U.S lowers Tra fish anti-dumping duties for Vietnam: Is it enough?

On March 31, 2014, The U.S. Department of Commerce announced its decision to lower anti-dumping duties on Tra fish from Vietnam. This is the ninth time that the DOC adjusts the rate of anti-dumping duties on Tra fish. The overall dumping duties on all Tra fish would be unchanged at $2.11/kg. However, several companies exporting Tra fish would be enjoying lower duties as a result of this decision. This is, no doubt, a good news for many Vietnamese Tra fish companies. Immediately after the announcement, Tra fish export price (FOB price) dropped to $1.4-$1.5/kg from $3.5 /kg. The Tra fish industry is expecting an increase in export of 8.5%/year, bringing the total revenue to $1.8 billion. Companies are overjoyed with the decision. However, there is still a lingering question in the back of their heads: should there be no anti-dumping duties in the first place?

vietnam catfish
“Dirty Waters, Dangerous Fish”http://www.youtube.com/watch?v=h1nEPzsFpc0

Many U.S. consumers are unfamiliar with the term “Tra fish”. Tra fish is actually catfish. In 2002, the American catfish farmers lobbied the government to prohibit importers from using the name “catfish” on their products if the fish was not from a specific family that lived only in North America. They also ran campaigns stating that Vietnamese product was a “Slippery catfish wannable” that swam “around in Third World rivers nibbling on who knows what”.

Catfish label

Why American catfish farmers were so hostile toward Vietnamese “catfish wannable”? After 2000 Bilateral Trade Agreement with the U.S., Vietnam rapidly took over 20% of U.S. frozen catfish fillets market. Vietnam flooded the market with its cheaper products that were selling at a fraction of what U.S. catfish were selling. American catfish farmers saw the threat of Vietnamese “catfish” overtaking the market demanded the government to do something. They first asked for a different label for their “real” catfish. Seeing that this effort did not have a noticeable impact on Vietnamese export, they launched an antidumping case against Vietnamese catfish. Vietnamese catfish were called catfish again.

The lower price of Vietnamese catfish was clearly a result of their cheaper labor and input costs. The DOC couldn’t defend the antidumping case by proving either Vietnamese fish were selling below production costs or Vietnamese fish were selling below its market price. Thus, they turned to something else. In 2003, DOC announced that Vietnam was a “non-market economy”. Non-market economy is defined as a country that ‘does not operate on market principles of cost or pricing structures, so that sales of merchandise in such country do not reflect the fair value of the merchandise”. By classifying Vietnam as a “non-market economy”, DOC didn’t have to prove antidumping price of Vietnamese fish. Instead, they claimed that Vietnamese government intervened and influenced production and the allocation of resources, making the price unreasonably low. Heavy “antidumping margins” on Vietnam catfish were imposed, ranging from 33.84% to 63.88%. That was a heavy blow to the fish industry in Vietnam. Prices crashed, exporters moved to buy fish from somewhere else, farmers were devastated and had to sell their fish at any price to cut loss. And that was not the end of the story. The DOC moved on and launched another antidumping case toward Vietnamese shrimp as well. The move angered Vietnamese officials who called this is a “bully attempt” by the U.S. The general secretary of the Vietnam Association of Seafood Exporters, Nguyen Huu Dung, said in an interview after hearing DOC’s decisions: “We are made to wonder whether you wish us ill, as much in the present as you did in the past.”

Protecting American cat fish farmers has cost American taxpayers about $14 million/year. Farmers have been also pushing for stricter inspection programs and stricter safety standards on imported fish. The TPP agreement which is still under negotiation is expected to lower trade barriers and tariffs among member countries. However, the catfish dispute is not likely to be fully addressed. Vietnamese catfish, despite the high antidumping duties, has taken over 60% of the U.S. catfish market. Maybe it is time for the U.S. to resolve the catfish problem by dropping fully the anti-dumping case against Vietnamese fish and try to be more competitive on its own.

Work Cited
http://www.vanderbilt.edu/jotl/manage/wp-content/uploads/cong-pdf.pdf
http://www.npr.org/blogs/parallels/2013/12/16/250845123/battle-of-the-bottom-feeder-u-s-vietnam-in-catfish-fight
http://online.wsj.com/news/articles/SB10001424052702303670804579237272998355660

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