Today, the U.S. Court of International Trade (CIT) issued an opinion in the challenge to the final results of the 5th annual review of the antidumping duty order covering shrimp imported from Vietnam between 2009 and 2010 brought by the Ad Hoc Shrimp Trade Action Committee (AHSTAC).
Because the U.S. Department of Commerce’s (Commerce) review involved a nonmarket economy, the agency must identify suitable production costs incurred in comparable market economy countries to determine a cost of production. In the Vietnam reviews, Commerce has generally chosen to use cost information from Bangladesh to establish surrogate production costs.
One of the relevant costs is labor rates. In the final results, Commerce elected to use a labor wage rate of just twenty-one cents per hour, derived from the shrimp processing sector in Bangladesh, as the appropriate wage rate for the Vietnamese shrimp industry. AHSTAC objected to the adoption of this rate, observing that Commerce’s decision was inconsistent with the agency’s past practice. The CIT last year ordered Commerce to reconsider that decision.
In today’s decision, CIT Chief Judge Pogue again found that Commerce had not adequately supported its decision to utilize the Bangladeshi labor wage rate. The CIT noted that the only affirmative basis offered by Commerce for the use of the wage rate was an agency preference to value all surrogate values from a single country when possible. The CIT rejected this argument, finding that this basis alone was insufficient to justify use of the twenty-one cent an hour rate.
The CIT afforded Commerce until September 30th to complete and file a remand determination addressing today’s decision. In that remand determination, Commerce may elect to continue to argue for the use of a twenty-one cent an hour labor wage rate while offering new reasoning to support the determination. Or Commerce may decide to identify and utilize a different labor wage rate to value shrimp processing labor costs in Vietnam.
Regardless of the ultimate outcome, the litigation highlights the reality of the “comparative advantage” of foreign shrimp suppliers. Taking advantage of labor wage rates of twenty-one cents an hour substantially reduces the cost of sourcing shrimp overseas. For a forty-hour workweek, an employee earning twenty-one cents an hour would make $8.40 in a week. Over a fifty-two week year, that employee would earn a total of $436.80.
The Vietnamese exporters involved in the review have, to date, successfully argued that the twenty-one cent an hour Bangladeshi wage rate should be used to value labor costs in the Vietnamese shrimp processing sector. Just something to think about the next time you find yourself standing in front of a seafood counter at the local grocery store.
John Williams
Read the CIT’s Opinion in Camau Frozen Seafood Processing Import Export Corporation v. United States, Court No. 2011-399 (July 2013) here: http://www.cit.uscourts.gov/SlipOpinions/Slip_op13/13-95.pdf