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Gridlock in the global shrimp trade

The US has managed to protect its domestic shrimp industry by preventing cheap imports from abroad. But imposing import duties may not be the best way to support the industry.

Every winter, large concentrations of female shrimp, Pandalus borealis, crawl towards the cold waters of the western Gulf of Maine, off the northeast coast of the United States. Having spent the first two years of their lives as males their orange bodies are now heavy with bright turquoise eggs as they move towards the shore to spawn.

Waiting for the shrimps are the fine mesh nets of fishing boats scooping up several hundred pounds in each two-hour trip. Between the 1960s and the mid '80s, the New England shrimp industry couldn't satisfy demand, with shrimp stocks never yielding more than 9,000 tons. This meant shrimp could fetch a price as high as US$1.30 a pound.

But in 1986 the price slumped: the Maine shrimp were heading to market as usual when shrimp from Ecuador were imported and sold at half that price. Since then, the small US industry has declined. "We won't even go this year," says Brad Hall, long time captain of the Irene Alton, an 18-metre boat. "Ain't worth it."

For the shrimp fisheries off the south coast of the US, which drive the economies of many Gulf of Mexico communities and supply over 90 per cent of the US domestic shrimp product, the impact of the increase in foreign imports has been more severe.

"About 15 years ago our catches went down but the price stayed flat," says Margaret Curole, wife of a shrimper based in Galliano, Louisiana. "We knew something was wrong. But we didn't know what."

The new wave of shrimp imports has also badly hit the vast majority of Mexican shrimp fishing communities along the Gulf of Mexico who normally sell on the US market. They too were unable to compete with the new lower prices.

In an effort to protect US shrimp farmers the US government set up an Ad Hoc Shrimp Trade Action Committee. In December 2003 it complained to the World Trade Organisation that the US industry was being materially injured by frozen or canned warm water shrimp from Brazil, China, Ecuador, India, Thailand, and Vietnam because the shrimp was selling at prices below fair value.

The complaint was upheld and, as a result, the US was able to impose import duty and protect its domestic shrimp market.

"Such duties are regulated by the WTO Agreement on Anti-Dumping, which allows members to impose taxes on imports if an investigation shows that the imports are being sold in the importing country at a price below the cost of production in the exporting country," according to reports of the International Centre for Trade and Sustainable Development (ICTSD) a non-profit organisation concerned with the impacts of international trade on sustainable development.

In Thailand, the US import duties have added to an existing ban, upheld in part by the WTO, on wild shrimp caught by Thai fishermen who did not use turtle excluders on their nets. Thailand was the biggest supplier to the US but the result so far has been a 43 per cent drop in the country's shrimp exports to the US in the first quarter of 2005.

The situation in countries such as Thailand and India is made even worse for small farmers because the industry is controlled by large multinationals such as Thailand's Charoen Pakphand, and Mitsubishi of Japan.

According to the UN Food and Agriculture Organisation (FAO), more than half the shrimp farms in Thailand are smaller than an acre. Unconfirmed reports say many small farmers want to sell their shrimp in Thailand – which is a highly lucrative market – but cannot because they are in debt to Charoen Pakphand, and must sell to the company at low prices.

In recent months India and Thailand have vehemently accused the US of using anti-dumping measures to shield US shrimp farmers from cheaper, more competitive imports. They argue that they cannot be accused of 'dumping' on the grounds that their shrimp are legitimately cheaper than those in the US.

According to Brian Marks, a geographer at the University of Arizona, the anti-dumping duties have been effective in reducing imports and raising prices, but he believes they could be a double-edged sword. "They could end up driving a lot of processing jobs out of the country," he says.

A report published by ICTSD argues that a relatively small number of well-organised US farmers are being protected at the expense of Thai and Indian shrimp farmers who are far poorer than their US counterparts.

The report also says that since 90 per cent of shrimp consumed in the US is imported, US consumers could be hurt by the higher prices induced by the anti-dumping duty. Indian and Thai stakeholders expressed indignation at the alleged contradiction between the free trade rhetoric of the US and its own protectionist measures.

"We realise these [foreign farmers] people need to work," says Marks, who does not think the anti-dumping duty is the ultimate solution. "What we really need are quotas and floor prices like they have with textiles. That would raise prices for everyone, and we could share the market without hurting each other so badly."

Margaret Curole, now the representative to the World Forum of Fish Harvesters and Fishworkers (WFF), claims the anti-dumping duties have actually done little to help US fishermen.

"Things are so good right now that my husband is out driving a tug boat," she says sarcastically. Like many fishing communities in the US, her home town is unable to support its families at the average US standard of living, and many have sought other work.

On a recent visit to China, Curole met a shrimp trade specialist. "He asked me what I thought about duties, and I told him they weren't helping us."

Tariffs have raised prices paid to fishermen less than 10 per cent on average, not enough to compensate for the 25 per cent drop over the last eight years. "We talked about getting people together to explore the option of a quota system and price controls," she says.

But when Curole presented the quota idea to the Southern Shrimp Association, the most powerful organisation in the Ad Hoc Committee that petitioned for anti-dumping duties, it was rejected: "They foo-fooed me out of hand," she says.

"They didn't want to talk about it because they figured they were going to get money from the Byrd Amendment," she adds, referring to US legislation that would distribute revenues from anti-dumping duties to the injured parties.

While the affected nations plan to contest the US anti-dumping measures at the WTO ministerial meeting in Hong Kong, creative solutions to the worldwide shrimp glut and other fishing industry issues do not appear to be high on the agenda.

Instead negotiators from some of the industrialised nations are pushing hard to open global trade further by removing duty and tariffs within fishing as part of Non-Agricultural Market Access (NAMA) proposals. The FAO has refused to examine how proposed NAMA rules would affect wild fisheries, though Japan warns that by opening up more markets, NAMA will increase overfishing of some species, risking further resource declines.

Brian Marks is worried that if NAMA proposals are accepted it will have a negative impact on quality and sustainability. "It will close off options to long term solutions," he says. "It will also lead to a greater internationalisation of fisheries, where species such as New Zealand's orange roughy, and the Patagonian toothfish find international gourmet markets and then that leads to overfishing."

On the other side of the ocean around 300 small fishermen from south-east Asian countries are protesting on the streets of Hong Kong, demanding better protection and calling for the WTO to take further liberalisation of fisheries off the agenda.

Liberalisation, they say, will benefit commercial fishing operations and bring greater hardship to poor independent fishermen, pitting them against their counterparts from the US, Mexico, southeast Asia and India. 

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12/14/2005

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