Richard Gutting Commentary

A Trade Alert distributed to subscribers of Urner Barry Foreign Trade Data included a commentary by Richard E. Gutting Jr. addressing the current shrimp trade litigation. Mr. Gutting’s commentary, along with an IntraFish article by John Fiorillo published Thursday, raised the possibility of settlements of the shrimp countervailing duty cases.

With Mr. Gutting’s permission, here is that commentary with links to various documents removed:

[Richard Gutting Commentary]

Crunch Time for Shrimp

Yesterday by a vote of 5 to 1, the U.S. International Trade Commission found a “reasonable indication” that U.S. producers are “materially injured” by imports of frozen warmwater shrimp from China, Ecuador, India, Indonesia, Malaysia, Thailand, and Vietnam that are allegedly subsidized. . . .

. . . .

The investigations move on now to preliminary subsidy findings in late March (unless delayed) when 117 foreign subsidy programs will be reviewed.

So far — lurking behind the public commentary over “massive subsidies” — is a tense legal dispute among domestic shrimpers and processors over whether shrimpers are a necessary part of these investigations.

Shrimp processors say no — shrimpers say yes. 

Sounds arcane — but it isn’t — it’s about the money foreign producers might pay petitioners or other arrangements that might be made if they settle these cases. It happened years ago during the antidumping investigations, and it could happen again.

Department rules say investigations can end if there is a “lack of interest” or an “understanding . . .  to limit the volume of imports”. Alternatively, they can be “suspended” if a deal is struck between foreign producers and/or governments and the Commerce Department — and any suspension deal must be completed seven days after the Department’s preliminary subsidy findings in March.So it’s time to start talking.

Each foreign country/group of exporters has a powerful incentive to settle. No duties mean a competitive advantage over other exporters, and no costs from lost markets and “forever” legal fees.

And so do U.S. importers — any future duties they must pay will be calculated retroactively, which means they must import first, make a “deposit”, and then find out how much they owe after they sell the shrimp. It’s a unique system (the US is the only country with retroactive calculations) — and a recipe for trouble.

So — don’t be surprised if you hear rumors of secret back-room negotiations and more arguments over who must be sitting at the table — its crunch time.

Richard E. Gutting, Jr.

The processor group that asked for trade relief has repeatedly stated that they are not seeking settlements and that countervailing duties are necessary for the survival of the industry. Whether the claims of the Coalition of Gulf Shrimp Industries (COGSI) are true or not, the group has also asked that the government narrowly define the domestic shrimp industry to include only processors and exclude all shrimpers. COGSI simultaneously claims that fishermen are just as endangered by subsidized imports as processors, but nevertheless asks the government to not allow shrimpers to have a formal role in the proceedings. And, despite a membership limited to a small number of northern Gulf processors, COGSI continues to assert that it accounts for the vast majority of the shrimp processed in the United States. Because one in every two pounds of shrimp processed in the United States takes place in Texas, Florida, and California, this claim is without support.

COGSI might have good reasons for taking this course of action on its own. It might not. For the shrimp industry, whatever the explanation, the important thing is to be involved and stay informed. It does not matter whether you do this through the Ad Hoc Shrimp Industry Committee, through the Southern Shrimp Alliance, through another organization, or on your own. What matters is that you become involved and stay informed.

For our part, we will keep providing updates regarding the cases that may be of interest to our membership and those in the industry generally. In the meantime, if you have questions, let us know.

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