Image: Vasep / FIS

The United States filed a lawsuit for dumping shrimp from Ecuador, Indonesia, India and Vietnam

VIET NAM
Wednesday, November 01, 2023, 07:00 (GMT + 9)

Recently announced information, the American Shrimp Processors Association (ASPA) has just filed an application with the US Department of Commerce (DOC) to initiate an anti-dumping lawsuit against shrimp from Ecuador and Indonesia; At the same time, it also filed an anti-subsidy lawsuit (CVD) against shrimp from Ecuador, Indonesia, India and Vietnam. With this lawsuit, 6 shrimp powers in the world are entangled in an anti-dumping lawsuit against shrimp in the United States! Is this an additional challenge or an opportunity for Vietnamese shrimp in the context of facing so many objective and subjective difficulties today? We review developments from the past to broaden the path for more appropriate comments and future actions.

Source: Stockfile FIS

About 8 years ago, the plaintiffs in the anti-dumping lawsuit against Vietnamese shrimp were the US Southern Shrimp Alliance (SSA) and ASPA sued against dumping against Vietnamese shrimp. As a result, the authorities of our Government have proven that the activities of the Vietnamese shrimp industry are the initiative of the participating entities. The government only supports orientation, strategy, policies, infrastructure... and the US authorities concluded that Vietnamese shrimp did not receive subsidies, so the lawsuit was canceled.

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Currently, Indian shrimp and Vietnamese shrimp are still subject to anti-dumping tax with the plaintiff's lawsuit from the end of 2003 lasting until now; However, the tax rate of Vietnamese shrimp enterprises is 0% and that of India is 3.88%. Also at this time, Indian shrimp held the highest market share in the United States, about 37%; Ecuadorian shrimp rose to second place (over 20%, slightly higher than Indonesian shrimp). Vietnamese shrimp modestly only reached about 8%.

The reason why Vietnamese shrimp cannot have a higher market share is that shrimp from the other 3 countries have very low selling prices, and Vietnamese shrimp is able to cling to this market thanks to high value-added processed products consumed in industrial systems. large, high-ranking system; while shrimp in the remaining countries do not have enough processing level to reach it. This situation is the reason why the plaintiff's lawyers (ASPA) have temporarily calculated the anti-dumping tax on Ecuadorian shrimp to 111% and Indonesian shrimp to 37%!

<-- Source: Stockfile FIS

It's all just the warm-up and there's more to come. This November, US authorities will consider and conclude whether the lawsuit from ASPA mentioned above can proceed or not. The general situation shows that the US shrimp industry, from fishing to processing, is facing many difficulties, mainly from consumer prices falling too much. Protecting domestic production is the top (hidden) task of the Government, with the current situation showing that lawsuits will happen. That is a rational analysis, but it is normal if there are different results. The US is also famous for its lobby activities where the Ecuadorian shrimp industry has a lot of money with the world's leading large shrimp enterprises. However, we will look at it logically, the lawsuit will happen and how the Vietnamese shrimp industry will be affected positively or negatively, so that in the end it will be more beneficial or harmful.

First, let's talk about the CVD lawsuit. Last time, in a different context than today, it was still more or less complicated to prove that Vietnam had been forming a market economy. Now it is completely different, Vietnam has been recognized by many large countries and the transparency in our country's economic and financial activities is increasingly clear.

I think the CVD lawsuit will have a satisfactory outcome. However, remote backup is absolutely necessary. This week, VASEP met with shrimp businesses participating in the US market and asked the Law Firm for advice. These businesses will answer the necessary contents so that the Law Firm can soon have countermeasures for rights protection activities. With this action, VASEP further proves its bravery and deserves to be a support for seafood businesses. A bright, welcome spot.

The focus is to consider the impact from a dumping lawsuit, if it occurs. Anti-dumping tax rates for Ecuadorian and Indonesian shrimp will be temporarily announced by the DOC, at least in the second half of next year. How much this tax is depends on the proof of both sides to the DOC. However, reality shows that the shrimp consumption price of these defendants is very low, leading to a large tax rate. Of course, this is also a rational analysis! Assuming that Ecuadorian shrimp is taxed at only about 30% and Indonesian shrimp is only about 10% (ie only 1/3 of the plaintiff's lawyer's estimate), the tax rate will cause huge losses for the shrimp businesses of these two countries. If you still pursue the US market. Because in reality, the shrimp industry's profit margin is below 5%. When the business problem is solved, these shrimp businesses will find a way to save themselves.

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Just like nearly 20 years ago, after being hit with an anti-dumping tax of over 60% (POR1), the Vietnamese pangasius industry had to temporarily withdraw from the US market (except for Vinh Hoan, which still maintained thanks to its low tax rate), looking for new markets. new school and many years later managed to find a way to re-enter here. If hundreds of thousands of tons of Ecuadorian and Indonesian shrimp are not sold to the United States, these shrimp businesses will look to the remaining shrimp markets.

You should also know that processed shrimp (whole or headless frozen in block form) Ecuador leads the way in EU and China. Southern European countries absolutely love Ecuadorian shrimp. Indonesian shrimp ranks second in Japan after Vietnamese shrimp. According to theory, to transform markets fastest, businesses will look to the remaining key markets.

Source: Stockfile FIS

At that time, Ecuadorian shrimp will be stronger in both the EU and China, and Indonesian shrimp will compete fiercely with Vietnamese shrimp in Japan. Vietnamese shrimp ranks second in the EU, so the two major markets of Vietnamese shrimp will be significantly invaded. Not to mention, if China buys more cheap shrimp from Ecuador, it will more or less lighten the price and quantity of shrimp purchased from Vietnam. Although China buys Vietnamese shrimp, it is all shrimp with specific characteristics, with few competitors such as black tiger shrimp or boiled live white shrimp.

If you have a positive perspective, consider the above not only as PRESSURE but also as MOTIVATION for Vietnamese shrimp's efforts to expand its reach. However, not all Vietnamese shrimp entrepreneurs are equipped with enough equipment for that position. Leading to an overview, the market share fluctuations of the shrimp powers are more or less causing difficulties for each other.

Source: Stockfile FIS

Another positive perspective is the lack of shrimp sources in the US market. Definitely an advantage for the remaining shrimp powers, India, Vietnam, Thailand, China. Vietnamese shrimp has an advantage in the market share of processing high value-added goods and prices will certainly improve when shrimp supply to the United States is limited. The Indian shrimp industry is also trying to improve its processing level, but it is at least ten years behind Vietnamese shrimp, so the advantage of Vietnamese shrimp here is not small, if the lawsuit occurs according to the above scenario! As for the remaining major markets, Vietnamese shrimp businesses will certainly focus on marketing, researching new products as well as trying to save all aspects of operations, reducing costs... All for increasing competitiveness.

In short, everything is always changing, this is normal. Redistributing shrimp market share is nothing new, and especially does not cause many difficulties for Vietnamese shrimp entrepreneurs who are becoming more and more seasoned and brave. Therefore, the Vietnamese shrimp industry feels that there is no significant pressure on the above information. The problem is solving internal difficulties. That is to find solutions to fight diseases in farmed shrimp; That is very strict management and control of shrimp seeds; That is to find all sources of irrigation investment for shrimp farming... All for improving the rate of successful farming. And that is the strongest competitiveness that needs to be done most today.

Author: Dr. Ho Quoc Luc - Former President of VASEP, Chairman of the Board of Directors of FIMEX VN | Vasep (Translated from the original in Vietnamese)

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