Potential trade barriers threaten Vietnam's US shrimp exports

Vietnamese shrimp.

Vietnamese shrimp exports to the U.S. declined in 2023, with challenges for Vietnamese exporters set to intensify further in 2024 due to an ongoing investigation by the U.S. Department of Commerce (DOC) and the implementation of enhanced domestic protection measures pushed by the U.S. shrimp industry.

Shrimp exports to the U.S., Vietnam's top shrimp buyer, totaled USD 589 million (EUR 529.3 million) in the first 10 months of 2023, down 20 percent year over year, despite consecutive months of growth recorded between July and October, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The decline is likely to worsen in 2024 on the heels of the U.S. DOC’s launch of countervailing duty investigations on frozen warmwater shrimp of Ecuadorian, Indian, Indonesian, and Vietnamese origin, announced on 15 November 2023. Additionally, the department announced antidumping duty investigations on frozen warmwater shrimp from Ecuador and Indonesia.

The recently established countervailing investigation is posing an even bigger challenge for the Vietnamese shrimp sector than previous ones, according Vietnam Ministry of Industry Trade Remedies Department Director Trinh Anh Tuan.

Tuan told the Tuoi Tre newspaper the investigation scrutinizes several of Vietnam’s subsidy programs and alters the list of mandatory respondents participating in the DOC’s survey. Vietnam has the highest number of subsidized programs under examination of any country at 40, surpassing India's 19 and Ecuador and Indonesia with 15 each. These subsidies include loans, corporate income tax incentives, receivable exemption programs, land incentives, and a group of sponsorship programs.

Currently, respondents are actively addressing the DOC questionnaire, the deadline of which is pressing and necessitates the prompt submission of complex information, adherence to intricate administrative procedures, and translation of all documents into English, Tuan said.

Minh Phu CEO Le Van Quang confirmed to SeafoodSource his company is a noncompliant respondent in the U.S. investigation. However, he declined to provide further comment, citing the sensitive nature of the matter.

Tuan said the scope of the U.S. inquiry implies that the Vietnamese government is itself a party under investigation in the case. He said his department has initiated the collection of information, ensured compliance with the regulations of the World Trade Organization (WTO), and requested that the DOC conduct an objective and transparent investigation. The next steps in the investigation entail the DOC unveiling preliminary conclusions, conducting on-site verifications with the Vietnamese government and businesses, and facilitating a public consultation session before delivering final conclusions in May 2024 – unless an extension is needed.

As for the causes behind the investigation, besides general concerns regarding food safety, U.S. shrimpers have come under increased competition from foreign products and have pressed the federal government to ensure their products receive fair treatment in the domestic market. Tuan said a significant increase in shrimp exports from Vietnam to the U.S. as a primary factor prompting the U.S. shrimp production industry to consistently request the DOC to institute Vietnamese anti-subsidy measures.

“Our seafood industry is being squeezed out of existence due to the continued dumping of imported shrimp. I and many others fear that our way of life will become extinct and forgotten,” Henry Barnes, the mayor of La Batre, a city on the Gulf of Mexico in the U.S. state of Alabama, wrote in a letter to Alabama Governor Kay Ivey, pleading her to take the matter up with the federal government.

On 21 December 2023, the American Shrimp Processors Association (ASPA) submitted comments to the DOC urging the association to maintain Vietnam’s status as a non-market economy. The submission was made in response to the DOC reviewing whether to approve a request from Vietnam to upgrade its status to a market economy.

"It is vital that we retain the right to treat Vietnam as a non-market economy so we can obtain meaningful relief from unfairly dumped shrimp in the U.S. market," ASPA President Trey Pearson said. "Prematurely granting Vietnam market economy status despite the widespread government distortions that persist would greatly undermine the value of the antidumping order our industry has worked so hard to obtain and maintain for almost 20 years."

Pearson pointed out the same subsidy programs that are under review by the DOC as a primary reason why domestic shrimpers are not getting a fair shake in the U.S.

"Vietnam’s economy does not operate on market principles, causing direct harm to domestic shrimp producers," Pearson said. "Granting Vietnam's request would only hurt domestic industries, including the many small, family-owned businesses in the Gulf shrimp industry that rely on strong trade enforcement to compete."

Nevertheless, Vietnamese exporters are holding out hope that the DOC investigations don't harm their trade with the U.S. Fimex Chairman Ho Quoc Luc said he is optimistic that if the DOC decides to ... 

Photo courtesy of Shutterstock/Son Troung

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