Domestic shrimp producers will find out Tuesday whether they’ll be one step closer to getting relief from the subsidized imports that have taken over about 75 percent of the U.S. market for the shellfish and that, the shrimpers say, cost them billions of dollars in lost revenue.
The U.S. International Trade Commission will hold a hearing Tuesday for the final phase of a duty investigation of frozen warm-water shrimp imports from seven countries: China, India, Thailand, Malaysia, Vietnam, Indonesia and Ecuador.
It will decide whether the subsidized shrimp imports are causing “material injury” to domestic producers. The seven countries exported more than 984 million pounds of shrimp worth nearly $4.3 billion in 2011.Overall, shrimp consumption in the U.S. is increasing and Gulf Coast processors are working to stay competitive in a growing market. In 2011, the U.S. consumed 4.7 billion pounds of seafood, surpassing Japan to become the second largest consumer, after China.
The Coalition of Gulf Shrimp Industries filed a petition last December, claiming that an increase in subsidized imports is hurting the U.S. shrimp industry. The coalition represents shrimp processors from Mississippi, Texas, Florida, Alabama and Louisiana, which make up 94 percent of domestic shrimp production.
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According to the coalition, the seven foreign countries account for 89 percent of U.S. shrimp imports and three-quarters of the shrimp sold in this country. As a result, subsidies provided by their governments greatly affect the price of shrimp in the U.S.
“The prices are so low that if you do not catch in great volumes, you can pretty much tie up your boat,” said Kim Chauvin, the owner of the Louisiana processor Bluewater Shrimp Co. “Last year we lost about 30 different customers because of pricing, and that makes or breaks your year.”
The Tariff Act of 1930, a law originally introduced to protect farmers from imports, allows U.S. industries to “petition the government for relief from imports that benefit from subsidies provided through foreign government programs,” according to the trade commission.
Patrick Macrory, the director of the International Trade Law Center at the International Law Institute, said, “Basically, a subsidy is anything the government is giving that is below market value. . . . Very often it is a low-interest loan.”
The Department of Commerce launched an investigation in May to determine whether there was sufficient evidence to support the coalition’s claim that the seven countries were subsidizing their shrimp industries.
Its investigation has been running concurrently with the trade commission’s look at whether the subsidies are causing significant injury to U.S. producers.
Both the trade commission and the Commerce Department would have to call for countervailing duties before any penalties could be applied, according to Peg O’Laughlin, a spokeswoman for the commission.
The final phase of the trade commission’s investigation, which began in April, follows a 45-day preliminary period that found a reasonable indication that the U.S. shrimp industry was being materially injured by the subsidized imports.
The commission’s preliminary investigations typically explore relevant economic data, such as domestic sales, output, market share, employment and profit.
After collecting quarterly pricing data from a variety of domestic processors and foreign importers, the trade commission found that frozen shrimp imports undersold the domestic product in 138 cases, which represented nearly 40 percent of the comparisons made.