Attorney Warren Connelly said yesterday’s determination by the U.S. Department of Commerce (DOC) that his client, the nation of Ecuador, is using government regulation to rig prices in favor of its shrimp exports to the U.S. came as a shock.
“Stunned, shocked, totally taken by surprise,” was how he described his reaction to the DOC’s determination, which came on the afternoon of 13 August, but for Connelly, he said the fight is not over yet.
Ecuador is one of seven nations — the others are China, India, Indonesia, Malaysia, Thailand and Vietnam— facing allegations by the Gulf Shrimp Owners Association (COGSI) of using government subsidies to drive down prices of exported shrimp to the U.S. COGSI maintains that those subsidies represent an unfair advantage over domestic producers.
Under U.S. law, the DOC has the right to levy new import duties, called countervailing duties, on imported shrimp if the DOC finds evidence of subsidies. The DOC’s final report this week found that the governments of Thailand and Indonesia had taken no action that warranted countervailing duties.
But the five remaining nations, including Ecuador, now face varying percentage increases to their duties, expected to take effect next week. Connelly’s shock is understandable, since the DOC’s determination is a complete reversal from its preliminary decision, issued on 29 May, where the DOC said Ecuador would not face any new duties. Now, the DOC is saying Ecuador subsidized its industries by a factor of 10.13 percent to 13.51 percent, a determination that Connelly, a partner with the Akin Gump law firm, called “inconceivable.”
“To us, we’re just mystified,” he said.
The DOC’s decision, Connelly said, is based on the premise that Ecuador restricts exports of fresh shrimp to the United States, which drives down prices of processed exports unfairly.
Connolly admitted that Ecuador does restrict exports of fresh shrimp, but for health and safety reasons, not to fix prices. Further, Connelly said 98 percent of all shrimp exports from Ecuador to America are processed anyway, and that would be the case whether the government restrictions were in place or not.
Despite the DOC setting new duty rates based on its findings, the matter is not yet closed. Connelly said he received the news about the DOC’s findings while he was sitting in a public hearing with the U.S. International Trade Commission (ITC). The ITC, also responding as required to the COGSI petition filed last year, is running its own investigation, to determine whether any subsidies or foreign regulations can be directly tied to financial hardship for the domestic industry.
The ITC won’t make its final determination until 19 September, and if it finds there is no hardship, the new duties could be reduced or eliminated altogether. Connelly said he and his firm have prepared a brief on behalf of Ecuador, a final appeal to the ITC.
“We feel like we’ve put a very strong case together,” he said.
If the ITC’s ruling doesn’t change anything, Connelly said he could appeal to the U.S. Court of International Trade but, he said, “It’s too soon to think about.”
