Earlier this month, the U.S. Department of Commerce
issued a preliminary ruling that a seven-month investigation had
determined that China and Vietnam have been "unfairly" dumping
cheap shrimp in U.S. markets, thus threatening the jobs of hard-working
American shrimpers. To enable the Americans to compete fairly with the
Asians, it imposed antidumping tariffs on Chinese exporters as high as
112%. Vietnamese shrimpers got off lightly by comparison, with tariffs of
up to 93%.
That's a jumbo issue, given that slightly more than $1
billion worth of shrimp from Vietnam and China was imported into the U.S.
last year. Indeed, by the end of this month, four other major shrimp
exporters accounting for another $1.5 billion of U.S. imports -- Thailand,
India, Ecuador, and Brazil -- are expected to be found guilty of dumping
too. "The Bush administration has been very aggressive in enforcing
U.S. trade laws," boasted James Jochum, the assistant commerce
secretary in charge of antidumping."
But a close look at what Commerce officials did in their
enthusiasm to determine that Chinese and Vietnamese shrimps had been
"dumped" peels away the high-minded rhetoric about
"unfair" foreign trading practices that supporters of U.S.
antidumping laws regularly cite.
According to their own findings, published in the Federal
Register, the official bible of U.S. regulators, Commerce found that many
of the companies involved were setting their prices "independent of
the government and without the approval of a government authority."
The bureaucrats accepted that 21 Vietnamese companies and 24 from China
had been setting prices that were market driven."
Yet they refused to follow their own logic and recognize
that profit orientated companies would hardly be charging below cost for
long. The most that commerce would concede is that these market driven
companies should face a lower tariff -- 16% in the case of Vietnam, and
between 49% and 98% for China -- than the higher rates imposed on
companies which failed to prove they fell into this category.
But market-driven or not, all the accused shrimp
exporters were found guilty of dumping because Uncle Sam considers Vietnam
and China to be "non-market" economies. So, to calculate what
shrimp prices in the two Asian trading partners should have been, Commerce
looked to "surrogate" countries with allegedly comparable
economies. The officials pretended that China is really India, and that
Vietnam is really Bangladesh.
To see if the price of water for Chinese shrimpers was
unfair in 2003, Commerce turned to the 1997 edition of the Asian
Development Bank's Second Water Utilities Data Book, and checked "the
average of the price per cubic meter for four cities in India." To
find the prices that Vietnamese shrimpers paid for their water last year,
the U.S. officials turned to the Bangladesh chapter of the same ADB
publication, this time checking the water rate for two Bangladeshi cities.
To get Chinese and Vietnamese wage rates for 2003,
Commerce checked Yearbook of Labour Statistics 2001, published by the
International Labour Office in Geneva. To value the cost of ice in China
last year, Commerce officials consulted the September 30, 2002 edition of
Hindu Business Line, where they found an article that "presents a
high and low price paid by seafood processors in India for block
ice." And to find the rates for diesel fuel, electricity, and coal in
China, Commerce consulted Key World Energy Statistics 2003, which is
published by the International Energy Agency -- checking, of course,
India. At least this time, the American investigators got the year they
were supposed to be investigating right.
To find the purchase price, factory overhead costs,
general administrative expenses, and profits for all Chinese shrimp
processors, Commerce relied upon the 2002-2003 financial statement of just
one seafood exporter in India, Nekkanti Sea Foods Ltd. (Based in Andhra
Pradesh, Nekkanti is about to be found guilty of dumping shrimp, too.) And
to determine the purchase prices, etc. for all Vietnamese shrimpers, the
officials used data from one Bangladeshi shrimp processor, Apex Foods Ltd.
When looking at the records of the two Indian and
Bangladeshi shrimp companies, the U.S. antidumping investigators didn't
even distinguish between the prices of shrimp according to the actual
count sizes -- which vary from small to super-jumbo -- by which they are
sold. The bureaucrats just blended the average price estimate for all
shrimp products from the two companies in India and Bangladesh. Anyone who
has ever shopped for shrimp in a supermarket -- and seen how much prices
vary by count size -- knows how ridiculous this is.
Even lawyers representing American shrimp farmers who
brought the dumping suit admit the Commerce methodology is open to
criticism. Brad Ward, a Washington lawyer for the petitioning Southern
Shrimp Alliance, says that the officials were doing the best they could to
apply the law.
Will the antidumping tariffs really help the struggling
American shrimp industry? Alas, no. The root of the problem isn't dumping,
but that the U.S. shrimp industry entered the 21st century unprepared to
compete. Americans fish for shrimp in the wild, and simply cannot compete
with modern aquaculture. Foreign shrimp farms supply nearly 90% of the
U.S. market. The six accused "dumping" nations only supply about
75% of the U.S. market. Logic and experience dictate that antidumping
tariffs against them won't plug the dike; already, shrimp exporters like
Indonesia have begun to fill the void.
No matter. Some American shrimpers are hoping to find the
big bucks in Washington, D.C. Under the so-called Byrd Amendment of 2002,
domestic antidumping petitioners can dip into the U.S. Treasury and pocket
the antidumping tariffs. Although this law has been determined to be
inconsistent with U.S. obligations as a member of the World Trade
Organization, Congress has so far refused to repeal it.
Last year, U.S. Customs forked over $190 million in Byrd
revenues to antidumping petitioners. The Timken Co., the Ohio-based
bearing manufacturer, was the biggest winner, raking in $72.5 million
(twice Timken's 2003 profits). The steel, iron and pipe lobbies raked in
another $37.4 million. And Louisiana's otherwise unprofitable processors
of crawfish tail meat have gotten $17.2 million in Byrd revenues from
China in the last two years. Now, some U.S. shrimpers want their share.
The U.S. shrimp industry is already embroiled in a
scramble over who will get the hoped-for Byrd monies. The Louisiana Shrimp
Association has even gone into U.S. District Court in New Orleans,
demanding that a judge order the federal government to cut LSA members in
on any Byrd funds that the Southern Shrimp Alliance might collect in the
antidumping case.
Why fish for shrimp, when you can make more money by
fishing Uncle Sam?
Talk about what's really unfair.
Mr. Rushford is editor of the Rushford Report, a
Washington-based newsletter on trade politics.
