Tariffs not a long-term solution
U.S. farmed shrimp buyers have a lot to be nervous about these days. Prices are higher due to the supply crunch in the wake of Early Mortality Syndrome hitting Thailand and Mexico. In addition, the International Trade Commission is holding its last public hearing today on the countervailing duties (CVD) that could get levied on seven countries that export shrimp to the U.S. market.
Earlier this year the Coalition of Gulf Shrimp Industries (COGSI) filed its CVD petition with the U.S. government, alleging imports from China, Ecuador, India, Indonesia, Malaysia, Thailand and Vietnam are subsidized and domestic shrimp is at a disadvantage in the market.
There are several problems with the CVD case (and the antidumping case prior to that). First of all, the monies in these cases are never used to alleviate the original problem alleged when the case is filed. Did money from the shrimp antidumping case help the domestic shrimp industry? I have yet to see any proof that this occurred and doubt any further “relief” will be had if this CVD case is won. Will monies from the CVD case go to alleviating the price disparity that the domestic industry insists is hampering its shrimp sales?
No, which leads to the second problem of product comparison. In this case, the domestic industry alleges that imported farmed shrimp has an unfair advantage because overseas subsidies allow prices to be lower, therefore forcing domestic prices lower. The problem here is that fresh domestic wild shrimp and frozen imported farmed shrimp are very different products in the minds of U.S. shrimp buyers, but the suit alleges they are the same. A national restaurant chain is not buying fresh domestic U-12’s to put in a shrimp stir-fry that’s on the menu year-round. The market for that product is an independent restaurant that can charge a lot more money for the limited in-season availability. The products clearly go to two different markets and have different price points that reflect that.
The only winners in these antidumping or CVD cases are the attorneys, who get paid whether the client wins or loses. They continue to rake in money, while the domestic shrimp sellers continue to complain about prices, and will undoubtedly be back where they started in a year or two. I’d like to see the domestic shrimp industry find a long-term solution to its problems that doesn’t hang its future on the tariff hook.