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Vietnam rejects US claims of shrimp industry subsidy

Publication Date : 29-01-2013

 

Vietnamese seafood producers are prepared to embark on a long battle against a US Department of Commerce anti-subsidy investigation to see whether the country and six others have been engaged in unfair trade practices.

The Vietnamese Association of Seafood Exporters and Producers (Vasep) says the petition by a coalition of shrimp producers in the US is "groundless" and could harm exporters as well as American importers and consumers.

Vasep afirms that Vietnam's shrimp industry is not subsidised by the government, saying that farmers, producers and exporters all operate in a free market.

Moreover, the country, as a member of the World Trade Organisation (WTO), complies with regulations on subsidies for agriculture, and has evidence to prove its compliance, Truong Dinh Hoe, Vasep secretary-general, told Viet Nam News.

Tran Van Linh, vice-chairman of Vasep, who is also general director of Thuan Phuoc Trade and Seafood Joint-Stock Company, said farmers had not received government subsidies and were in fact struggling to survive during the prolonged economic downturn.

Linh said they also did not receive refunds on value-added tax (VAT) for their purchases of raw materials, which have increased in price due to high inflation.

In recent years, the shrimp industry has had to face major challenges, including high interest rates on bank loans, and disease outbreaks that have led to massive shrimp deaths.

Last year, about 30 per cent of shrimp businesses in Vietnam went bankrupt; 30 per cent suspended operations; and the remainder cut back on production.

"I think this petition is no doubt an excuse and a bid to compete with shrimp imports. If the US goes ahead with this, then it is the US that subsidises its shrimp industry," Linh told Viet Nam News.

In consultation with lawyers, Vasep has prepared a legal response, but the government will play the most important role by proving that the industry receives no subsidies, according to Linh.

Vo Van Phuc, general director of Vina Cleanfood Joint-Stock Co. based in southern Soc Trang Province, said that farmers did not receive government subsidies and that most of them have had difficulty accessing loans at preferential interest rates, particularly in the last few years.

"The price of everything has rocketed, especially materials for shrimp breeding. The loans we received from commercial banks had an annual interest rate of 20 per cent. Subsidies? It's just laughable to say we're subsided by the government," he said.

Vasep said that such an anti-subsidy duty would affect the livelihoods of more than 600,000 Vietnamese shrimp farmers and processors.

US response

'Edward Hayes, an attorney with Leake & Andersson in New Orleans, Louisiana, conceded that Vietnam and the other six countries named in the petition "were not subsidising their shrimp industry with the express purpose of trying to harm the US industry".

But, he added that they "are using the industry as an economic development driver, and the indirect effect is causing and will cause substantial damage to our shrimp industry".

A legal specialist in international trade disputes, Hayes represents the US-based Coalition of Gulf Shrimp Industries (COGSI), which petitioned the US Department of Commerce (DOC) to launch an investigation against exporters of frozen warm-water shrimp in seven countries, including Vietnam.

Vasep has pointed out that the US members of the coalition, which includes six American states, supply only 10 per cent of shrimp to the US market, and that more than 90 per cent of shrimp consumed in the US are imported.

But Hayes said that American shrimp producers were struggling to compete with artificially low-priced imported shrimp heavily subsidised by foreign governments.

Vasep, however, noted that wild-caught shrimp from the US and farm-raised shrimps were different products produced in different conditions for different consumers.

The two kinds of products do not compete with each other in the market, Vasep alleges.

Also, the prices of shrimp from the seven countries named in the petition are lower than wild-caught shrimp due to favourable natural conditions and standardised fishing and breeding processes, according to Vasep.

The US-based coalition filed the petition with the DOC seeking relief from subsidised shrimp imports on December 28 last year.

After reviewing documents, DOC said an investigation was warranted.

The US International Trade Commission (ITC) now has responsibility for the case, specifically for investigating whether a domestic industry is materially injured, or threatened with material injury, by subsidised imports.

The ITC said it would release on or before February 11 its preliminary determinations on whether the US shrimp industry has suffered losses because of low-priced shrimp imports. Final determinations could come in July.

According to Vasep general secretary, Hoe, Vietnam could be subject to a 12 per cent anti-subsidy penalty.

He said that if such a tariff were imposed, American consumers would be the first to suffer as shrimp prices in the US would rise.

International reaction

Besides Vietnam, other major shrimp exporters named in the petition are mainland China, India, Ecuador, Indonesia, Malaysia and Thailand.

Their response to the COGSI petition has been overwhelmingly negative.

Ravi Reddy, president of the Seafood Exporters Association of India, was quoted in Fish Information and Services, a Tokyo-based online seafood publication, as saying that the country planned "to fight it in the court by engaging the best lawyers". The US is India's largest shrimp importer.

In Ecuador, the president of the National Aquaculture Chamber, Antonio Camposano, quoted in the same publication, called the petition "an accusation absolutely devoid of truth".

Meanwhile, Bachrul Chairi, the Indonesian Trade Ministry's acting director-general for foreign trade, was quoted in The Jakarta Post as saying that an anti-subsidy duty would disrupt shipments of shrimp to the US, its largest importer.

And Thailand's director-general of Foreign Trade Department, Pranee Siriphand, has said the length of the subsidy investigation could harm the country's shrimp industry.

It could take the ITC 45-85 days to determine whether the US shrimp industry had suffered losses, and another 85 days to determine whether subsidies existed, he was quoted as saying in the Bangkok Post.

Dinh Anh Tuyet of IDVN Lawyers in Ha Noi, who is the lawyer for Vasep, said such an anti-subsidy case was common and usually unavoidable for countries after they become members of the WTO.

Because of the importance of the case, Vietnam's Ministry of Industry and Trade's Competition Authority and the ministries of Agriculture and Rural Development, Finance and Justice will all be involved, Tuyet told Viet Nam News.

Last year, the US was Vietnam's second-largest importer of shrimp (US$493 million), accounting for more than 20 per cent of Vietnam's total shrimp exports. Japan is the largest importer.

Of the seven countries, Thailand was the leading exporter of frozen shrimp to the US last year, followed by Indonesia, Ecuador, India, Malaysia and China.

 

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