The US Department of Commerce's (DOC)'s decision on shrimp countervailing duties (CVD) on Tuesday was a shock for Ecuador, with processors from the Latin American shrimp hub receiving a final duty rate of 11.68%
"Ecuador was the big surprise," said John Sackton, publisher of Seafood News, who attended the announcement in Washington, D.C.
"In June, Ecuador was the second biggest shrimp exporter to the US. The huge change in duty rates is going to lead to major disruption in the shrimp market," said Sackton.
"Already, this afternoon, there are reports of Ecuador suppliers suspending sales," he said.
The duty rates could be retroactive to when the preliminary rates were published around the beginning of June. "However, the DOC could also make a different determination," said Sackton.
China, India, Malaysia and Vietnam also received duties.
Yet even the US shrimp industry had reason for disappointment, considering Thailand -- historically the largest supplier to the US -- escaped unscathed, along with India, which has also become a major supplier.
The final rates are:
- Sociedad Nacional de Galapagos (Songa) -- 10.13%
- Promarisco -- 13.51%
- All others -- 11.68%
In the preliminary phase, Ecuador had a deminimus (zero) rating.
Thailand: deminimus (zero)
Indonesia: deminimus (zero)
- Devi Fisheries -- 6.16%
- Devi Seafood -- 5.54%
- All others -- 5.85%
- Asia Aquaculture -- 10.8%
- All others -- 54.5%
- Minh Qui -- 7.88%
- Nha Trang -- 1.15%
- All Others -- 4.52%
The rates are definitely not what Ecuador’s shrimp trade organization, Camara Nacional de Acuacultura (CNA), expected, considering the preliminary determination by the DOC, which had suggested a subsidy rate of zero.
“Ecuadorian shrimp producers do not receive any subsidies, and the preliminary determination has confirmed that, so we could expect that things remain the same,” José Antonio Camposano, executive president of the CNA, told Undercurrent News in June.
Countries received subsidy rates in line with the amount they were allegedly subsidized by their own governments.
The DOC alleges Ecuador’s shrimp producers receive subsidies, with Pescanova-backed Promarisco receiving a 13.5% government boost, Songa receiving a 10.1% lift and the rest of producers riding on an 11.68% government advantage.
Surprises also came for India, which was not expected to receive US duties but received duties ranging from 5.54% to 6.16%.
These rates, not to mention the 18.2% duty imposed on producers in China, will give the US Gulf of Mexico shrimp industry a competitive market advantage. Yet the Times Picayune called CVD rates a “substantial setback” for the gulf industry since Thailand – the largest shrimp supplier to the US – emerged unscathed from the decision, with zero duties imposed.
Thailand, even as early mortality syndrome (EMS) cripples the industry this year, produced more than any other region during the first half of the year.
Although its production is down significantly and has decreased handily in recent months, it can't be denied that even with EMS, the region is a shrimp production powerhouse and player in the US shrimp market.
Speaking to Undercurrent after the CVD hearing convened at 5:30p.m. EST on Tuesday, David Veal, executive director of the Coalition for Gulf Shrimp Industries, said the coalition is considering appealing the decision on Thailand.
"We do understand how it occurred and we think it was an error on the commerce department's side," he said. He declined to specify what the error was until the coalition knows whether it will appeal, a decision it plans to make in the coming days.
The coalition holds firm to its opinion that Thai shrimp companies are receiving subsidies from the Thai government and, perhaps more importantly, that it impacts the US shrimp industry.
"In the US market, the single most important factor in the purchase of a food item is price, and that’s the case here, and as long as they sell products that are being subsidized, it will be wrong," Veal said.
Yet opponents of the subsidies – mainly US retailers and food distributors – say the gulf shrimp industry is also getting support from BP, which has paid billions of dollars to Gulf residents and companies affected by the deepwater horizon oil spill of 2010, reports the Wall Street Journal.
Gulf shrimpers, however, can rest assure that they will now have a lot of leverage over most of the major US suppliers, noted Veal noted, who considered the decisions on the whole a success for Gulf shrimpers.
"While Thailand was dropped out, Ecuador was put back in, which was the second largest country there," he said.
One thing is for sure – Malaysian shrimp producers’ competitive opportunities decreased the most out of any region with the 54.5% subsidies the DOC imposed on all shrimp exporters from the nation except Asia Aquaculture, owned by Thai giant Charoen Pokphand Foods, which received a subsidy of 10.8%.
Vietnam’s duty was 4.5% for all companies except Minh Qui, which received 7.88%; and Nha Trang, which received 1.15%.