf at 68 percent. Most of the harvesting is done in the upper Gulf in a stretch 50 miles off shore from Key West to Brownsville, Texas, Veal said.
Yet when a Mississippi shopper visits the supermarket seafood counter, he is as likely to buy imported shrimp as domestic, Veal noted. “You don’t see any distinguishing characteristics between domestic and export. Often, they are interspersed.”
Most seafood restaurants in Mississippi and elsewhere, especially the chain operations, are serving imported shrimp exclusively, Veal said. “It’s all driven by price.”
NOAA produced a mid-year report that forecast a July 2012-July 2013 brown shrimp harvest in the western Gulf of Mexico of 59.2 million pounds, which is above the historical 50-year average of 56.5 million pounds.
NOAA reports that total domestic shrimp harvest brought in $414 million in 2010, the latest figures available.
Peak season for harvesting in the Gulf is April to December, with larger boats working waters farther out from January to April, according to Veal.
About 200 to 300 boats work from Mississippi docks, he said, though 20 years ago that number was two to three times higher.
While fewer shrimp boats are on Gulf waters, the catch per boat has gone up significantly, Veal said.
“Landings in the Gulf are strong. But we just can’t get a good price for them.”